Mobile apps are not just limited to providing convenience and functionality to their users. They can also be huge sources of revenue for developers, entrepreneurs, and enterprises. There are multiple examples to justify apps that bring in high sums of revenue to the business. However, how much do these apps make? Also, how can a business thrive besides a welcome revenue stream?
If an app is categorized as a top app, it would earn about $82500 on average. This brings much change to the table from the top 800-900 apps in general that would have an average earning of $3500. The average is taken into account because numerous factors affect the revenue of the app such as the aim of the app, its platform, app structure, earning model, etc to determine the precise value of an app.
Stats about mobile apps in 2023
In 2019, the size of the global app market was $154 billion. This number is now estimated to grow at a CAGR of 13.8% from 2023 to 2030. So it is clear that apps generate revenue at an incredible rate these days since the market is there for it. Some of the reasons for their significant rise in the market are due to technologies such as AI/ML, increase in smartphone usage, internet utilization, and many other factors.
In the first quarter of 2023, there were around 58.33% of global website traffic on mobile devices, maintaining the 50% mark from 2017 to 2020 when it surpassed it. It varies from business to business as to how much money an app can make to elevate the business. However, if you are looking for much success in the digital world, the mobile app market is the ideal choice for you.
Statista also suggests that by the end of 2023, the global app revenue will reach $542,390 million. This is because mobile phone usage has increased in the past few years. A study conducted by Oberlo suggests that 56.69% of global traffic is directed from mobile phones.
Things to consider before making money from apps
Before considering designing and developing your mobile app, it is necessary to know the factors that will impact the success of your app. Conducting your research is fine, however, it is more credible if you hire an individual developer or an app development company to do it for you. Below are a few factors you need to consider before developing your app:
1. Goal of your app
Before making any steps towards monetization, you need to understand the appeal and purpose of your app. What issues does it solve and how? Below are some questions you need to answer before initiating the monetization process:
- What problems does your app focus on?
- What software development services do you require to develop an app?
- What impact would you leave on the market through your app?
- How will the app aid in customer support and needs?
Answering these questions will lead to the purpose of your product after which you can begin to develop your app.
2. Defining your Target Audience
If your target audience is business people, make sure to go with a strategy that saves them time and money. If your audience is kids then it is better to provide them with features on the app for free.
Studying your target audience to generate revenue from them requires effective online business strategies that help you understand their needs and execute the solutions. Also, your users deserve to know the genuine worth of your business to purchase your app.
3. Study your Competitors
This is another crucial factor to consider before developing an app that makes you money. The intel about your competitors provides you insight into what strategies other similar products in the market are implementing to stay relevant and earn capital. This aids in making your decision.
The competitor analysis is not just limited to functionalities, highlights, and design of the app. With much research about your competitors, you can devise a business strategy of your own to implement in your app’s marketing and stay ahead of the competition. Some of the questions you need to ask to accomplish such a strategy are:
- How robust are their apps?
- What do their products fail to provide that you can provide a solution for on your own?
- How are they earning?
Your marketing and sales will also see a significant boost through your business strategy.
The technologies that you integrate your new app with not only enhance the user experience but also add to the revenue generated by the app. For instance, the developers get 70% of income from a traditional business mobile app monetization platform model whereas a blockchain-based mobile application delivers 85% of the total app profit share.
Monetization Models to earn from an app
1. In-app Purchase Model
This model allows the user to install an app from its respective app stores however can be seen as permitting users to buy goods, perform better, premium features, and other services. A user pays for a decent level of user interaction. In other words, the app accumulates consumers who utilize a free portion, pay avidly, and continue paying for the app.
Another strategy that this model utilizes is to provide ad-hoc features to the user. For instance, game apps often include this feature in their blueprint. The specific features in a game such as currency and lifelines need to be bought by the user to stay ahead of the rest of the players. This is how an app is monetized. Consumers are convinced to purchase certain features that earn the app revenue.
Statista states that mobile app consumers spent an average of $33.9 billion globally in the app market in 2023. Hence, we now know that the difficult part is not to convince the user to install your app but to make a certain in-app purchase from your app without losing that customer.
2. Freemium model
Freemium apps are a combination of both free as well as premium apps. This model implies that it is free to download however, certain features and elements of the app are to be purchased by the user. Features like higher performance, attributes, or even ad-free content can be offered in the paid version of the app. The in-app model can be considered as an offshoot of the Freemium version. The in-app purchase model asks for multi-level payment whereas the freemium model only asks for a single-level payment.
Due to the feature of one-time payment, it is easier to acquire customers through freemium models as compared to in-app purchase models. Such models help in customer retention and capital expansion. Users are offered premium services and app maintenance and in return, you charge them for that which is a good trade.
3. Subscription Model
Subscribing to an app is one of the most preferred ways to stay in touch with it. This strategy lets customers utilize quality content for a short period until they get used to it and charge them for the package. These subscriptions can be charged monthly, quarterly, half-yearly, and yearly. This model is best suited for cloud-based services such as video, music, and news apps considering the budget.
This is the best model if you want to quickly monetize your app however, it may cause difficulties during development. The apps need to be quite effective in their cause. It can also be an issue to increase consumer retention rates for longer periods. This requires fresh content, consistent maintenance, and much relevance to the subject.
4. In-App Advertisements Model
This model is targeted to a wider consumer base. As a result, providing similar content and ads can funnel a lot of finance through the consumer base to your business. For instance, a music streaming app would put up ads for headphones instead of irrelevant ads like batteries or dishwashers.
Based on the type of content, different kinds of ads can be utilized. Factors such as relevance, revenue generation, and content determine the best fit for being displayed on banner ads, native ads, video ads, rewards, ads, etc. So make sure to pick the right combination to generate great revenue from them. Ads can also be made optional or compulsory if the consumers are uninterested in it or want to explore further options through them.
The revenue derived from these ads depends on cost per impression or cost per click. You can also promote the ad on their platform. However, ads can also be highly time-consuming and annoying due to which users can quit the platform.
5. Data Collection and Purchase Model
The most important resource that can aid in generating heaps of revenue is user data. Everything from their practices to choices is considered significant since based on such factors the app will generate revenue even if it is free to install. There are also other sources through which you can gather revenue such as researchers, analysts, and companies that will pay you for providing them with user data.
Primarily, data is consumed for the improvement of your app experience or meeting any demands of your app. The latest technologies help in delivering the users with a relevant and personalized experience that the user is familiar with. Behavioral retargeting is a practice in which the user has browsed through a range of mobile devices, he/she wants to buy and leaves the app without making a purchase. Away from the website, they will observe ads with discount offers on mobile devices to keep them engaged with the purchasing process. However, consumers can be defensive about their data which is why it becomes an obstacle for such apps.
Apps suitable to generate revenue for your business
Now that you understand how profitable mobile apps can be, it is time for you to find the one that is right for your business. However, there are certain factors such as cost that will impact the presence of your application on a specific platform.
1. Application Stores
Mobile apps are showcased mostly on application stores. The two most popular platforms are the Apple Store and Google Play Store which feature Android and iOS apps in them. The Android market has a larger user base than iOS and offers a wider customer base to its developers to cater to their preferences. iOS on the other hand is not nearly as big but still provides a huge market for its developers.
During the third quarter of 2022, a total of 3.55 million apps were picked by Android users which made Google Play, the application store with the most number of apps available. Second place went to iOS with the App Store harboring 1.6 million apps to its users. Hence, the market is wide, diverse, and competitive at the same time.
2. Smart TVs
If you think apps are just limited to mobile devices, think again! Apps are also meant for viewing on a larger screen. Video apps and gaming apps are the ones that take this industry by storm. This is also true that the app market for TVs is on the rise and if people tend to invest in smart TV apps as they do right now, the future of Smart TV apps will look interesting since they will generate massive revenue.
3. Smart Wearables
Following the macro vision, we enter the micro space for apps to thrive. Apps are also compatible with smartwatches, headsets, apparel, smart glasses, bands, shoes, fitness trackers, etc. These wearables scream easy adaptability and convenience in their structure and can be made much better. Apps for this purpose can derive high profits and several exposure streams which could offer a competitive advantage in the market.
4. Voice Assistant Based App
These apps are also quite adaptable considering the technologies of today. It delivers a personalized experience, builds a brand, refurbishes a product, and provides ubiquity. This technology just like smart TV apps has a flourishing future and will be in demand. As a result, strategizing your business products around this technology will deliver better results since it has scope for the time being.
With so many options at your fingertips, which one would you choose for your business? It is important to consider your business’ goals and solutions to provide your customer base with. Consider the good and the bad of every method and then pick the one that could make you the most money. If you decide to hire a mobile app development company for such a task, make sure to hire a good one that will deliver a product that could generate the most revenue for you.
Frequently Asked Questions (FAQ)
1. Which are the most profitable apps to generate revenue from?
The categories of apps that make the most revenue for their respective fields are- Music apps, Gaming apps, and Video streaming apps. These apps can be categorized under entertainment and generate massive revenue for a company due to the high engagement level of their user base.
2. How much do app owners make from an app?
The revenue generated by the app entirely depends on its base functionality, the platform considered, the expectations of the target audience, app monetization models chosen, and many other factors.
3. How do free apps generate revenue?
There are three ways in which free apps can generate revenue- in-app advertisements, referrals, and sponsorship marketing.
4. How much does it cost to build an app?
The cost of developing an app depends on multiple factors. Some of these are the complexity of the app, features and functionalities, type of platform, development team and location, and others. So it depends on the category of app you would like to build since the cost relies on multiple factors.
5. Are there any risks associated with app monetization?
Some of the risks surrounding app monetization are dynamic market demands, competition from other apps, and dynamic user preferences.