Making Money from an App: Can It Be Done?
The software industry is one of the fastest growing and highest paying in the world. Working at a tech company, salaries for developers are often amongst the highest. While someone in finance might average $75,000 per year at a tech business and a marketing employee could pull in $90,000, the average developer salary at a startup comes in at $102,000. And that’s the average number.
On top of this, the app world is booming. There are literally millions of apps available to download in the App Store, and more than one in four app developers are raking in monthly sales of $5,000 or more. And, considering that more than half of the world’s 19 million developers are writing apps rather than traditional software, it’s easy to see why the app industry is booming.
That said, though, a lot of people get into app development with unrealistic expectations. What about the 75% of developers who aren’t earning $5k or more per month from their app? When you look at the numbers, it turns out that only a very small fraction of apps — less than 1% — are financially successful over the long haul. The question is, then: how do you make money from an app? Is it even possible for the majority of people?
As a developer, you might be accustomed to focusing on the technical aspects of writing code. Maybe you’re not used to thinking about marketing and sales. After all, other people handle those jobs, right? Your job is to write applications, not monetize them.
If you’re a startup, though, you have to wear more than one hat. As an up and coming developer, you’ll need to be thinking about how you’re going to actually monetize your app from day one. As we’ll see below, different monetization strategies have to be incorporated into your app in different ways. There’s not a one size fits all solution when it comes to making money from an app, and it’s important to consider what approach you’re going to take even while you’re still in the design phase.
In this blog post, we’re going to talk about two primary ways that you can make money from an app: in-app purchases and rewarded surveys. First, though, let’s clear up a common misconception about app monetization.
Are you convinced that charing $1.99 or $3.99 for your app is the best way to earn an income from it? Chances are, you’re wrong.
As it turns out, about 98% of app revenue comes from free to download apps. The bottom line is that most users aren’t interested in paying for an app up front, especially if they haven’t had a chance to try it out first.
Paid downloads are also one-time transactions. As we’ll see below, there are better ways to monetize your app that involve recurring payments from your users. Over time, these smaller, recurring transactions can add up to an enormous customer lifetime value, especially as compared to a $1.99 download fee.
Rather than charging users up front for a download, the vast majority of apps are monetized (at least in part) using in-app purchases. We’ve all seen them: maybe it’s a premium subscription option for an otherwise free app (a so-called “freemium app”), or it might take the form of an upgrade or new feature in a gaming app. Whatever the specifics, in-app purchases can generate huge amounts of revenue if they’re implemented correctly.
There are a couple of different approaches to implementing in-app purchases. The first involves getting users to make a one-time purchase that’s good for life. When a user pays to download a new level or character in a gaming app, that’s an example of this type of in-app purchase. Taking this approach can definitely work, and these kinds of microtransactions can be hugely profitable over time, and according to some sources they make up as much as 79% of revenue generated in the U.S. from apps.
The other approach to in-app purchases involves making them available on a repeat basis. In other words, a user makes a purchase that lasts for a predetermined amount of time. After that time is up, they’ll need to purchase the item again. Recurring subscription-based apps are a good example of this. Taking a subscription-based freemium approach is especially useful for startups: you’ll have a rough sense of how much revenue you can expect to generate the following month (assuming you keep your current users), which can be extremely helpful in the early stages of launching an app.
Lots of people are familiar with in-app purchases. But, they’re not the only way to make money from an app.
Call us biased, but here at TheoremReach we’re quite partial to rewarded surveys. We connect developers looking to monetize their apps with researchers who need user data. App users are presented with the opportunity to fill out a survey in order to unlock an app feature or obtain in-app currency. When the user fills out a survey, the researcher gets their data and pays out a predetermined amount to the app developer. Everyone gets what they’re after: a reward for the user, income for the developer, and data for the researcher.
Getting started with rewarded surveys is easy. Sign up for a developer account with TheoremReach here, or contact us with any questions. You’re just a few clicks away from making money with your app!