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App monetization - Is paid app correct strategy?

| Category: General    

Why would a developer build an app? Is it to Save the World or to achieve World Peace? Mostly no, and the answer is simple - to make profit. And the most critical decision is how to offer the app?  Free of cost, or as a paid app? This is the single decision, has a huge impact on profit, which is the objective of developing the app.

Going by the statistics, during the last few years, we see an unprecedented growth in the number of developers who make apps for the three major players – Google (Android), Apple (iOS) and Microsoft (Windows). And the money paid to developers by these biggies is again huge. So there is an enormous potential for developers to tap. The key lies in the strategy.  

Now, let’s analyze all possible ways to generate revenue with an app.

1. Charge per download – paid app

2. Charge for an upgrading an app

3. Monetize a free app.

All these strategies work, and have generated revenue. (if not, why in the list ) But not all apps are successful. So the real challenge is choosing the strategy which SUITS THE APP best. Yes, we need to find the correlation between the app and the strategy to be used. 

Paid apps are a kind of guaranteed revenue generation strategy, but the fact that, it costs to download the app may makes the potential customer to think twice before downloading the app. So, it is a risk to monetize the app by offering it as a paid app. After all, how many of us are willing to spend, before even we are sure, if the app satisfies us or not. 

So, this brings us to the next strategy in monetizing an app – offer the basic app for free and charge for upgrading to a fully functional app. On paper this plan looks good.  Since it covers the risk for both the parties – service provider and the user. But, the catch here is, when the user is satisfied with the basic app, he might not upgrade, resulting in no revenue generation.  

Now, do I say that the best possible plan is to offer the app for free and monetize the app? To an extent it works. Users like me would never mind one or two adverts popping up while playing a game or listening to music.   But, think of a customer, who uses an app to review his business project, or a user using an app to host a call conference with his team, will this kind of user, be happy with the advertisements popping up, due to monetization?  He might find it disturbing and distracting. This might end in uninstalling the app. 

So, the correct strategy is the one which suits the app best. Tailor-made strategies always work.

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