How Do App Developers Make Money from Their App

Illustration by Holly Guacamolly via Dribbble
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As we refer to them, apps or mobile applications have been in demand for quite a while now. The need for apps never eases, and the demand has led many people to choose app development as their Career option or their only source of income.

In the year 2021, the application development field has been projected to raise a sum of $693 billion, whereas, in 2020, it was $581.9 billion. The app development field is a viable path to choose from if you are ready to put in some effort and have enough knowledge about what problem you will target your app upon.

Usually, people prefer apps that are primarily user-centered and which serve a specific purpose or function. For example, a food delivery app can only be used for ordering food and not play games with your friends. Applications have a diverse reach amongst users. For example, there is always an app for, Business, Camera app, ordering food, etc.

App Factors to Consider

Before we discuss how App developers generate capital out of our applications, lets us first discuss what are the factors on which our application depends.

 icon-angle-right Purpose of the application

Regarding getting some side income from the app, you should know what problem you are targeting through your app and how your app caters to that problem-solving methodologies. An app that serves no purpose is likely not to get that much attention as compared to an application that has a basic and most important role to play.

 icon-angle-right Target Audience

When making an application, you should be well-hearsed with what type of audience your application will target. If the major users with which the app targets are businessmen, you can offer only a limited set of services and keep the rest as paid services. If your application will be used by kids, you can offer most of the services free.

 icon-angle-right Competitive Analysis

You should be well aware of what technologies and methods your competitors will use. Applications similar to yours can help get an insight into where your application and competitors’ application stands in terms of money-making strategies.

How App Developers Earn Money

Now let’s talk about how developers earn money through their applications:

How App Developers Make Money
Illustration by Nikolos N via Dribbble

#1. In-App advertising

The application is free to download. The developers put it inside some advertising banners, and the income generated from the app depends solely upon the users’ interaction with the advertisement. This revenue method is considered the most profitable and the only revenue method that provides the app developer with a reasonable sum of money.

#2. Premium app version

There are specific applications in the market or play stores where you can download and use free features. Still, after a while, the application will ask for a donation which will be needed to unlock the premium version or some parts of the application which can be anything like no ads, coins, game currency, etc.

#3. Subscription

Another revenue-generating method is a subscription where you offer your app’s best services for a month or so and charge them money based on that. Many cloud services, music, or video markets use this method to generate a decent income through your application. For example, Google Music, Spotify, and Youtube.

#4. Affiliate marketing

This method involves supporting a third-party service or product to generate more revenue. The developer of the application uses a pop-up advertisement method to sell or promote any product of the third-party service.

#5. In-app/In-stream video ads

Most videos lasting between 25-30 seconds get automatically played while the user interacts well within the app components. This solely depends upon the user’s time of interaction with the app and whether or not he needs some bonuses, lives, additional features within the app. It is a win-win situation for everyone, including the advertiser, app developer, and app user. The reward is time-limited and varies according to the lucrative ad type.

#6. Incentivized ads

Incentivized advertisements are those ads’ interactions with the user, including filling out a survey(Sponsored). You do some content sharing which helps in the overall revenue system of the application. These advertisements can help the users to get some additional features of the application.

This strategy allows the creation of an app that engages loyalty amongst the users for the app. Most people who are interacting with such ads mostly pay keen attention to the brand behind it as a whole.

#7. Physical Purchases

Many eCommerce websites make use of applications that are free for selling out branded products and gifts. The angry bird was one such game that generated a massive amount of revenue by selling off branded products of their own.

To encourage app developers to use this strategy, Amazon has started their own service called Merch by Amazon, enabling publishers to sell their own artwork. App developers can publish their artwork on amazon’s server and get their products promoted. To make things work efficiently, Amazon even works to provide genuine revenue out of this service.

#8. Pay to Download Applications

Some applications need a fee to download and use them. You cannot download or use them without paying the developer the amount of fee or donation the developer requires. These applications are made only for those users who can pay a nominal fee for using some features and can pay later for adding any extra features in the app or the subscription as a whole.

The developer usually fixes an amount that does not incur him a loss and keeps him on the profit side considering the CPI(Cost per install) charges and some third-party server charges and keep the application working and giving away stable updates with coming time.

#9. Selling Data

As every user of the app knows, several applications collect a lot of user data based on how a user of the app interacts with the application, how much the user uses it, and what all searches the user performs while browsing the internet.

All this important data is desired by many officials working in different fields. This means that the developers of the free applications can collect and sell the user-sensitive data to these researchers and make a good decent amount of money. The data which these applications collect is majorly the email address of the user, social media accounts handles, and some personal preferences as in which genre music do you like, your food preferences, etc.

If any developer is collecting such user information, then you have two ways to generate your income. You can either sell this user data, or you can store the raw data and then use it for processing and showing advertisements within the application. If the data is useful, then any marketing company will be ready to either buy the data or might be willing to show specific ads in relation to what the user searched on the internet a while ago.

FAQ About Earning Money

These were some of the methods you can use to generate a decent amount of income in your application. Let’s wrap up this article with some FAQs about earning money.

 icon-check-square-o Which platform makes the most money?

Well, that varies just upon how the users use that application and for how much time. It has been found that over 30% of the iOS app developers earn $5000 through their apps as compared to 16% of the revenue generated by android iOS developers. The primary reason for such a low revenue percentage is the piracy issue. It is too easy to modify the application’s internal contents and provide most of the free app contents.

 icon-check-square-o Do free apps make money?

Well, there are several ways to generate income out of free apps, as we told previously. You can either go for In-app purchases, Sponsorship, or Affiliate marketing. Every method gives around a decent side income and depends solely upon how the user interacts with the advertisement banners.

 icon-check-square-o What are the most profitable app categories?

Suppose we are talking about those applications that give the best income for their parents’ apps. For example, gaming applications, Music applications and Video applications are some categories. If you are an app developer who has a decent reach, you can do market analysis to know the user demands and the features.

These are what you should be aware of when you are talking about revenue earning through app development.

Conclusion

Among the various ways to make money out of applications, the most important thing that still prevails and comes out as the best of the list is the different types of advertisements prevalent among different applications. If you are an application developer and focussing on making an app that counters every significant problem of the society and helps to create a revenue overall after cutting down the expenses as a whole.

The monetization plan of the application should align with your purpose of the application as a whole. Since only a small number of users will be interacting with the advertisement and bringing you revenue, it is better to generate a gathering or growing the reach of the application on a mass level so that even minimal of the revenue from a single user comes out as a rewarding amount for the app developer.

About the Author!

Rick Boklage is working for Focus It Solution. Focus It Solutions helps businesses embrace technology and offers custom web-application services. Our developers create robust and reliable web applications for diverse industries such as healthcare, insurance, banking, manufacturing, and many more. Get in touch with him now for any assistance regarding Web Development. Follow his company, Focus It Solution on Linkedin.

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