“How do I earn from my App?” is the question all developers/ App-owners contemplate at one point or another. The focus is often on the numerous ways one could monetize their App and keep earning from it. But is a good revenue model enough to determine the success of your App and respectable earnings?
Here’s how App owners may foresee their earnings:
Make an App – distribute it for free- get 500,000 downloads within a month – make $$ rest of the year from ads.
After all, why wouldn’t anyone download a free App as long as it does what it says in the description? Stats from all the popular App Stores show free Apps generally have the highest number of downloads anyway.
There’s nothing wrong with the technicality of the thought – in fact, this is a very popular strategy and is likely to generate maximum profits if you pull it off. However, it is the pull-it-off part which is a cause for concern to those who own or plan to own free Apps in the App Store.
The general trend shows that on average, free-App owners have a much lower number of downloads than is required to generate a reasonable amount of revenue. The only free Apps in the Top-100 lists are usually the ones that are backed by established publishers, or corporations who have launched their free Apps to further expand their already established brands, rather than to offer an exclusive mobile-only service. And this is further highlighted by the fact that 80% of App Store revenue is generated from 20% of their publishers. According to Gigaom, an average indie owner of the free App on the App Store is earning less than $500 a month, with a third of them earning even less than $100. This is nowhere near what an App owner should originally have aspired to.
On the other hand, ironically, the paid Apps are generating relatively higher revenues on average for their owners. But as anyone who charges even $0.99 knows, the download count is affected the most as soon as you put a price tag on your App. Why then do these same paid Apps from indie developers out there, despite generally having a lower number of downloads, usually generate more revenue overall?
So wait! Does this mean you should start charging for your joke-of-the-day App?
Judging from how most free Apps are faring, that may seem like the way to go, but every App’s case is unique and you should use this information only to make informed decisions. Just because the trend applies to most, doesn’t mean it must apply to you as well. Consider another scenario for your Joke of the Day App:
You decide to charge $0.99 for your App on the App Store. You wait for the revenue to start flowing but after a week of waiting, you have 25 downloads, and it doesn’t pick up in the following weeks either. Where did you go wrong? Did you market the App? Did you activate your App’s social media pages and advertise aggressively? Did you set the right perimeters for the promotions? Wait – did you check what other options are available to users in the App Store? Do the users even want your App when another one is offering jokes and riddles, let alone pay for it? And those who purchased it, how did they rate it on the App Store?
Yeah… there are a lot of variables, aren’t there? How do you then decide which revenue model to follow? To further complicate matters, there are a dizzying number of revenue models out there: free, free with ads, free with in-app purchases, freemium, paid, paid with in-app purchases etc. and we haven’t even started talking about selling subscriptions yet.
The point is, clearly, revenue model alone cannot determine the success of your App and lead to reliable projections of your earnings. Luckily, there is one other factor that seems to affect earnings of almost all Apps in a predictable manner, regardless of revenue model: User Ratings.
The general trend shows:
Good reviews = More downloads
More downloads = More Money, therefore
Good Reviews = More Money
Over a decade of App Store trends has proven that overall revenue is linked to user ratings. Go ahead, look for popular/ high earning Apps out there and notice how users have generally rated them. It’s true, many App owners witnessed a sharp increase in their number of downloads immediately after positive reviews started coming in. Even 10 five-star reviews showed a sizable increase in downloads for this App owner. You ever notice an App encouraging you to rate it on the App Store before you exit it? These App-owners have clearly realized the value of user ratings. Perhaps, more than the revenue model, this should be the focus of your efforts. After all, user ratings play a vital role in the visibility of your App and reduces perceived risk for those considering to pay to download it.
So What Exactly Should I Do?
While choosing a revenue model remains a vital part of any business plan, encourage your users to rate your App. There are plenty of methods to do it, but more importantly, make sure that those reviews are positive. For this purpose, understand that the quality of your App is of vital importance. Do not enter the market with a half-cooked App, clumsy interface, or obsolete graphics. Ensure a bug free App that offers a clearly defined (and unique) utility to the users that will retain them for longer than just a few weeks. Only then you can ensure the success of your App.
Having taken care of all this, here is one of the ways you can hope for it to play out: you launch your App in the market and promote it as per your plan, and manage to get a few downloads to begin with. Your App is offering a unique feature, or an advanced UI that allows users to more conveniently perform a certain task. This prompts some of them to rate it well on the App Store, and leave positive reviews. Your rankings improve as a result of the positive ratings and your visibility in the App Store increases, allowing more people to come across your App. The positive reviews further encourage an increasing number of users to try out your App – perhaps, even to pay a reasonable sum for it. As the user count increases, your revenues from downloads, ads, in-app purchases, subscriptions, or whatever combination of these you have decided on, start flowing in to increase your profits.
While nothing is set in stone, App-owners can do a lot to give their Apps an advantage in the market if they thoroughly understand its dynamics, and user-psyche. Utilize this knowledge to prioritize that which creates most value, ensures user satisfaction, and drives the sales. Come up with a combination of features, third party integrations, a marketing plan, and revenue model that is sure to address most (if not all) the barriers.