In this five part series of posts we will be investigating the reasons to use the freemium app model, how to earn money from your free apps and the obstacles you might face if you go free.
Part 1 – Monetize Your App – Free
Part 2 – Monetize Your App: Ad Supported
Part 3 – Monetize Your App: Sponsorships
Part 4 – Monetize Your App: Affiliate Sales
Part 5 – Monetize Your App – In-App Purchases
One of the advantages of releasing an app in the Apple App Store is the user community is willing to pay for apps and games unlike some of the other App Stores. You’ll notice in the chart below that the Apple App Store contains 70% paid apps compared to the Android store which only contains about 35% paid apps. The main reason is the Apple users are used to paying for quality, they bought the phone for a premium and they are willing to pay for apps.
Back in the day if you were to sell software the only way to release it was in a box on a store shelf. As an independent developer you would need to get published by one of the major studios to release it. The greatest opportunity the App Store gave developers is the ability to cut out the middle man and sell directly to the users, and for only a 30% cut for Apple. That’s not a bad percentage if you are releasing it yourself, but if you do get a publishing deal expect them to take 50% of the 70% you receive leaving you with less than half of the profits of your app.
There are over 800,000 apps in the App Store right now. The market is highly saturated. Just name a potential use and most likely there is already an app for that. So, your app will have to compete with a lot of similar apps, some of which probably come free of charge.
Although apps are rather cheap these days, when a user sees your app, they are likely to go and check whether there are similar (free) apps which do the same thing. If they find it, it is likely that they will try it first. After all, they don’t have to pay anything to test it. But, if they see that you also offer a lite version of the app, your chances of getting them to install either full or lite version grow significantly.
There are many reasons why you may want to release your app for free:
- You are a brand and you want the most user engagement you can get since the app is more than likely a marketing tool for your company.
- Your app is used for your portfolio to showcase your talents so you can get a position at a larger company building paid apps.
- You have a social app that needs as many users as possible, users will try most apps if they are free.
- You are releasing a Lite Version of your app for users to try, then link to the paid app for all the premium features.
- Release it as a Freemium app and make money with ads or in-app purchases. (More on these in future posts)
Keep in mind, as an independent developer it is much more powerful to have an app with a lot of downloads and reviews than to have an app that is practically invisible. See this as a marketing expense for future projects (to have a good project which will attract some clients).