How Does An App Makes Money
Apps that make money do so through in-app purchases or microtransactions, as well as direct monetization schemes such as advertising or premium content.
Apps with large userbases tend to use more of the later because they have access to bigger budgets for ads and other marketing strategies.
But how many apps actually implement both types of revenue streams? And which ones are truly loyal to one approach over the other?
It’s tricky to identify these things because there is no standard definition of what it means to be “loyal” to a particular type of app revenue.
So instead of using that word, we will describe some examples of apps that seem to rely mostly on one method but then veer off into the others every now and then. We will call these apps ‘semi-monetized.’
By defining this term clearly, we can talk about why these apps may not make enough money even though they put in effort to earn income via advertisements or in-app purchases.
This article will also discuss how most top grossing iOS apps made their money before 2018 when Apple changed its policy around third party ad SDKs.
In-app purchases
Another way to make money for apps is through in-app purchases. This is when you purchase certain features or content within the app with virtual currency. For example, if an app has a tool that allows you to create pictures, then it might have a fee of one dollar to use this tool.
This one dollar can be spent either once, repeatedly, or even indefinitely. The app must separate these transactions from other sources of income so they do not affect their earnings.
Some examples of in-app purchases include:
Ticket packages to events
Games
Full applications (think iMessage)
You get what you pay for! Make sure you check out our article about how to increase app sales to see more ways that apps make money.
Subscription services
One of the most common ways app makers make money is through subscription services. This is when you pay a monthly or yearly fee to use the app fully.
Many apps offer a free trial period before you have to start paying, but some don’t.
This can be tricky because many people will try the app during this time and then complain that it isn’t good enough or that there are too many bugs.
By having the subscription, though, they keep spending money on the app so it doesn’t matter what others say!
Apps like Netflix and Amazon Prime already have these types of subscriptions, and now we have them in more places than just those two giants.
Some examples include Spotify, Hulu, and YouTube music and video streaming, respectively. You get the same quality as paid accounts, and even without being subscribed, you can still access lots of content.
These type of apps also sometimes offer discounts if you are willing to subscribe longer term instead of per month.
Amazon Affiliate Marketing
Many apps make their money through affiliate marketing. This is when you create a website or app that contains advertisements for products or services, and then you earn a commission for each advertisement or referral to the product or service you linked to.
Most companies use affiliates to promote their products so they can’t directly advertise on your site. By offering your audience discounts or coupons for the advertised item, however, you can still make money from referrals.
You get paid per referrer (the person who sent them there) or per click (when they click the ad). The more people you send to an advertiser’s site, the higher your earnings!
There are many ways to make money with this technique, but you have to be careful about violating any of the terms of the affiliates’ agreements. Make sure to read everything very carefully before using anyone’s link.
Google Adsense
With Adwords, you create advertisements for products or services that will direct users to your app via a link or advertisement. The ads are then displayed directly on the site or application where they will generate revenue through advertising fees from the ad network.
The great thing about this method is that it does not require you to have any special coding knowledge or skills! This means that even if you are not very computer savvy, you can still get some extra income online.
Most people start out by testing the waters with “easy money” such as selling a product or giving away a service free before moving onto more expensive offers. By offering various levels of paid plans, you give yourself room to grow without going too big too quickly.
There are many ways to make additional money through Ads, such as creating Your Own Product or Coupon Code Systems. Both of these types of sites allow you to add products and services and either take a percent of the sale or use coupons to reduce the price slightly.
Facebook Ads
While creating apps is free, most app developers do not get rich doing it. This is because how most people develop their skills is by starting with something simple and then building from there.
If you want to keep developing your talent, you will need to make a lot of apps! Most successful apps are designed to perform a specific task well, so they take advantage of all the features that platform.
By offering things like video chat, live streaming, and other ways to interact with others, these apps gain popularity.
Another way popular apps make money is through advertising. Developers place advertisements for products or services in the app at no cost to them. The advertisers pay to put their ads where many people can see them, so this income adds up very quickly.
You may be familiar with some of these types of ads; there’s about a 0% chance someone would download a movie without seeing at least one ad for it.
Creating a website
Starting your business online does not mean creating a website and calling it a day! You must also create a platform or app that people can access to view your product or service. This is how you make money with your own digital company through what we call the Shopify Business Model.
The more popular your app becomes, the higher your revenue will grow. People will have to pay to use your apps, which means you get paid more for them.
There are many ways to launch your app, and most of them cost no more than $500-$1,000. It’s important to pick your battle- so choose a medium that won’t bankrupt you but will put up enough resistance to distract your competition.
You may want to consider free apps as your starting place before investing in others. There are plenty of free ecommerce platforms like Shopify where anyone can start selling without having to worry about costs.
Offering a paid service
Another way to make money with apps is by offering a paid service or product within your app. For example, you can create an app that allows users to create Instagram style pictures. You could also add filters, layouts, and features to make their photos look even better!
This would be similar to buying premium accounts for social media sites like Facebook, Twitter, and YouTube. Or buying additional features for Photoshop or other graphic design software.
By adding this feature to your own app, you are creating more opportunities for revenue and growth. It’s not only appealing to individuals who use your app, but it proves your app isn’t just a gimmick.
There are many ways to earn extra income through the development of your creative skills.
Linking your app to a website
A very popular way for apps to make money is through creating a login or account profile for their users. This allows people to access additional features of the app, such as letting them upload pictures or let them create blogs within the app!
By having a linked website, the income comes in two ways: revenue from advertisements and affiliate marketing.
Advertising – Companies pay per click ads to show up when someone searches for something related to your app. For example, if you have an online shopping app, then advertisers can advertise sales on similar clothes at cost-effective prices.
Affiliate Marketing – this is where others earn compensation by referring business to you. For example, if you have an ecommerce app that sells shirts, you can send people links to buy shirts directly from you via social media or advertising. They get compensated when a sale happens because they referred the customer to you.
