What’s your business model?

Unless you are doing charity, you are planning to earn out of your app or indirectly benefit from its usage. Before you even start with the development, you have to be sure what is the app’s business model going to be. That will be the base for a lot of your planning as you move ahead with building your strategy. Let’s do a quick 101 on the business models out there.

1: Free – Like purely free with no strings attached like ads.

2: Free, with ads – These are free, but they are bundled with ads at the top, or with full screen ads at key points during the app’s usage. A bit annoying and can put off your users unless they are addicted to your app(long shot).

3: Freemium – The most talked about model in town. With this model, an app is free to download, but you can do in-app purchases in the app for extra benefits. Immensely used in games where the app is free, but you pay to download coins, goody bags, etc.

4: One time purchase – With this model, you are given a free version of the app, but a critical function is either locked to number of uses or completely locked until the app is unlocked for a one time fee. Typically between 0.99 cents to 4.99 cents. The idea with this model is to get users used to your app and increase their dependency on it. Once they are hooked, due to the crippled state of the app, you are more likely to buy, rather than move on to explore a new app.

5: Pay and use karma – This is the no-frills app which you are required to pay upfront for use. An alternative to this would be a “Lite” app, similar to point 4. If you are hooked enough – you can buy the full version separately instead of unlocking features. We prefer the unlock feature.

One you have all this figure out, you need to pick that nice sweet spot for which you feel your intended audience is going to pay for. User research has shown that users are now more likely to buy a product at $1.99 and leave good feedback over users who buy apps at $0.99. You can again research the sweet spot by asking a sample set of users. How much are they willing to pay? If you get an answer around the price point that you feel it should be, you are on to something. If it’s way off re-calibrate.

In the likely hood of the app been not downloaded, you can always do a sale to bump up purchases!

Comments are closed.