The secrets to making money with mobile apps

There are hundreds of thousands of iOS and Android apps for buyers, but most don't make a dime

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In some cases, a subscription model makes sense. Certainly, for a high-quality magazine like The Economist, which doesn't repeat the same news everyone else has, a subscription is worth the reader's money. Outside of media, I suspect the subscription model is a harder sell, though we'll certainly see it with services such as the CloudOn Office virtual environment (currently offered for free as a teaser). We also see it with Quickoffice Connect, an attempt to get people to subscribe to the Quickoffice Office-editing suite rather than buying it just one time. However, Quickoffice Connect is a cautionary tale, as the subscription offering is a poor product that will hinder Quickoffice's future attempts to convert users to ongoing payments -- the same issue we see with Adobe's attempt to convert its Creative Suite users into subscribers for a product that hasn't justified its frequent upgrades for some time.

Laurs has created what he calls a user engagement model representing this app pricing strategy, as shown below.

GetJar mobile application user engagement model

As you can see, it weighs three factors to steer you to the best pricing model:

  • Utility, meaning how useful a person finds the app
  • Engagement, meaning how often a person uses the app
  • Value, meaning how much the person likes what the app provides, relative to the universe of other options

As the slide above shows, how those three facets combine indicates the way to make the most money from the apps.

There's another factor to consider, Laurs says: marketability. Free apps, including "freemium" titles that allow the download for free but use ads or in-app purchases to make money, are the easiest to market. People like free, even if they know there's money being made off them in some other way; thus, it's easier to market a free app over a paid app. But the marketing cost shouldn't be your primary criterion; attracting a lot of users who aren't paying for an app or end up using it little, thus not getting you the ad or in-app revenues you counted on, doesn't make you the money you sought in the first place.

No matter your pricing model, remember one more thing: The apps have to be good at what they do and how users engage with them. Quality still matters most to gain customer loyalty and referrals to their friends and colleagues.

This article, "The secrets to making money with mobile apps," was originally published at Read more of Galen Gruman's Mobile Edge blog and follow the latest developments in mobile technology at Follow Galen's mobile musings on Twitter at MobileGalen. For the latest business technology news, follow on Twitter.

Copyright © 2012 IDG Communications, Inc.

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