Myths and reality: common misconceptions about app monetization and how to avoid them

  • 24.10.2023
  • Written by Vladyslava Rykova
  • Category: Business, Marketing

Myths about monetization: why is it worth breaking stereotypes?

Many developers and entrepreneurs are faced with the issue of monetizing their applications, and, as a rule, they encounter many opinions and “knowledgeable truths” on this topic. Myths about monetization seem to be widespread everywhere: from forums and blogs to advice from friends. However, how true are these statements? Should you blindly follow “proven” methods, or is it time to understand and destroy the stereotypes that may be holding you back from success? In this article, we will dive into the world of myths and reality of monetization, deal with common misconceptions and give recommendations for overcoming them. Get ready to learn a lot and maybe rethink how you monetize your app.

Монетизация мобильных приложений

Myth 1: Monetization is just advertising

When we think about monetization, the first thing that comes to mind is advertising. Many people believe that placing advertising banners or videos in the application is the only and most effective way to generate income. However, this presentation limits the developer’s options and can even lead to the loss of audiences who are annoyed by excessive or irrelevant advertising.

Other app monetization methods:

  • Paid versions of applications. One of the most obvious monetization methods is to provide the user with a paid version of the application without advertising or with advanced functionality.
  • In-app purchases. Users can purchase in-game items, currencies, access levels, or other additional features. This method is often used in games, but can also be applied to any other application.
  • Subscription. Instead of paying a one-time fee for the app, users can sign up for a subscription and receive regular updates, exclusive content, or other benefits.
  • Affiliate programs and affiliate links. If your app recommends certain products or services, you can earn a commission for each successful purchase or registration.
  • Selling data. With privacy concerns in mind, some apps collect and analyze anonymized user data that can be useful for market research.
  • Functional collaboration. Your app can integrate with other services or apps, providing users with unique experiences and earning rewards for it.

Myth 2: Free apps don’t make money

Many people believe that if an application is free, then it cannot automatically be profitable. This myth probably arose due to the fact that the first mobile applications that generated income were paid. However, with the development of the app ecosystem and the diversity of monetization methods, the market has changed.

Examples of successful free applications:

  • Although this messenger was free for most users, it was monetized through an annual subscription in some countries. Facebook ultimately acquired WhatsApp for $19 billion.
  • This popular video game is available for free, but Epic Games has made billions of dollars thanks to in-app purchases (purchase cosmetics and dances).
  • The dating app uses a monetization model based on subscriptions and in-app purchases. Users can use the basic version for free, but additional features such as endless likes or the ability to see who has liked your profile will have to pay.
  • Pokémon GO. This augmented reality project became a real hit and generated income thanks to in-app purchases, such as pokeballs and other game resources.
  • As one of the most popular social apps in the world, Instagram monetizes through advertising, allowing brands and businesses to promote their products and services on users’ feeds.

These examples show that free apps can be not only popular, but also profitable. The main thing is to choose the right monetization strategy and understand the needs of your target audience.

Myth 3: More features = more money

There is a common misconception among app developers and owners that the more features an app has, the higher its cost and the more monetization opportunities it has. In fact, overloading an application with features can have the opposite effect. Users may become confused by complex navigation, feel overly complicated, and end up abandoning the app in favor of simpler, more intuitive solutions.

How to balance functionality and income?

  • Understanding user needs. Before you add new features, you need to understand what exactly your target audience wants. Analyze reviews, conduct surveys and testing.
  • Minimalist design. Focus on the key features that make your app unique. Unnecessary functions can distract the user and complicate the perception of the main functionality.
  • Modularity. Divide the application into modules or “packages” of functions. Users can start with the basic version and additionally purchase or unlock additional modules as needed.
  • A/B testing. Before introducing a new feature or changing an existing one, test it with a portion of your audience. This will help you understand whether the innovation will improve the user experience or worsen it.
  • Feedback. Regularly collect feedback from users and respond quickly to problems. If a new feature does not bring the expected effect or causes a negative reaction, do not be afraid to remove it or improve it.
  • Monetization through value. Think about which features truly add value to the user and can be monetized. You should not make the basic functions necessary for the application to be paid for.

Myth 4: Difficult monetization = successful monetization

Often, app developers and owners believe that the more complex and varied the monetization system, the more effective it is. They add different levels of subscriptions, multiple in-app purchases, and a variety of ad formats in the belief that this will automatically lead to more revenue. In practice, complex monetization schemes can confuse and alienate the user.

Simplicity and efficiency: what is more important?

  • User experience comes first. If the monetization system is too confusing, it can turn off users. The application should, first of all, be convenient and useful, and monetization should not spoil the overall experience of using it.
  • Clarity and transparency. Users must clearly understand what they are paying for. If you have multiple tiers of subscriptions or different in-app purchase packages, make their descriptions as clear and understandable as possible.
  • Testing and analysis. Before choosing a monetization model, test different options with a portion of your audience. Analyze which approaches generate more revenue and how they affect user retention.
  • Minimalism in monetization. Sometimes it is better to have one simple but effective monetization model than many complex and less transparent ones.
  • Feedback. Listen to your users. If they’re complaining about difficult or intrusive monetization, maybe something needs to change.

Conclusion: On the path to successful monetization

Successful app monetization requires focusing on user needs rather than system complexity. It’s important for developers to focus on transparency, simplicity, and feedback to not only increase revenue, but also maintain audience trust. Real success lies in creating a valuable product that solves specific problems for its users.

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Vladyslava Rykova

Expert in legal marketing. Head of marketing agency MAVR.

Business degree “Master of Business Administration” (MBA).

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