Your Path to App Revenue: Subscriptions, Ads, or One-Time Buys?

This year, consumer spending on apps will hit $120 billion, according to new data from App Annie (sign-in required). Games will power the bulk of that consumer spending, but apps of all kinds can surely find an audience. How can developers best leverage this flood of users to generate sustainable revenue?

Subscriptions

In its report, App Annie predicts that “consumer spend on in-app subscriptions will largely fuel the 2x growth rate for apps outside of games versus games.” Indeed, Apple and Google have provided developers with an increasing number of tools and revenue incentives to get users to sign up for subscriptions.

For example, under its current setup, Apple reduces its 30 percent cut of subscription-based revenues to 15 percent once a user has been subscribed for more than 12 months. In a July 2018 press release, the company claimed that app subscriptions were up 95 percent from 2017, although it declined to break out any subscription-based revenue data.

If there’s a downside to the subscription model (at least from the developer perspective), it’s a simple one: It’s often difficult to constantly think up new features for an app—and if you’re not delivering those shiny new toys on a regular basis, your users may end up unsubscribing in favor of something new (and who could blame them?).

In-App Advertising

People hate ads. It’s a fact of life, as sure as sunshine and rain. And yet, according to App Annie, some 60 percent more apps will monetize via in-app advertising in the coming year.

“We’ve already seen indications of maturation in advertising strategies for apps leveraging in-app ads as part of their User Acquisition (UA),” the organization wrote in its report. “With more consumers than ever before using mobile, and more time being spent on these devices, it is expected for advertising dollars to follow.”

Sure, that little banner ad along the bottom of your iPad app is annoying—but that minor aggravation is a price that many folks are willing to pay for a “free” app. Just make sure your audience is amenable to advertising before you decide to integrate it, otherwise you’ll experience some blowback.

Good Old-Fashioned Single-Purchase

Yes, subscriptions are “hot” right now. But for those developers who build simple-function apps, or have no intention of spending years releasing new features, offering an app as a one-time purchase is also a good idea. (And keep in mind that iOS users are more inclined to spend money than their Android counterparts.)

The downsides are pretty obvious to anyone who’s spent any time trying to sell an app: There’s a lot of competition out there, and much of it is willing to give away their ad-supported app for free. That plethora of free options makes it difficult for developers to sell an app for 99 cents, much less a higher price-point.

No matter which revenue option you choose, discovery remains a huge issue for any developer who uploads an app to an app store; without a solid marketing campaign and a little luck (actually, make that a lot of luck), it’s easy for a product to instantly get lost in the tide. To make matters worse, if your app is successful, there’s every chance that unscrupulous developers will try to copy your functionality.

Despite those challenges, it’s very possible for a developer to make some money off their latest app, provided they give their audience something valuable and exciting.