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Understanding Different Business Models for Your App

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Software-based startups are entering the market by the thousands. The landscape is still very attractive for a number of reasons; for starters, there are problems that you can still solve with an app, which means there are plenty of opportunities to develop an app that pleases its users.

There is also the fact that apps are becoming easier to develop. The entry barrier into the app landscape is lower than ever now that there are frameworks, SDKs, and other development tools to use. You don’t have to be an expert programmer to build the first mockup for your app.

The real challenge, however, is choosing a business model for the app. There are several ways you can monetize your app, and we are going to review some business models in this article.

Free with Ads

If you take a look at the landscape right now, the majority of apps still rely on advertising revenue for monetization. Ads are the easiest way to make money from your app, especially if the app is popular. Ads are also easy to install, plus you don’t have to maintain the advertising network yourself.

Existing ad networks offer appealing payouts for app developers. As long as you have thousands of users benefiting from your app, you can use ads to monetize it once and for all. There is just one small drawback, however, and that is that ads tend to annoy your users.

Premium Apps

Another common business model is offering the app as a premium app. You charge a one-time fee for the app. The amount you charge for the app depends on the value you deliver and the market segment you target.

While pricing is a huge factor, it is not the only one. One app, for example, could be priced at $999 without offering any real value, but it sells like crazy thanks to the marketing hype around its launch. Another similar app is available for $.99, but it doesn’t sell as much.

Software as a Solution

The Software as a Solution (SaaS) model is an interesting one to explore. You basically charge the user’s rent for using your app or service. Instead of paying a one-time fee, you offer the app or service at a low monthly cost.

The low monthly cost is attracting more users. Users basically love the idea of not having to spend hundreds on premium apps (i.e. design suites) and can instead get them for lower monthly fees.

SaaS has several variations. The most famous one is iPaaS from PieSync, a leading synchronization platform for data integration. The article “What is iPaas? A guide to getting started & best practices” from PieSync will give you a clearer idea of this business model.

Choosing the Right One

There is no surefire way to choose a business model. Each business model has its advantages and disadvantages. The right one for your app depends on the kind of app (or services) you offer and the market segment you want to target.

There is, however, one more tip to keep in mind – you have to have a clear business model from the start. The only way you can monetize your app successfully is by having a business model that suits the customers best.

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