When looking for business models for your mobile application, you have several different methods at your disposal. You can opt for subscription services, in-app purchases, pay per downloads, the freemium model or advertising supported models. However, all of these approaches fall into two categories: having users pay for your app content or having advertisers pay for your app content. Consumers today are becoming increasingly resistant to paying for mobile content, leading many mobile publishers to turn towards advertising supported models for revenue flow.
Although many consumers still download mobile apps all the time, a shrinking few of them still pay for these downloads. Last year alone only 14% of mobile apps downloaded were paid apps. Android users in particular will not pay for mobile apps, with only 34% of Android users reporting paying for mobile app downloads. This is possibly due to the fact that 73% of the apps on the Android marketplace are free. Of these free apps, 80% of them use advertising supported models. iPhone apps fared much better, with 70% of iPhone users having downloaded a paid app within the past 12 months.
Free apps are also more likely to be downloaded that paid apps, according to a recent study conducted by Cambridge University computer scientists. The study found that only 0.2% of paid apps were ever downloaded over 10,000 times, while 20% of free apps went on to secure 10,000 downloads or more.
Successfully monetizing a mobile application is a tricky proposition. With so many free mobile apps available on the Android and Apple App stores, it’s hard to convince a user to pay for your paid app when so many free alternatives exist. As advertising supported mobile apps become more popular though, and mobile advertising platforms become more robust and personalized, we anticipate a big shift towards this direction that’s embraced by both the consumers and mobile app publishers alike.