Unfortunately, building a sustainable mobile app monetization model is harder than it seems in a market where 80-90 percent of mobile apps released in app stores are abandoned after a single use. Before you embark on the process of designing, developing, and launching an app, it’s worth your thought and energy to come up with a sustainable mobile business model to make your mobile app dreams come true and keep your platform afloat.
In today’s mobile app ecosystem, more businesses are choosing subscription-based models to grow sustainably. Today, we’ll look at how and why this can be done.
What is app monetization?
To back you up, let’s clear up the basics of app monetization. Simply put, app monetization is the process of generating revenue from your mobile app.
Since the goal of app monetization is to generate revenue for your app, the model chosen can ensure survival or the failure of your business. .
Before landing on a subscription retention model, you’ll first need to assess the range of factors that contribute to determining whether this is the optimal pricing model for your platform.
Subscription models offer one or more payment tiers. Typically, the basic level is available for free, called the “freemium” level, and the paid levels unlock other content that only a small subset of users will take advantage of. As a result, your power users end up paying for your free users.
What is the difference between an in-app purchase and a subscription model?
Relying on in-app purchases, or IAPs, to monetize your app is different than using a subscription-based model. In-app purchases refer to offers that users purchase within the application, such as virtual services, assets or exclusive experiences. The IAP model also applies to apps that allow users to purchase physical goods, such as food orders from your delivery app, items from your e-commerce store, or transportation services.
Purchases on The App may also refer to flat fees users pay to access certain features of the Gaming Apps. Users can make small purchases in a free app to enhance their experience, such as buying a new skin. In-app purchases are individual transactions, while subscriptions are recurring payments.
With a successful subscription-based monetization strategy, your app can generate revenue without recourse to investor funding.
Subscription models are effective for independent developers or smaller businesses with limited bandwidth and funding. However, one downside to a subscription model is that users probably already have so many subscriptions that they already pay for that incentivizing them to add another one may seem potentially unappealing.
Before you start designing your app in In line with a subscription-based app monetization model, you should evaluate the following:
Your core offer: What is your value proposition? What is the best way to display your offers?
Your users: Who are your users? What are they looking for?
Your price point: What price is reasonable for your specific audience(s)? For example, if your primary audience is teens, consider the subscription rate where you can reasonably price your subscription.
Your vertical: What is your vertical application? and what app monetization strategies have been proven to work for your category? For example, news apps have long used subscription-based models.
In recent years, several factors have contributed to the rise of subscription-based models, including changes in the privacy, greater access to customer data, and more.
Other industry-wide changes have accelerated a transition to subscription models in the mobile industry, such as an increase in financial decisions that give prioritizing mobile devices.
Data shows that in 2021, consumers spent an average of 4.2 hours per day on their mobile devices, with mobile driving 45% more financial decisions according to the State of Mobile 2021 Report.
Now that we’ve covered what a subscription retention model entails, let’s discuss some ways you can increase your chances of success in executing this model .
1) Implement Behavioral Analytics
Companies like Google and Facebook create and implement highly targeted campaigns based on elaborate user profiles. With Americans spending nearly 60 billion hours a year on Google, smaller companies like its mobile app are now held to the same targeting standards that the tech giants set for the rest of the industry.
To support why data collection is key to behavioral targeting, a statistic shows that the average company uses more than 100 MarTech tools.
Within a subscription model, modifying your user experience based on behavioral triggers is one of the best ways to drive long-term engagement and retention.Within subscription models, your users have a higher expectation of personalization because they want to know that the subscription fee they are paying is worth it. Unlike an ad-based model, for example, you have fewer high-value users to please.
2) Leverage Useful Integrations
The use of integrations influences the successful user retention strategies of many market-leading subscription apps. Apps that provide highly personalized experiences often collect data across touch points, using behavior, preference, and purchase data as signals of what to serve their users.
A critical example of an integration that can increase your subscription retention App-based audience is a tool like RevenueCat, which provides a mobile subscription infrastructure for platforms of all sizes, including major apps like VSCO, Notion, Life360 and ClassDojo Count, to power this model to scale.
This type of integration makes creating, analyzing, and growing mobile subscriptions more efficient. RevenueCat allows clients to easily set up subscriber and product management (on iOS, Android and web) and analyze purchase data, all without server code.
For example, the RevenueCat integration helped our music production client Rapchat drive an enhanced subscription-based app experience.
The app works on a Freemium model and sends users various messages to sell them more.
“Our business model is subscription-based: artists can subscribe to Rapchat Gold to unlock all kinds of premium services. functionality including enhanced vocal effects and auto-mastering filters,” said Miller.
Miller prioritizes creating an app experience that users want and need on their journey as artists. Doing so helps the company maximize long-term subscription retention.
“In the end, it’s pretty simple: if we can constantly improve the product and make our customers happy, all the major KPIs, including continue to grow and we’ll have a great business.”
3) Omnichannel Marketing
Multichannel messaging can be a powerful way to drive subscription retention. With multiple messaging channels, you can drive users to maintain or upgrade their subscription. For modern businesses to reach their users effectively, they must be present across all channels to holistically reach users across all platforms and meet their higher expectations for a cohesive customer experience.
For example, apps with a subscription monetization model can use push notifications to prompt users to upgrade, renew their subscription, re-enter the app, and more.
Rapchat, for example, sends special upgrade offers, such as holiday discounts, through multiple channels.
By driving the message home through multiple channels, Rapchat increases your visibility and gives users another conversion opportunity.
During Black Friday/Cyber Monday, for example, they sent out a handsome 60% discount on Rapchat Gold through a variety of channels.
4) Leverage data for greater personalization</h3
Data is increasingly important to mobile-first businesses, especially those leveraging a subscription retention model. Letting data drive your approach to keeping users on your platform helps you satisfy the increased user appetite for personalization. When serving your existing users, you’ll need to offer a product that’s worth the weekly, monthly, or yearly subscription fee you’re asking them to pay.
For example, a Mckinsey study shows that companies that actually use data of leverage behavior are able to outperform their peers by 85 percent in sales and more than 25 percent in gross margin.
Taking an objective approach to retaining your users will involve responding to their direct signals, preferences and characteristics, interactions and lack of interactions with your platform.
5) Improve Ratings and Reviews
Ratings and reviews from your app store contribute to the success of your subscription-based app by making your app more visible and appear more believable to potential users.
It’s important to find ways to collect positive ratings and reviews from existing users to drive future downloads and promote more subscriptions in the future.
One way to improve your app’s ratings and reviews is to run campaigns in one or more messaging channels, such as in-app messages, push notifications, or email, to ask satisfied users to rate and evaluate your application. .
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