How can it be that some apps generate massive profits and others just go negative? The answer is obvious. Not many app entrepreneurs are likely to make bank. According to the latest Vision Mobile’s report, nearly a half of iOS and Android developers are trying hard to break even, They get around $500, and that isn’t even the worst situation. If you think that the mobile app business is a place of paradise, then you’ve got another thing coming.
Building an app for your business needs and developing an app to earn money are entirely different things. Let’s take a look at how to develop an app that brings money.
Find your market
You should pay your special attention to three aspects when building a sustainable software product that can bring money.
Three things to consider when building a mobile app
- Right Timing
- Right Place
- Right Market
Simply put, you need to find a mobile app idea that can meet the needs of the target market. In other words, find a product/ market fit. Marc Andreessen introduced this term meaning under “product/ market fit” a product that can satisfy the target market needs. AirBnb did a great job and succeeded in solving two pains: the lack of customers and the lack of cheap apartments to stay. Though AirBnb hit two birds with one stone, and this is rather an exception than a rule.
According to the Business Model Canvas proposed by Alexander Osterwalder, a product/ market fit for the mobile app development market is a Minimum Viable Product (or MVP). And why is a product/ market fit an MVP but not a fully-functioning mobile app? A great product/ market fit is not a final product. It can emerge, evolve, and even disappear. That’s why it is beneficial to start with a “tryout” product.
There are a few examples that software products as a rule, undergo lots of changes before the official launch of a fully-functioning app. For example, Twitter is the most prominent example in terms of the evolution. The development team changes at least seven different market models until they found a way to monetize the app. Now Twitter offers businesses as well as brands their APIs and other third-party apps as a means to research the user behavior.
One more example of the long way to the success is Instagram. The app was designed as a location-based service of sharing photos inspired by Foursquare. Initially, Instagram had nothing to do with monetization. As soon as Facebook rolled out an indirect advertising strategy, Instagram implemented it.
The owners benefit from sharing photo and video which brands create on Instagram and then share with their Facebook audience. But Facebook has gone further, and now there is targeted advertising based on Instagram hashtags. For example, if you post a photo with #IDAP, you might see an IDAP ad in your Facebook News Feed.
Developing a mobile app is like playing roulette. The first users of Twitter were status-updaters. And if Twitter had built more advanced features initially, there would have been chances for their failure.
The idea is nothing unless it isn’t properly implemented
It’s a hard truth to consider, the idea is worthless without the implementation. Most startup owners want excessive funding for nothing but an outstanding app idea. Even if you have the most innovative idea, there are chances that somebody has already brought it to life.
Despite the number of blogging sites, WordPress has taken up the market. WordPress found out the key to the success – choose the right community of people who rely on WordPress as a primary source of money. The following resulted in “Premium Themes” that became a great business model to generate revenue.
The main reason of why a startup exists especially in the sphere of app development is to serve the users and solve their needs or pains (more commonly used while discussing the app development issues).
Success formula for a mobile app startup
- Great Development Team
- Great Business Plan
- Great Market Opportunity
- Great Customers
However, lots of startups vanish into thin air due to the lack of funds. It’s common knowledge than 9 out of 10 mobile app startups fail. But still, per Aspera ad Astra. If there aren’t any burdens, no one will work the fingers to the bones to achieve better results.
Assuming that you have every factor working for you. But how to find out what the winning combination is? The truth is, you can’t find it out of the blue.
Long, long ago there was a startup called The Point. It was the predecessor of Kickstarter and Indiegogo. The Point was a social network allowing people take part in collective actions and contribute money to something. Andrew Mason, the founder of The Point and Groupon, had received $1,000,000 before he started the project. It’s definitely a miracle.
It took 10 months to understand that The Point didn’t work. However, such experience helped Mason and his team to shift their focus completely and develop something unique – Groupon.
This is the inability to shift the focus and adapt that makes startups fail. And an MVP gives you a unique opportunity to check your app idea with your target users at low costs and with minimum risks. That’s what you need to build a successful mobile app.
Build an MVP to test your app idea
Building an MVP isn’t as simple as it may seem. The main difficulty is to consider the app features that can showcase the concept of a future app. Sometimes people focus on the features they plan to develop too much. That makes it hard to define the primary idea of the app.
Don’t think of an MVP as a minimum set of features. An MVP is about testing your idea in terms of novelty and investments. There are lots of different MVPs. Some app entrepreneurs use landing pages, but it’s a more appropriate way for web startups than for app builders.
For example, AirBnb used a door-to-door approach in New York when it stopped gained traction. And the reason for the decrease is the low-quality photos that the landlords uploaded to the app. And the owners decided to rent cameras and take professional pictures. They visited lots of dwellings just to improve the listings and make the app work. The following helped double or even triple the number of bookings in New York. Such an approach led to the AirBnb photography program. And the service became a hit.
Find a proper monetization strategy
If your MVP hits the market, it needs to be developed and improved. At this stage, app entrepreneurs start thinking about an adequate strategy of monetization. However, you shouldn’t forget about app improvements since focusing solely on monetization strategies may harden the further app development process. There are lots of monetization strategies to help gain profits. Let’s focus on the most widespread ones.
Top 3 Best App Monetization Models
- In-App Advertising
It’s the most commonly used monetization strategy for mobile apps. App entrepreneurs make money from in-app advertising. Apps with in-app ads are usually free to download. And if you want to use an app without apps, you can always upgrade to premium.
- In-App Purchases
The following strategy implies selling physical or virtual goods within the app which helps the company to generate the revenue. There are a great many of goods and services that can be sold through the app. In this case, the app becomes a powerful sales channel.
In this case, the app is free to download and use, but some advanced features are unavailable in a freemium app version. To unblock the features, you should buy them or upgrade the app to premium. The following monetization strategy helps engage the users who are ready to pay for extra tools.
Don’t focus all your efforts on making an app profitable. The first and foremost concern is to make it useful. Start with an MVP to test your assumptions with real users. And then go for developing a fully-functioning software product that can bring money.
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