The single biggest question I get from my clients is how do I better my monetization? AKA, how can my free app make me money?
While most posts on the internet will tell you the general ideas/ ways in which one could extract money from a user, it barely touches on the ‘how’ to be profitable. Perhaps a better question that anyone looking to launch a free app should ask is ‘How do I make my free app profitable?’ because understanding how apps makes money is easy, but how to be profitable is a fairly complex process that takes time and work.
This post I will talk about the things to consider if you want your app to be profitable.
First, what are some of the ways in which an app developer can make money when their app is free?
1) In-app purchases (IAP): This is the most common and known term in the app world for monetization. In-app purchases are purchases made inside that app that allows users to unlock features to be used inside the game such as virtual coins or energy. More than 70% of games in the top grossing apps of all time use this model.
2) Lite & Freemium Upsell: Sometimes a developer will release different versions of the app so that users can play and get a sense of what they can purchase. This is similar to moving the free-line model of try before you buy. Users are more likes guests and limited to features where they are often enticed though locked functionality and desirable features such as being able to save progress or customize their avatars.
3) Ad Revenue: No one wants to ‘dirty’ up their gaming products with ads and pop-ups, but there is no denying ads generate money. Once your app starts getting traffic, ads can be a consistent and profitable revenue source. I have seen some apps where over 70% of their revenues come from video ads even though it offers IAPs. Other types of ad revenue into the funneling of traffic and leveraging your product as an affiliate. (other games paying you for having your users install their app via your app. CPA – cost per acquisition or CPI – Cost per Install).
Now that you know of the top 3 ways in which a freemium app makes money, let’s talk beyond basic monetization and focus on profitability in your Freemium app. Assuming your product is good…(ie. plays well, looks nice, is stable etc.), then the next step is to optimize it. This comes in the form of game design and smart marketing all driven by data and analytics.
Let’s look again at the top 3 ways to monetize and list some of things you may need to consider when you are looking to optimize your app for profitability.
1) In-app purchases (IAP): There are many ways in which one can sell things in a game. Consider the options: IAP can come in the form of on-going virtual good purchases, one-time full access game purchase or subscription model where the app will charge you every month for a set of defined set of features & virtual goods. The secret here is to know when to push this sale onto a user. Here we look at the game design and specifically the economy design (balance of income sources, income sinks) as well as user experience (UX). Some questions you can ask here include: Where do I notice my users getting frustrated? When are they most engaged? What are the session times of the average player? What do my players care about? What do they engaged with the lost? What things can better their game play?
2) Lite & Freemium Upsell: Again, let’s start with asking some questions. If the lite version is to entice the users to buy the more premium product, what are the core features that will give the users an experience that will leave them wanting more? What is enough and what is too much? Where and when do you message your players without being pushy? Once you answer some of these, you will know which features are better off locked and which are better off free. How I usually approach this is to start by locking everything that is not part of the unique selling proposition of the product (core). From there I will play the game and see my natural behavior of game play and note balances in friction as well as flow.
3) Ad Revenue: Be creative with your ads and don’t limit yourself. Ad revenues aren’t just banner ads or video ads. When trying to optimize your ad revenue, start by thinking/mapping all the real estate that can be homes to ads that may offer your users as well as clients value. (Not all ads are bad, sometimes they can actually give credibility to your game if you place them strategically). Some ideas to approach modern in-game advertising include brand sponsorships (themed slot machine), partnerships (special in-game events/promotions) and product placement etc.
You can follow me Twitter @astrogurl or email me at firstname.lastname@example.org for more on how to social casino game design and optimizing your casino apps for profit.