The Breakdown: Generating Revenue from Your Business App

One of the core tenets of entrepreneurship is to be where your customers are and in 2021 that means having a presence on the app store. With more people spending more time on their mobile applications, smartphones have become one of the top platforms for consumers to interact with brands. Smartphones compete and beat responsive websites in most industries.

 

So what’s the holdup? Why hasn’t every single business already deployed its own business app? There are numerous reasons but it all boils down to the cost and potential value. We’ve already broken down the cost of building an app in a previous article but what about the value? An application that gets thousands of engagements every month but fails to convert those engagements into sales or revenue might still be a bad decision.

 

Related: The Breakdown: Actual Costs Involved in App Development in 2021

 

In this installment of our Breakdown series, we’ll take a look at the potential lower and upper limits of revenue from a business app, the different types of mobile apps, and some important considerations to make when deploying an app to maximize revenue.

The Current State of Mobile Apps for Businesses

According to a recent App Annie report, quarter Q1 2020 is observed as the largest quarter of customers spending time on apps. The time spent on gaming apps over the world increases by 20% every year. In fact, an average American spends 3 hours and 43 minutes a day on mobile, and 90% of mobile time is spent on apps, which is a healthy indicator for the scope of business growth through mobile apps.  

time spent in gaming apps

But at the same time, this explosive growth means that all of your competitors have either already deployed an mobile application or are actively working on it. With the increased competition in the market, your app’s success will depend on taking additional steps to plan ahead. 

 

 

One of the simplest ways you can do this is by answering four simple questions:

 

  • What type of app is used the most?
  • Which platform generates good revenue for apps?
  • Do I need to create a paid or free apps?
  • What all SEO aspects are considered before launching it on the play store?” We will look into these topics shortly.
  • What is your budget for application development?

 

Different Types of Applications and their Popularity 

  • Gaming 

The gaming sector isn’t just one of the biggest in the entertainment industry but also in the mobile apps industry. It is a massive industry that generated nearly $80 billion in revenue just last year. And while it is possible for businesses to game-ify different aspects of their customer experience including customer loyalty and rewards programs, most business apps do not belong to this category.

  • Social Media 

The statistics point to the gaming apps as the most successful at generating direct revenue but that they in 2021, they’re the most downloaded apps nor the most used – that spot belongs to social media apps. As of now, 2nd June 2020, the most downloaded apps are ZOOM, TikTok, Facebook, Watsapp, and Instagram.

 

Most businesses do today have presence on social media platforms but only a very small percentage have developed their own platforms for their communities. 

  • Productivity

One of the fastest growing types of mobile apps belong to the productivity category. These apps are usually targeted towards working people and students. And because these apps make a direct impact on the Quality of Life aspect of users, they are very successful at justifying their price tags and thus at generating revenue. 

 

Additionally, the operating system on which your app is deployed also plays a role. 

Monetization Strategies: How Businesses Make Money from Apps

There are numerous app monetization strategies but not all of them apply to business applications, and those that do deliver varying results. For instance, the most common monetization strategies is in-app advertisements. However, in-app ads can be intrusive and negatively affect the customer experience.

 

Instead, we’ve listed the top five monetization strategies that  businesses can use to generate revenue from mobile apps without sacrificing brand value or customer experience.

  • In-app Purchases

This is one of the more obvious monetization strategies – simply build your app as another Point of Sale. However, in-store purchases aren’t limited to digital storefronts. Companies can also create simple but addictive game mechanics that encourage some of “powerups” that can be purchased with real money. Similarly, promoting digital wallets is another way to generate revenue from the app.

Choosing a paid app model is the second most common way of monetization. This method involves a one-time, upfront payment to download and use the app. The biggest benefit of going this route is the simplicity.

 

However, the upfront cost can be a deterrent which is why the paid app model is often blended with another strategy such as freemium or demo/trial which allows users to test out the application before fully committing. 

  • Loyalty/Rewards Program

Customer loyalty programs are a great way to retain customers over long periods of time and increase sales at the same time. Many companies including Starbucks, Domino’s, Nike, and North Face have implemented their loyalty programs in mobile apps which through better deals, easier account management, and gamifying the rewards system (such as Spin the Wheel and quizzes). 

  • Push Notifications 

Checking emails or logging into the website to get updates can be a tedious process and consumers today are far more used to getting notifications right on their smartphone’s home screen, which can be done with a mobile app. More importantly, companies can have a direct line of communication with users to share exciting new deals and sales.

  • Subscription Model

Finally, we have the subscription model which is similar to the paid app model but replaces the one-time fee with a recurring subscription. This subscription unlocks more features and content. Companies regularly publish create high-quality content in the form of informative articles and guides, video tutorials, entertainment videos, etc and lock it behind a paywall.  

 

The monetization strategy you choose will have a big impact on the revenue. Generally, subscription models drives the highest revenue but it also has a high cost. On the other end, ads have very little costs but usually create a smaller revenue stream – unless you develop a viral app like Flappy Bird in which case, even north of $1.5 million USD in monthly ad revenue is possible.

 

In a nutshell, there is no upper limit to the revenue you can generate from your app but even with a modestly successful app (1,000 active users), businesses can generate anywhere between $200 to $500 per day, especially if the app continues to grow.

Impact of OS and Platform on Revenue

The success of an app depends on the market variation and popularity of platforms. For instance, one of the differences between the two biggest mobile app markets is the earnings of their users, which is a good indicator of their spending power. Though the income difference between Android and iOS users is reducing, the average income of Android users is $61,000, compared to the average income of iPhone users $85,000.

 

Furthermore, Android-based devices are used in a wider range of income groups due to the lower prices. This means that having an Android app could reach a more significant number of customers (granted you’re targeting a wider spectrum of income groups). 

 

On the other hand, due to the higher lower-limit of iOS devices, iOS apps can be priced higher. The engagement of iOS users is also 9 hours more than the average Android users. Many companies also issue iOS devices as company phones so investing in an iOS device makes sense if you’re targeting professionals or if you’re developing a productivity app.

 

Below is the analysis created by SensorTower. It clearly shows the difference in the ranking of apps in the Apple Store and Google Play.

Google play mobile app rankingsGoogle Play Rankings[3]

Here is the list of most downloaded apps on the Apple play store in 2020.

appstore mobile app ranking

 

App Store Ranking[3]

 

The difference in the list of apps displayed in Google Ranking and Apple Ranking shows the difference in the behaviour of users using iOS and Android platforms. 

A Quick Look at ASO

Optimizing your app is a big part of gaining the attention of users and getting your app to the first page of its respective app market. There are different practices that can be adopted depending on how your application is most often downloaded: organic or non-organic app installs. 

 

Organic install matters as these installs are not motivated by paid ads and thus sustain without additional investment. The user installs the app directly through browsing the app store or looking at the charts. 

 

To fully utilize the organic installs, you need to improve the visibility of the keywords using App Store Optimizations (ASO). Using the tricks and tips of ASO, the ranking of apps is increased. The main keyword and pool of keywords are relevant to rank the app. An easy way to know the keywords is to conduct a competitor audit. Looking at the keywords added in the title and their related keywords in descriptions gives a fair idea of a set of keywords for your app. Pick the keywords with the highest potential to have high ranking and high volume. For ASO services approaching a mobile development company could be a better idea.

 

Other things to consider in Organic downloads is to have excellent App ratings and reviews. Reviews and ratings will allow the user to download your app naturally. There are a few other points you need to explore to increase the download:

 

  • App Promotions
  • In-App behavioural analytical tools
  • Add on Features and App Previews in the Apple store

Apps for Integrated Systems

Traditional TVs are obsolete. The introduction of Smart TV is creating a new space for app industries. It includes internet capabilities to access the web, web series, or their shows and information-sharing abilities. Around 57% of households own a Smart TV in the US alone in the year 2018. It is estimated to increase by up to 250 million units by 2040. Netflix, Vudu, Veoh, etc. are some of the popular apps on Smart TV.

Cloud-based Amazon Alex App and Google Home app are the new way of communication. Even these systems give you an opportunity in creating Apps suitable for integrated systems. While creating mobile apps should certainly be your priority, it’s a good idea to keep in mind to extend those apps in the future for the upcoming integrated systems market.

Wrapping up: Making the most out of every buck

Costs only reflect one side of the ROI, the other being the actual revenue, which brings us to the question, how much money can you make from an app?

 

While there is no upper limit, a realistic and reasonable revenue range can be determined for your app, before you even deploy it. For starters, your original investment will have an impact on your revenue.  Apps that are more reliable, scalable, have more features, and faster is far likelier to generate more revenue.

We have seen the app market is experiencing growth in mobile, Smart TV, and integrated systems. The technical and ASO nitty-gritty needs to be considered for a successful launch and rankings of the app. The worldwide gross income for non-game apps looks promising for the year 2021. If you still haven’t tried your hands on launching apps, you better do it.

 

That said, developing an app on your own can be challenging. That’s why hiring a team to make one for you can be the right move.  Big Kitty Labs is one of the leading software development companies in Columbus Ohio that has been developing applications, websites, and software for over 10 years. Contact us for free discovery and consultation on your next project!