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7 ways app development companies can increase profits

The highly competitive global app market is home to thousands of developers and design firms that continue to drive the industry forward with interesting mobile games and utilities. When you’re enjoying the latest free app that you’ve installed, it can feel a lot like a good-natured geek has gifted you with something for no other reason than to improve the quality of your life, but make no mistake about it – almost all apps are developed with the intent of monetization. Whether you’re the owner of an app development company, an aspiring developer, or just an interested third party, here are seven ways development teams are pursuing a higher bottom line:

1. Engineering Innovative Solutions

The fastest way to create instant hype around your app is to develop a solution or tool that hasn’t been made before. Companies that aren’t confident in their ability to engineer solutions in-house may want to bring in someone who has studied engineering management online through a program like the one from Kettering University. With that kind of leadership on board, it becomes easier to assemble a team of engineers who can work together towards the common goal of achieving something groundbreaking and industry-disrupting with a new app.

2. Creating a Spin on Existing Categories

While inventing something entirely new as mentioned in the previous tip is usually the best way to automatically assume a sizeable market share within a given category, developers can also boost their revenue just by re-hashing existing concepts. This can work for any kind of popular game or tool – believe it or not, there are still app companies releasing their own versions of the flashlight app. The goal here is not to become the top option in the category, but just to generate a bit of supplemental income with the addition of yet another app to your product line.

3. Targeting High Value Audiences

Any app developer who relies on ad revenue as part of their monetization strategy should know that advertisers will pay more to put their ads in front of certain high value leads. Thus, one way to increase the value of each impression and click is to make sure your app caters to an audience that high-paying advertisers will be interested in. For example, leads in the travel and vacationing industries are generally open to spending hundreds or even thousands on booking hotel reservations, flights, vehicle rentals, and other travel related expenses.

4. Upselling In-App Purchases

Did you know that many apps earn a substantial portion of their income through in-app purchases? If a user is already willing to spend a lot of time in your app’s interface, chances are they’re interested enough to consider cheap upgrades and/or gaming powerups that will enrich their experience. The easiest way to make in-app purchases available in any style of app is to simply start charging for additional features on an individual basis as they’re added. This technique tends to work best for mobile games, but it can be applied to any kind of app with a bit of creativity.

5. Offering Paid Subscriptions

Building a paid subscriber base can be an excellent way to boost monthly revenue. A relatively small user base of 1,000 subscribers paying you a highly affordable subscription price of only $5 would bring you an extra $5000 per month in revenue. That’s not amazing, but it’s enough to cover most overheads for the majority of small-to-medium size app developers. Even if you find that only a small percentage of users are willing to pay for a subscription, that will be extra revenue that you wouldn’t have earned otherwise. If your app is unique and valuable enough, you may even be able to retain most of your user base while switching to a subscription-only payment structure.

6. Optimizing Ad Location and Appearance

Marketing research has proven that ad placement and design play major roles in click-through rates, conversions, and other essential marketing metrics. The key in this department is finding the right balance that doesn’t annoy users with an overbearing amount of annoyingly placed ads yet still maximizes the monetization potential of the app. Some developers even use slightly tricky tactics like having ads pop up on an area of the screen that users normally click on, such as near the sign-in button, near the device navigation buttons at the bottom, or at the top of the screen near the notifications bar. However, be careful not to overdo the frequency or misleading placement of ads, as it could encourage users to search for alternatives from competitors.

7. Invest in Marketing

While spending time or money on marketing will initially create a loss, the benefits of having a fast-growing user base will usually pay off in the long-term. The best-selling apps of all time which wind up making millions or even billions for their inventors are usually supported by investors and/or purchased in major acquisitions. In either case, investors and prospective buyers will want to see stats that prove the app’s potential. By investing in marketing services, you can gain increased exposure, promote more downloads, and raise all of the appealing figures that will make your app look great on paper.

Should You Make Your Apps Free to Download?

Most app developers know that making your app free to download is an easy way to promote more installs and thereby amass a larger user base. Of course, this can help you earn additional advertising revenue through increased usage of the app. However, there are some cases when charging for the app makes more sense.

For example, if you’re catering to a more niche audience of professionals and/or the functionality is worth a premium price. Perhaps the best approach is to offer two versions – a free version that contains ads plus a paid version that doesn’t pester the user with ads and maybe even provides a few advanced features not found in the free version. Generally, for new apps it’s best to start with the free-to-download approach and then upsell a paid version later on.

Photograph by Lobo Studio Hamburg