Building the Business Case

Profiting from Mobile Applications

 

 

Profiting from Mobile Applications

As with all businesses, making a profit means getting more money coming in from your customers than you are paying out to cover your costs.  

For some apps, there is no need to for the app itself to be profitable.  If you are selling something, then a catalogue app may justify itself by increasing your sales. The cost of the app is then a cost to be included in the marketing budget.

You may also need to build an app because your competitors have one.  Most supermarket chains have apps that allow customers to order their products for delivery.   A supermarket that does not offer this service is bound to loose some sales to their competitors.  

Sources of Revenue

Several business models are possible depending on the customer’s business needs.

Charging for your app on the app store

Your app can be downloaded for a price from the App stores.  The price should obviously reflect the value of the app you are selling.

Apple and Google both take 30% of the price of the app.  Obviously if your app  is free, then there is no percentage to pay to the stores

In-app purchases

In-app purchases are for digital content such as subscriptions, or adding extra features.  The app is almost always free on the app store, but the user has to pay for some functions.   In-app purchases are frequently used in games apps to give the player additional abilities or access to further levels.  

In app purchases are used by many developers because it is a good way of giving users a basic version of the app for free, followed by an upgrade to the premium version. 

Subscriptions

In app purchases can also be used to buy subscriptions for content and services delivered through the app - for example a trade news letter which includes valuable information.  

Apple and Google charge 30% of the revenue for a subscription, so this model may not work well for you. Note that Apple and Google are both receiving 30% of all your subscription revenue for the lifetime of the subscription. This may still be worthwhile if you win additional subscriptions through the app.

Including Adverts from advertising agencies 

Advertisers, just like app developers, recognise the app revolution, and how important mobile users can be as a target for advertising. Apps also allow new and clever ideas, such as proximity based marketing (advertising is displayed for something that is located near the user). 

Putting advertising in your app is a way of monetising the app if you have a sufficiently large user base.  Your app can be free to download, but you will make money from advertising revenue. 

Apple Google and other third parties provide mechanisms by which adverts can be included in your app.  This is similar to including Google ads on your website.  Apple and Google provide the actual advertising content, your app just needs to include pages or space where the advertisements will be displayed.  

The downside of advertising is that it will turn some users off.  Advertising is distracting and annoying to some users.  You will need to attract a lot of users to make advertising worthwhile.  

Including your own adverts

You can include your own advertisements in an app by adding appropriate content pages.  A guidebook app can include pages for hotels, restaurants and other attractions.   As the app will be downloaded by users who are visiting the places described by the app, this kind of promotion will be valuable.  

Including your own advertisements means that you have to sell the advertising yourself, but you have control over what content is included, and you can set a reasonable price.  

Sponsorship

Sponsorship is a form of advertising, but worth considering as a separate concept as it applies to some types of apps better than others.  Here’s an example.

If you are building an app fro a festival or a conference that will attract many visitors, it is often the case that the event itself is sponsored by businesses and other enterprises.  Adding these sponsors to the app will help promote them.  You can include pages in the app as additional value for sponsors.  

Cost of building and running an app

The cost of building an app will obviously depend on how complicated it is.  You can start working out how much you need to budget for by looking at the ‘What can you do with an app’ pages on this website which give a guide to the cost of the features we offer. 

You should also include the costs of running your app.   This will depend very much on how often you need to update that app, and how much effort you need to dedicate to handling orders, requests and feedback from your users.  Unless your app is completely static and doesn’t have any user input, there will always be a need for someone to sped time managing it. 

You should consider infrastructure costs:  If TempleDynamic builds the complete system, the cost of servers and internet connection is included.  However we can build apps that interface with your own servers - to exchange data with your databases or website for example.   In this case make sure you take into account any costs involved in allowing your systems to work with the app.