There are more than 3 million apps on both the Apple App Store and Google Play Market. And while many of them could potentially generate millions of dollars, only a small fraction of them actually do.
If you’re looking to build and monetize an app of your own, there are several different variables you should take into account.
Things to Consider While Building Your App
- The difference between iOS and Android
- The most popular monetization models
- The most profitable app categories
The Difference Between iOS and Android
The platform you choose can have a huge impact on your earning potential, due to differences in market shares, users’ payment capacity, and the overall platform popularity.
In terms of usage, iOS takes about 29% of the world market, whereas Android takes almost 71%. Despite such a huge gap, iPhone users are reported to spend 2.5 times more money online than Android users.
The overall income generated by the top 100 app publishers in the first quarter of this year on both stores is about $135 million. iOS apps make up 62% of that revenue, whereas Android apps account for only 38%.
If downloads are what you’re concerned about, that’s one area where the App Store loses to Google Play: the percentage of downloads in the App Store is almost twice as low as in the Google Store.
So, while Apple can offer you more paying users, due to its strong presence in high-revenue markets, Google can give you wider market coverage and downloads.
The Most Popular Monetization Models
Once you’ve chosen your app platform, it’s important to consider the monetization model you will use.
Yes, free apps can generate money. With free apps, you can earn money based on the users’ interactions with the advertisements displayed in the app.
The key benefit of this type of monetization strategy is that there’s a great variety of ad formats, so you can choose the one that best suits your needs in terms of generating revenue and engaging users.
If you’re looking to spend as little money on ads as possible, you might consider going with a classic banner ad. On the flip side, if you’re looking to increase your ad spend, options like rewarded video or native advertising might be better for you.
Keep in mind that unlike other monetization strategies, because of their nature, ads need to be tested and analyzed constantly, which leads to more frequent changes in terms of formats and placements.
Partially Free Apps (Freemium)
Freemium apps, or partially free apps, are a good alternative if you’re not into using ads in your app. Users like the idea of a free app, where they can explore the content and decide for themselves whether the app is worth spending money on. Freemium implies using in-app purchases. They can be used to sell a variety of content like extra lives in games, virtual currency, ads removal options, premium content, etc.
However, according to AppsFlyer research, the majority of users don't make purchases. If you provide value to your users, you might gain their loyalty, which could later turn them into paying customers.
Paid apps charge a one-time download fee allowing users to get an app with all the features available forever. In the early days of app stores, paid apps dominated.
Nowadays, statistics show a different picture. Users prefer free and freemium types of apps, pushing developers to other monetization models rather than just “pay upfront and use.”
The revenue in paid apps is strictly connected to the new users downloading the app. If constantly growing a new user base isn’t a problem for you, then go ahead and set a price for your app.
Choosing the best monetization model greatly depends on the context of your app and the value it provides to its users.
The Most Profitable App Categories
One other consideration to take into account is what category of app you’d like to build. Your choice of an app can dictate which revenue model you choose, as well as which store you’d like to use.
Both Google Play and App Store generated $50 billion in revenue in the first half of 2020. $35 billion of that was earned from mobile games. The global games market is rapidly developing and is expected to reach $196 billion by 2022.
The monetization strategy of game apps usually depends on the game genre. For example, genres like simulation and casual games, which incline users to have a higher level of engagement and game skill, use in-app purchases as a main form of monetization.
Another popular category is dating apps. Currently, the worldwide user base of dating apps is 139 million — but that’s projected to increase to 161 million in the coming years.
These apps are most commonly monetized through subscriptions, which can be very lucrative. Tinder, for example, has generated $433 million in spending across both stores. While free to download, Tinder makes money by offering users premium features like extra likes or unlimited swipes on a monthly or yearly basis.
More and more people choose streaming services for entertainment needs instead of paying for cable connections.
YouTube and TikTok are great examples of top-grossing apps in this category. This year, YouTube has generated $431 million globally, offering the majority of its content for free and generating its revenue via in-app ads and subscriptions.
On the contrary, TikTok, which has generated $421 million in revenue uses a combination of ads and in-app purchases. This approach allowing users to spend real money to purchase TikTok coins to send virtual gifts to their friends.
The global fitness app market is expected to reach $14.64 billion by 2027. Due to the growing penetration of advanced technologies into the healthcare sector, the niche has become a desired piece of the pie.
Sweat is a great example for beginner app developers. Right after its release in late 2015, the app gained a stunning user base, which converted into $100 million yearly revenue. The creator of sweat built an online community converting fans into paying customers, providing workouts, yoga videos, and meal plans on a monthly or yearly basis.
Educational apps can also generate a significant amount of money. Babbel, a lucrative language learning app offering 10-15 minute lessons, focuses on conversational learning
Rather than offering in-app ads or purchases that could distract learners, Babbel uses a subscription-based model. This approach has earned them $115 million in revenue per year.
As you can see, the difference in revenue can vary greatly depending on the category of your app.
How Much Can a Mobile App Earn You in 2021?
Though already massive, the mobile app market is only growing, leaving you plenty of opportunities to create a high-earning product.
Taking into account considerations like platform, monetization strategy, and app category is an important first step in building a highly profitable app in 2021.