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TOP 5 Business Models for App Developers

Oct 2nd 2015 at 6:38 AM

Each app developer wants his product to be on sale and succeed. However, everyone has his own definition of success. Someone measures it by the amount of profit an application makes. No doubt, it’s one of the significant parts of building and promoting an <!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> app, especially when you want to earn money from it.

Of course, the best way to help your product win is to understand the needs of users. Due to this, you have an opportunity to make the app better in accordance with preferences of your target audience. Moreover, it’s important to consider different business models before monetizing your future application.

Nowadays, people have developed some smart ways that bring the grist to the mill. Let’s discuss some of them here. Still keep in mind that different categories of apps can have various optimal business models.

1. E-Commerce

It’s not surprising that with market players like Amazon, Groupon, Target and Walgreen, mobile e-commerce produces the most income in the app industry. The latest reports show that clients are increasingly assimilating this type of shopping, so this sector will keep on growing. If you decide to use this business model, you have to take into consideration the backend processes that are important for work. You can approach it in two ways: have virtual inventory and buy/sell others’ inventory or have a physical collection of goods and sell your own services.

2. Royalties and licensing

This type of business model called a “high risk, high reward” game. The most usual way to get royalties is to offer your product to the leading device manufacturer like HTC, Samsung or Motorola and arrange for pre-installing it on their devices. But, note that Apple never does this. In this case, for each device that is activated those players will make you a pre-agreed upon royalty fee. As an alternative, you can license your application out to one of such companies, so that they have an opportunity to use it under their own name. Keep in mind, this business model is uncommon for startup applications because it takes good connections, nice reputation and a significant amount of money and time.

3. Contract work

For developers, contract work is a sure bet because, on average, it provides a developer with comfortable monthly income. In this situation, clients make an order for desired product with their specific requirements. As a freelancer, you have a possibility to make more money that you do as a permanent member of staff at the company. But actually, you have to be able to deal with irregular income as orders can vary from time to time.

4. Developer services

At modern age, software is a great business, so there is a buoyant demand for supporting services and materials. Niche services like BaaS, SaaS, PaaS and others spread rapidly to support the growing needs of developers. Cover the need of developers is like selling pickaxes during the gold rush. But to succeed there you firstly need to find out what this tool is and afterward be able to create and provide it.

5. Subscription

A subscription is a profitable option for big screen smartphones and tablet owners. There are numerous examples of application that provide their paying users with books, music, movies, newspapers, etc. For a fixed price per month or year, clients can use all media they need. If you produce own content, you surely need a big budget for this strategy because offering third party content can lead to low profit. Moreover, don’t forget about copyright rules when it comes to movie and music industries.

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