As the use of apps becomes increasingly popular, more and more people are jumping on the app bandwagon and starting their own freelance app businesses.
Alex Genadinik, the author of two business books, and some very popular mobile apps, gave us an insider’s look into several aspects of running a mobile app business:
Q: What do you think are the challenges of the mobile app business?
A: The core fundamental challenges are very similar for apps as they are for just about any other kind of business. There are three main fundamental challenges that every company faces, and apps are no different. Those challenges are product quality, marketing, and making sure that the finances of the business make sense. In the mobile app world, the quality requirement is quite high. People want absolutely beautiful apps that make their lives better. There is also the challenge of marketing in that the app stores are quite crowded, and they get more crowded every day. Distribution is becoming a very big challenge for mobile apps. And lastly, few people like to pay for apps. People prefer to get apps for free. And that makes monetization an uphill battle, creating a difficult financial picture.
Q: There is a lot of excitement surrounding mobile apps today. What would you advise someone who is looking to get into the mobile app business?
A: I would advise them to plan the app very well. Before a single line of code for the app is ever written, I would advise to have a clear marketing and monetization plan for the app. I see many people go through the expensive process of building an app in the hopes of it being the next breakout hit, but not having a clear monetization or marketing plan. Additionally, I would advise to figure out how to launch cheaply. Many people spend most of their resources to get to their launch, and then don’t have enough money left to continue to iterate and refine the product. In my book I discuss many fundamentally correct ways to start a business so that you do not waste your resources in the beginning, and are able to build a lasting business.
Q: What are your tips to promote a mobile app?
For most apps, including my http://www.problemio.com apps, the biggest driver of downloads is the app store. While for some apps that means being featured in the app stores, for the vast majority of apps, this means that they must rank well for relevant search keywords. That means choosing your keywords correctly, and then getting good reviews (ranking factor), having people continuously open the app (ranking factor), and having the app open for longer periods of time than competitive apps (ranking factor).
Another ranking factor is the acceleration of downloads that an app gets. If one app gets 50 downloads a day, and another app gets 100 downloads a day, the latter app will eventually outrank the former. But if these are competitive apps that rank for the same keywords, one app may find it difficult to get significantly more downloads than the competitive app. For that reason, I recommend having a strong presence outside of the app store. In my case, I started a YouTube channel https://www.youtube.com/user/Okudjavavich which then drives people back to my apps, and allows me to have more downloads than my competitors. The same is true for your website. If you can drive people there, you can then drive them to download your mobile apps.
Q: What is the best strategy or a business model that fits most apps?
The Freemium business model is by far the most popular business model for mobile apps. And the structure of the app store ecosystems support this model. The freemium business model hinges on giving something of value away for free (free app). That free product puts the app in a position to get a high volume of downloads. And then once that mass of people is using the app, there can be a way to monetize that app by purchasing something inside the app, or doing some other action that generates revenue. Most of my apps work on this principle. Apps which I own that do not work on this principle tend to struggle in the app stores.
Q: What are some of the ways to monetize mobile apps?
There are a number of ways to monetize mobile apps. I’ll start from least effective and go to most effective. The least effective and least attractive monetization strategy is having ads on your app. Users hate them, and that means they will use the app less (negative ranking factor) and there will be a higher chance of having more bad reviews in the app stores (another negative factor). Plus, for all that trouble, ads do not make much money. Most ads may make a few pennies per download at best.
The next best way to make money from an app is to offer affiliate products inside the app. These can be products your users need, and they will be happy that you suggested it. For example, in my apps, which are apps to help people start a business, there is a tutorial to create your own website. And in that tutorial there is an affiliate link to a website hosting company. All websites need hosting anyway. So by offering a product they will need, I give my users an interesting resource to consider, and if they use it, I earn extra revenue.
One of the best ways to make money with an app is by having a repeatable in-app purchase. That can be either with a subscription model, or by figuring out what can be repeatedly sold. In game apps that would be extra points to beat levels. Game apps make advanced levels very difficult to get people who want to get to the next level to pay for the extra boost in lives or points. And if a game has an unlimited number of levels and addicted players, they have been known to earn thousands of dollars from a single user.