Payment Strategies

Strategies for monetising Android and iOS apps

Apps are notoriously difficult to monetise, however if there is enough of an incentive and if the features of the app are addictive enough, people will be willing to pay. Here are a couple of tricks for monetising and increasing revenue in app.

PRODUCT

Credits

Credits are a universally accepted product, which users can purchase to gain access to features in app. Its a kind of in-app currency — you exchange your money for credits and then you use those credits to buy the use of certain features in app, such as access to playing certain games, in gaming apps, or the ability to feature yourself more prominently on a dating app, so as to get more attention. The exchange rate between your currency and credits will vary according to the country, however typically £1 would equal 100 or 200 credits, to give a feeling of value. What happens next, is the user will then go about using the app and the app will automatically deduct credits for the features they are using. As a result the user will use the app freely without feeling they are making any purchases and quickly run out credits, which will then need to be topped up again.

Subscriptions

Subscriptions are a no brainer for a business, they guarantee future revenue and activity in the app. Subscriptions are a kind of economic commitment to an app, validating that the user has enjoyed the app enough, that they will continue to use the app in future. Subscriptions can only be offered with time based products. For example at Badoo they would offer Super Powers, which were a bundle of features offered for a set period of time (7 days, 30 days, 180 days etc.) When a user proceeds to pay for this time based product, there would be a tick box to allow users to subscribe to the feature, so that at the end of the time period, the user would automatically get charged again and there would be no break in the use of the feature.

White Labels

White labelling a product can be an extremely effective way of increasing revenue. By offering essentially the same functionality and app, but with different branding, you have more opportunity of targeting specific user segments. For example Badoo created a white label called Fiesta, for the Latin American market and Bumble, which is aimed at women, showing that users prefer to use an app that resonates with their own identity and that companies would benefit from making many similar customised offerings, rather than creating a one size fits all solution.

PRICING

Micro-payments

Getting a user to pay little and often, rather than paying greater amounts once, is beneficial for both the user and the app. Why? Because users prefer to pay smaller amounts, which requires less thought and emotional involvement, rather than paying for something more expensive, where the user will have to reason with themselves if they actually need it. It also benefits the app, as in the case of subscriptions, these small payments will easily go through, without much detection and will seldom be refused because the user does not have enough funds.

Localised Pricing Points

Apps will inevitably offer products to different markets in their countries currencies. On top of this prices will differ in country to country, so in some countries the app will ultimately be more expensive than in other countries. Different markets will have their price points tested to determine the best price point for that country.

Alterations to Pricing Points

To increase revenue, an app may test increasing price points in certain markets. In some rare cases, an increase in price point will be followed by an increase in purchases, by users who perceive the app to have more value. However more often than not increasing the price point will either have no impact on the number of purchases or indeed a detrimental affect on the number of purchases. To avoid this its best to price high to start with and then to decrease prices, to a more acceptable level with time.

Try before you buy

The users who have never purchases in app, are know an non payers. Users can take a period of time, before they decide to purchase, however, if they still haven’t after a period of time and find themselves in the ‘non payers’ category, the favourite way to incentivise this group to become payers, is to offer credits for free and allow users to try before they buy. One method of doing this, is to implement an offer wall, which rewards users with free credits in exchange for installing and running apps.