The goal of starting an app, or any kind of business for that matter, is to solve a problem or fulfill a need, while making a healthy profit to sustain/grow the business and make founders and investors happy.
This is why choosing the right business model and pricing correctly are two very important things.
We touched on the subject of app business models in our first, and most viewed post. We will now take a closer look at the most common ones, share the good & bad about them, and give some examples on each. So without further ado, let’s jump right into it.
One of the most common app business models and our personal favorite. Under the freemium model, a basic version of the app is free for users to use, with access to extra features given at a price, most commonly in the form of a monthly/yearly subscription fee.
Paid apps are listed on the online stores for a price and can’t be downloaded and tried for free; the only way to start using them is to pay for them upfront.
Mostly used in games and is often referred to as the addictive model. We’ve all played games like Candy Crush or Farmville, and we’ve all been very tempted to buy extra lives just to play a few more rounds, or buy that power-up because it would help us compete better with our friends.
Ads aren’t recommended because they negatively, and sometimes severely, affect user experience. They do however become a good option when they add direct value to users and are placed strategically in an app. A very good example of that is Snapchat’s discover page - all the stories on the discover page are ads, but they add direct value to the users.
Choosing the right business model might not always be easy. However, two factors should always guide our choice, and they are beautifully captured in a question we can ask ourselves: What business model best serves our users, and is most likely to maximize our app’s profit?
It’s a needle worth finding in the haystack.