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How do mobile phone apps and games make money

Publicado por Nacho Vilela

Esta entrada también está disponible en: Spanish

How do mobile phone apps and games make money?

Once you have a good idea for a game or app it’s important to stop and think about how to make enough money to at least cover what you’ve invested to create it.

While there are as many ways to make money from an application as one can imagine, in this article we will discuss the most common business models for apps and games, using some models of well-known apps and games as examples.

I hope you find this helpful as you create your own app!

In app purchase

 

Free Apps + Advertising:

  • Free download with income via banners and ads (iAd, AdMob, millennial media, place play)

Apps published through this format often have a double objective: one, to generate income through impression and ad-banner clicks, and two, to serve as an app or game demo that later has a paying version.

Example: Angry birds free

iAd could pay between $.30 and $3.00 for eCPM (Cost per one thousand impressions), AdMob between $0 and $.50, depending on the number of ad clicks, a factor that determines the eCPM fluctuation.

Free Apps + In-App Purchases:

  • Free download and paid subscription

The app download is free but we pay to subscribe to its contents, like in the well-known Orbyt, a virtual kiosk with digital newspapers such as ElMundo, Expansión, Marca…

In financial terms, we decide the price of the contents to adjust to market prices in order to maximize profits.

  • Item selling and purchasing maps or levels

“Item selling” is the purchasing of objects and improvements within a game using virtual money. This virtual money can be obtained by successes/advancements in the game or purchased with real money. This business model is predominantly used in apps and games that lead in market profit rankings, for example:

CSR Racing reached $12 million per month due to the sales of cars and improvements during the game.

Clash of clans is another brilliant and addictive game with daily sales of 500,000 €.

It’s important to remember that while these figures are extraordinary, developing a game for mobile phones is not cheap, as we can read about here in the popular article about the cost of mobile games and apps.

Paid Apps:

Conventional business model: we put a price on the app or game and the markets, by applying sales commission like in previous cases, periodically take our part of the download profits. This business model often supports a free demo version that secures the initial downloads and gives recognition to the product.

Fifa13, coming soon to Android, costs 5.99 € in AppStore and habitually appears in the list of top sales.

iVIP is a more curious case. The app, costing $999, offers privileges in certain cities—a high price for being VIP? We still haven’t dared to find out!

Make history!

Let’s be honest, it’s not very likely…but… why not talk about the ultimate hypothetical of profiting from your app?

Create a great application with millions of users and maybe you manage to get Facebook to buy it for $1 billion, like what happened with Instagram.

If after reading this article you see your future as a developer of mobile apps or games a bit clearer, we recommend the book Appillionaires available on Amazon. The book reveals what’s behind many successes and failures that end successfully in the mobile world.

Idea, business plan…now all you need is a company to develop it! Count on us!

Follow us on Twitter: @Startcapps



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