Mobile apps have become a crucial component of business strategy in the digital era since they provide a potent means of improving consumer interaction, streamlining processes, and increasing income. The development of software programs for mobile devices, like tablets and smartphones, is called mobile app development.
Companies' requirement to provide their customers with smooth, on-the-go experiences has increased the significance of mobile applications as the business environment changes. Mobile apps are expected to generate over $935 billion in revenue in 2024.
Enterprises wishing to optimize their return on investment (ROI) must carefully choose the business model for mobile app development. An app's performance may be greatly impacted by choosing a suitable business model, which affects everything from user acquisition and retention to income generation and long-term viability.
Enterprise executives may make well-informed choices that support their strategic goals by exploring the several business models accessible for mobile enterprise app development with the help of this article.
Development of mobile apps refers to creating software programs for mobile device use. According to Statista, the global mobile app market is projected to reach $756 billion by 2027, with a steady Compound Annual Growth Rate (CAGR) of 8.58% from 2022 to 2027.
Native applications are created especially for an operating system (iOS or Android) and use programming languages unique to that platform (Swift/Objective-C for iOS, Kotlin/Java for Android). Though each platform needs its own development work, they provide excellent performance and a smooth user experience.
Basically responsive web pages that provide a mobile-friendly experience, web apps are accessed using web browsers. Though simpler to maintain and platform-independent, they could not have native app performance or capabilities.
Developed using web technologies (HTML, CSS, JavaScript) and housed in a native container, hybrid applications combine aspects of both native and web apps. Though they may not perform as well as completely native applications, they do provide cross-platform compatibility and lower development costs.
According to eMarketer, 90% of the time people spend on their mobile phones is spent using apps. Its business model defines how a mobile app makes money and keeps running. These models determine the financial feasibility and general success of an app.
Mobile app business models have changed to meet shifting consumer tastes and market conditions. Present trends point to a move in models that give user engagement, recurring income, and insights derived from data first priority.
Freemium models provide a free app version with in-app purchases or subscriptions, providing access to premium content or extra features. This approach encourages customers to upgrade for more functionality by reducing the initial pricing barrier, drawing in a large user base.
- In-app purchases are payments made by users for extra functionality, virtual items, or premium content.
- Recurring payments for access to premium services or content are known as subscriptions.
- Show advertising to free users and provide premium subscribers an ad-free experience.
- Pulls in a large user base.
- Presents many sources of income.
- Promotes retention and involvement of users.
- Could need a substantial outlay on user recruitment.
- Perhaps not all free users become paying ones
- Possible bad user experience should advertisements be too obtrusive.
- LinkedIn: LinkedIn operates on a freemium basis, providing basic networking capabilities for free and premium memberships with more
- sophisticated tools for recruiters and job searchers.
- Dropbox: Offers free space and functionality; membership options provide more.
Users of the subscription model pay a regular charge to use the app or its premium features. Tiered subscriptions provide varying degrees of service, as does the freemium model, in which basic functions are free but premium ones need a subscription.
- Consistent monthly or yearly subscription income.
- Different membership tiers offer variable features and advantages with tiered pricing.
- Sales that are steady and predictable.
- Promotes continued interaction with the user.
- Scalable with more features or levels.
- Need ongoing value delivery to support recurring payments.
- High rates of user attrition if they feel there is little value.
- Obtaining users initially might be difficult.
- Microsoft Office 365: Provides cloud services and Office apps at different subscription levels.
- Salesforce: Salesforce offers CRM software and subscription options catering to various company requirements.
Users of the paid app model pay an initial cost to download and use the app. Price plans might be tiered according to software versions or features or have a single purchase price.
- Sales of apps directly source income.
- Basic and Premium app versions have different costs.
- Immediate revenue from each download.
- Clearly stated value offer to consumers.
- Ads and in-app purchases are not necessary.
- Restricts user base to those prepared to pay up ahead.
- Producing regular income is difficult.
- Great rivalry in app shops.
- TeamViewer: TeamViewer bills a one-time price for its support and remote access services.
- MindNode: Markets a one-time buy software for project management and mind mapping.
Users see adverts, which is how the advertising model makes money off of the app. In-app advertising often takes the form of native, video, interstitial, and banner ads.
- Revenues determined by the quantity of times advertisements are seen.
- Revenue made when consumers click on advertisements is known as ad clicks.
- Higher rewards for activities like app installations or video views are known as ad engagement.
- Monetizes free users without charging them straight up.
- Possibility of substantial income with a large user base.
- Flexibility to include several ad forms.
- Advertising has the power to sour the user experience.
- Ad networks dependency and changing ad prices.
- Privacy issues with monitoring of user data.
- Spotify: Offers premium customers an ad-free experience while monetizing free users with advertising.
- Duolingo: Offers free, ad-supported language learning; a premium membership removes advertisements.
The idea of data monetization is to make money by gathering and evaluating user data. Ensuring user privacy and following laws need responsible data-collecting methods.
- Selling third parties' anonymized data insights are known as user data analysis.
- Personalized advertising is achieved by using data.
- Market research is the provision of data for study and market analysis.
- Important information on preferences and behavior of users.
- Possible large income from data sales.
- Improves characteristics and customisation of the app.
- Regulation adherence and privacy issues.
- Demands strong data security protocols.
- Trust problems with users if data procedures are opaque.
- Google Analytics: Gathers and analyzes data to provide companies insights.
- Fitbit: Fitbit sells compiled data to health groups and uses health data to provide individualized insights.
With the commissioned app approach, companies work with dedicated app developers to build bespoke applications that meet their requirements. A revenue-sharing arrangement or set development fees is one way to generate income.
- Sales of the bespoke app to the company provide direct income.
- Revenue sharing is the portion of app sales that is shared.
- Individualized solutions catered to business requirements.
- Possibilities of special competitive advantages.
- Adaptable royalty arrangements.
- Costly development.
- There is not much scalability outside of the commissioning company.
- Updates and maintenance depend on the developer.
- Coca-Cola Freestyle: Explicitly developed to improve customer experience for beverage dispensers.
- McDonald's Mobile Ordering: Commissioned app enabling faster and easier mobile ordering and payment.
According to Statista, there will be approximately 6.92 billion smartphone users worldwide in 2023. The success, user acceptance, and financial sustainability of your corporate software may all be influenced by your chosen business model. Thorough knowledge of your app's goals, target market, development expenses, and long-term income potential should direct this choice.
1) Revenue Generation
Subscriptions, purchased software, and in-app purchases may all be successful models if making money is the main objective.
2) User Engagement
Because they reduce the entrance barrier for users, freemium and advertising models may be more appropriate for applications that want to boost user engagement.
3) Brand Awareness
Offering the software for free or using the freemium model might assist in achieving broad exposure if that is the goal.
4) Enhancement of Customer Service
A free or freemium model may guarantee maximum accessibility for applications like support or feedback that aim to enhance customer service.
5) Demographics
The business strategy decision may be influenced by knowing the age, gender, geography, and financial situation of your target market. Younger consumers could like free applications with in-app purchases, whereas business professionals might be prepared to pay for subscription services with premium features.
6) Preferences and Behavior
Finding a model that meets user expectations may be aided by examining user preferences and behavior, such as purchasing patterns and degree of involvement. For instance, a subscription model might work better if people like experiences without advertisements.
1) Initial Development Costs
Due to the necessity of different versions of code for iOS and Android, native applications normally are more expensive to build. While it may require users to compromise on factors such as ease of use and speed, web and hybrid applications can therefore be cheaper to develop.
2) Ongoing Maintenance Costs
This is because updating the program, eradicating bugs and adding new features are indispensables that help keep the program current and a lot more helpful. Value addition should be ongoing to retain customers within free subscription and freemium models, which may increase CIE.
3) Budget Constraints
Find out whether there is a specific budget for the first development and what it will cost to maintain the system from that point onwards. To ensure the selected company model is economical, consider the likely profitability of a few of the models.
1) Scalability
Analyze how well the company plan can scale. As the user base expands, subscription and freemium are suitable for scalability and may be an excellent model. Because the payoff may be a one-shot deal derived from each user, paid app models may be less sustainable.
2) Revenue Streams
Many pathways lead to enhanced long-term sustainability through a variety of income streams. The many money streams should be spread out. As an example they have adopted the practice of mixing advertisements with in-app purchases.
Examine if the app development process of repetition in payment guarantees contributes more stability compared to the one-off remunerations.
1) User Acquisition
As there is less of an entrance fee involved, freemium, along with the advertising models, may attract more users. Paid applications might require aggressive promotion and compelling value propositions to justify the first expense.
2) User Retention
If subscription models deliver helpful and entertaining services or materials continuously with consumer interest, it can increase the consumer retention rate. Presumably, availability of desirable and valuable narrow functionalities may persuade the interested users to become paying ones in freemium models.
3) Impact on User experience
There could be greater churn rates due to advertisement interference. To maintain a friendly user interface and encourage the transition to the paid version, freemium and subscription models should design the ratios correctly.
Enterprise executives may use an organized decision-making framework to choose the best development business model methodically:
Indicate in detail the main and supplementary objectives of the software development. Ascertain if the app's goals are to increase revenue, raise consumer interaction, increase brand exposure, or increase operational effectiveness.
Get in-depth market research to learn about the intended audience. Recognize their pain spots, preferences, habits, and demographics. Effective consumer demands are met by the features and economic model of the app being tailored thanks to this study.
Determine how much the software will cost overall, including development, promotion, and continuing upkeep. To guarantee financial feasibility, compare these expenses to the possible income streams of various company concepts.
Using industry standards and market research, estimate each company model's possible revenue. Consider average revenue per user (ARPU), freemium to premium user conversion rates, and market size.
Think about how every business model affects user acquisition, interaction, and retention. Examine how various models fit with user expectations and impact the user experience.
Test many business concepts, get user input, and examine performance indicators. Get ready to edit and improve the business plan in response to consumer feedback and actual facts.
The following examples show how several business models may be used to certain kinds of corporate apps:
- Business Model: Subscription Model
- Justification: Cloud storage, sophisticated functionality, and regular upgrades are ways that productivity applications often provide continued value. Support and frequent improvements are needed in line with a subscription model.
- Example: For instance, Microsoft Office 365 offers many subscription levels to suit the demands of consumers ranging from single individuals to huge businesses.
- Business Model: Freemium Model
- Justification: A large customer interaction application user base helps produce network effects. Lowering the entrance barrier, the freemium model promotes broad adoption while generating revenue from premium services.
- Example: LinkedIn, for instance, operates under a freemium model, providing free networking and job search tools with premium memberships providing access to more sophisticated capabilities.
The best business model for your corporate app must be carefully balanced about long-term viability, user expectations, financial factors, and strategic goals. Enterprise executives may make wise choices that propel success by fully comprehending the app's objectives, target market, development expenses, and revenue possibilities.
Successful development of mobile apps and business model implementation depends on a user-centric strategy, ongoing value delivery, and flexibility in response to changing market circumstances. In the cutthroat digital market, businesses can ensure their mobile applications stay useful, lucrative, and relevant by using a disciplined decision-making framework and being aware of new developments.
I'm working with Best Remote Team, which is an India-based company that provides dedicated remote developers on an hourly and monthly basis. I'm a tech enthusiast and write content to give readers the lowdown on different technologies and their related trends.
