monetize your app - by hristo neychev
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MONETIZE YOUR APP
by Hristo Neychev
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So, you have created this amazing, useful app and now you want to
make some money with it!
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What is your favorite cocktail?
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My favorite cocktail
SEX ON THE BEACH
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Now…let’s talk about
SEXY PROFITON THE BEACH
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SEXY PROFIT ON THE BEACH
30% analysis
20% forecasting
40% marketing
10% finance
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Build it and they will come!
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Profit = Revenue – Cost
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ProfitRevenue
Cost
PROFITABILITY ESTIMATION
Cost
Infrastructure Cost Hosting Bandwidt
h Storage
Staffing Support Marketing Development
MarketingBudget
SEO
PPC
Social Media
PR
Revenue
Number Paying Users
New Paying Users
Total Number of Users
Conversion Rate (to
paid)Churn
Average Revenue per User (ARPU)
Buy the App
In-App Purchases
Subscription Fees
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Revenue
Number Paying Users
New Paying Users
Total Number of Users
Conversion Rate (to paid)
Churn
Average Revenue per User (ARPU)
Buy the App
In-App Purchases
Subscription Fees
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Cost
Infrastructure Cost Hosting Bandwidth Storage
Staffing Support Marketing Development
MarketingBudget
SEO
PPC
Social Media
PR
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POTENTIAL REVENUE SOURCES
• Pay-per-download
• In-app advertising
• In-app purchase
• Affiliated web services
• Subscriptions
• Sponsorships
• Promotions
• Lead generation
• Analytics
• Affiliate sales
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PAID APPREVENUE SOURCES
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PAID APP
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
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PAID APP
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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PAID APP
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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PAID APP
30%
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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PAID APP
JUN '10 JAN '11 JUN '11$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
THE 300 MOST POPULAR PAID GAMES
www.distimo.com
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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PAID APP
PEOPLEEXPECT FREE
UPGRADES
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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PAID APP
Prices from $0.99 up to $999.99
The Apple/Google store keeps 30%
Average price is going down
One time charge
Reduces adoption
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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FREEMIUMREVENUE SOURCES
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FREE(mium) APP
Freemium vs. Free Trial
Freemium is a tricky game to play
Very low conversion rates
Beware of the marginal cost (MC)
Wider adoption = wider advertising
Set smart tripwires
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FREE(mium) APP
Freemium vs. Free Trial
Freemium is a tricky game to play
Very low conversion rates
Beware of the marginal cost (MC)
Wider adoption = wider advertising
Set smart tripwires
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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FREE(mium) APP
• Conversion rates are in the range 0.5% to 4%
• Look at Pandora, Dropbox, Evernote, Skype, etc.
• Shoot for 1-2% conversion rate
Freemium vs. Free Trial
Freemium is a tricky game to play
Very low conversion rates
Beware of the marginal cost (MC)
Wider adoption = wider advertising
Set smart tripwires
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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FREE(mium) APPEXAMPLE:MC = $1ARPU = $5CR = 1%
CALCULATION:Freemium users: 1,000,000
Monthly Revenue == $500,000(1,000,000 * 1% * $5)
Monthly Cost: $1,000,000
SEXY PROFIT => UGLY LOSS
Freemium vs. Free Trial
Freemium is a tricky game to play
Very low conversion rates
Beware of the marginal cost (MC)
Wider adoption = wider advertising
Set smart tripwires
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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FREE(mium) APP
Freemium vs. Free Trial
Freemium is a tricky game to play
Very low conversion rates
Beware of the marginal cost (MC)
Wider adoption = wider advertising
Set smart tripwires
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
![Page 27: Monetize Your App - by hristo neychev](https://reader033.vdocuments.net/reader033/viewer/2022051512/54469cb4b1af9ff43a8b4651/html5/thumbnails/27.jpg)
FREE(mium) APP
Freemium vs. Free Trial
Freemium is a tricky game to play
Very low conversion rates
Beware of the marginal cost (MC)
Wider adoption = wider advertising
Set smart tripwires
• Features• Capacity• Effort • Support
• Usage quota• Number of seats• Customer class• Bandwidth features
LIMITATIONS BASED ON:
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IN-APP ADVERTISINGREVENUE SOURCES
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IN-APP ADVERTISING
Need an app used multiple times a day by the same user to get more impressions
Need a lot of downloads to make any money
Woks well with low MC freemium apps
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IN-APP PURCHASESREVENUE SOURCES
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IN-APP PURCHASES
Several options
An example
The Apple/Google store keeps 30% of each transition
Big revenue of potential
Multiple sessions lead to more purchases
In-App Purchase
s
PAID
FREEMIUMFREE
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IN-APP PURCHASES
Several options
An example
The Apple/Google store keeps 30% of each transition
Big revenue of potential
Multiple sessions lead to more purchases
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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30%
IN-APP PURCHASES
AGAIN
Several options
An example
The Apple/Google store keeps 30% of each transition
Big revenue of potential
Multiple sessions lead to more purchases
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
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IN-APP PURCHASES
2011 2012E0
1
2
3
4
5
6
7
8
9
AdvertisingRevenue
IAP Revenue
http://www.flurry.com
REVENUE POTENTIAL
82%77%
18%
23% Several options
An example
The Apple/Google store keeps 30% of each transition
Big revenue of potential
Multiple sessions lead to more purchases
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IN-APP PURCHASES
Session 1 22%Session
2-9 34%
Session 10+ 44%
FIRST IN-APP PURCHASE
http://www.emarketer.com
Several options
An example
The Apple/Google store keeps 30% of each transition
Big revenue of potential
Multiple sessions lead to more purchases
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AFFILIATED WEB-APPREVENUE SOURCES
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AFFILIATED WEB-APP
Good for content based apps
Make money on the service/content not on the app
Reach new customer audience
Reach new search behavior
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AFFILIATED WEB-APP
Good for content based apps
Make money on the service/content not on the app
Reach new customer audience
Reach new search behavior
facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev
![Page 39: Monetize Your App - by hristo neychev](https://reader033.vdocuments.net/reader033/viewer/2022051512/54469cb4b1af9ff43a8b4651/html5/thumbnails/39.jpg)
AFFILIATED WEB-APP5 Common Mobile Search Behaviors
http://www.spydertrap.com
1. Fewer keywords
2. Location is key (GPS, Google places)
3. Mobile experience
4. Time (more frequent on evenings and weekends; the opposite of desktop search behavior)
5. Apps vs. Browser searches 27% vs. 73% but growing
Good for content based apps
Make money on the service/content not on the app
Reach new customer audience
Reach new search behavior
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SUBSCRIPTIONSREVENUE SOURCES
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SUBSCRIPTIONS
Good for content based apps (newspapers…
…magazines, and comics)
Not limited to those
Low conversion rates (1-5%)
Relatively reliable revenue
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SUBSCRIPTIONS
Good for content based apps (newspapers…
…magazines, and comics)
Not limited to those
Low conversion rates (1-5%)
Relatively reliable revenue
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SUBSCRIPTIONSSUBSCRIPTION BASED GAMES
http://www.insidemobileapps.com
Good for content based apps (newspapers…
…magazines, and comics)
Not limited to those
Low conversion rates (1-5%)
Relatively reliable revenue
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SUBSCRIPTIONS
Good for content based apps (newspapers…
…magazines, and comics)
Not limited to those
Low conversion rates
Relatively reliable revenue
SUBSCRIPTION CONVERSION
RATE 1-5%
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SUBSCRIPTIONS
Good for content based apps (newspapers…
…magazines, and comics)
Not limited to those
Low conversion rates (1-5%)
Relatively reliable revenue
• Annual subscription• Monthly subscription• Automated recurring billing• Subscribe for a service/feature• Subscribe for support plan• Good/Better/Best account
options
IDEAS:
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CHOSE THE RIGHT MONETIZING STRATEGY
• Simple Games = Free/Freemium + In-App Purchases
• Complex Games = Paid/Freemium + In-App Purchases
• Niche Apps = Paid with a Higher Price + Good Service
• News Apps = Free + Advertising
• Content Apps = Free + Subscription
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NEXT STEPS
1. Choose your monetizing strategy
2. Build your Revenue and Cost forecasting models • (based on assumptions)
3. Challenge your assumptions • (research articles, studies, similar apps, marked data)
4. Finalize your forecast (World Domination Plan )
5. Go Live
6. Use real live data to constantly improve your strategy
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…have FUN on the beach!
And last, but not the least…
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Thank you!
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twitter: @HristoNeychev