What kind of mobile apps are currently most profitable?
Have you ever read about a rapidly rising share in the stock market and wanted to join the bandwagon?
We all are driven by incentives. Economists base most of their models on incentives. How can the mobile app market then be excluded from the fundamental idea of profit motive?
Smart entrepreneurs entering the mobile app market don’t just start converting a WordPress website to Android app. They study the market and find the segment and audience where the chances of profitability are high.
Profitability is crucial when researching the best possible app category to enter. Consider this statistic for context : 29% startups fail because they run out of money.
Finding an app niche which offers better odds on financial success. The challenge here is discovering such a niche.
There is no type of app that is always successful. Every market is transient and favors a certain kind of category at some point. Entrepreneurs need to understand their environment and begin work on an app accordingly.
The following sections provide an analysis of the mobile app market and the type of apps that offer the best probability of profitability.
Top mobile apps in the world based on sales revenue
The easiest way to find the most profitable apps is looking at the ones already there. Here is the list of the top 10 mobile apps in the world based on sales revenue.
Study this list closely. It is naturally difficult for an entrepreneur to replicate the technical complexity of the apps on this list. However, this list does offer insights on how most top apps commonly deploy app monetization.
Consider Netflix, Tencent Video, IQIYI, and Pandora Music on this list. All these are subscription-based apps. Not until a long time ago, Spotify used to be a common fixture on the top ten app list. Even YouTube now offers premium content for paid subscribers.
Other apps on this list such as Tinder and LINE offer in-app purchases.
This trend points to how comfortable users are now with subscription-based services.
If you are entering the mobile app market, monetizing your app with subscriptions is a good option based on the aforementioned list.
The challenges of monetizing apps with subscriptions
Subscriptions are always a double-edged sword.
Implementing them in an app is easy and the prospect of getting money from subscribers every month is naturally enticing. Furthermore, people understand the idea of paying for a subscription very well. This is evident by the top 10 app list discussed earlier and is important from a marketing perspective.
There are still considerable challenges to this model. The points below highlight some of them.
#1 - Giving people a reason to stay
There’s a reason people pay a single one-time payment for most products but pay regularly for a Netflix subscription. A normal product, such as a pair of jeans or a mobile phone case doesn’t appreciate in value after you buy it. It remains the same or gets worse as time goes by.
On the other hand, Netflix continues to expand its content library and makes it worth your while to keep paying and subscribing.
In a subscription model, your app doesn’t just need to provide a good service. It must also maintain and improve its services.
People only continue subscribing to a service if it offers them something unique. This is why Netflix invests in original content.
How does this translate to your venture? It is not viable to ask a budding entrepreneur to start an app like Netflix. However, it is possible to provide a quality service that keeps offering subscribers a high quality experience.
For example, let’s assume you learn how to make a WordPress blog and convert it to a mobile app. You then put your blog content behind a paywall and ask subscribers to pay a fee to view the content.
This model of monetization is followed by the biggest publications in the world such as the New York Times and The Telegraph.
If you keep writing good content, people will continue subscribing and more will come. Since the quality of your content doesn’t feel and subscribers always get something new every now and then, they will continue paying.
Thus, even a simple blogger can use a mobile app builder and monetize an app with subscriptions.
#2 - Investing resources in service
Let’s continue with the example of using quality content to monetize apps with subscriptions.
As the writer, you have to invest a lot of time writing quality content for which people are ready to pay money. Remember subscriptions are not donations your readers give away out of kindness. They are a fixed amount of money paid for a specific service.
As a writer, you need to keep writing and improving. This requires investment of time and even money if necessary. You need to do everything possible to keep your subscribers happy and motivated to stay.
This investment of resources can be difficult for some entrepreneurs. The same story plays out for big brands like Netflix. In 2020, the streaming giant is expected to shell out $17B. This only underlines the need for subscription-based apps to continue offering something new or face desertion.
#3 - Price Management
Let’s say you decide to increase the price of your standard subscriptions one day. This might go over smoothly if you don’t have a large base of subscribers. However, if you do, this can be a big challenge.
There are many reasons you might consider increasing your subscription price. Maybe your costs are escalating and you need an exit strategy.
However, making a large base of subscribers suddenly pay a higher price is very difficult. People don’t like change especially when it hits their wallet.
This is one major challenge for subscription-based apps, possibly even a drawback. Other apps with in-app purchases can change price more flexibly without fear of a backlash.
How can apps deal with this challenge?
The best way of setting a subscription price is experimenting with it at the early stages of its journey. Once an app breaks an early majority and grows its market share rapidly, tinkering with the subscription price is a bad idea. These experiments should happen when an app is still relatively isolated from the market as a whole.
After an app crosses a substantial percentage of market share, entrepreneurs can again change the subscription price. This is because the app has effectively monopolized its market and has the power to set its own price.
The challenges covered here are not exhaustive. Many other strategic and tactical challenges can thwart subscription apps. Entrepreneurs can prepare for them and understand what they must do to succeed and build a profitable app.
Anyone creating an app with a WooCommerce app builder must remember these challenges as well.
Starting an app in a segment that offers better odds of success and profitability is natural.
This piece studies the most successful apps in the world based on sales revenue and analyses their monetization model. Furthermore, it highlights the specific challenges of subscription-based apps.