Monetize Your App - by hristo neychev

MONETIZE YOUR APP

by Hristo Neychev

facebook.com/HNeychev linkedin.com/in/HristoNeychev twitter: @HristoNeychev

So, you have created this amazing, useful app and now you want to

make some money with it!


What is your favorite cocktail?


My favorite cocktail

SEX ON THE BEACH


Now…let’s talk about

SEXY PROFITON THE BEACH


SEXY PROFIT ON THE BEACH

30% analysis

20% forecasting

40% marketing

10% finance


Build it and they will come!


Profit = Revenue – Cost


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


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


Cost

Infrastructure Cost Hosting Bandwidth Storage

Staffing Support Marketing Development

MarketingBudget

SEO

PPC

Social Media

PR


POTENTIAL REVENUE SOURCES

• Pay-per-download

• In-app advertising

• In-app purchase

• Affiliated web services

• Subscriptions

• Sponsorships

• Promotions

• Lead generation

• Analytics

• Affiliate sales


PAID APPREVENUE SOURCES

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


PAID APP

30%




One time charge

Reduces adoption


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




One time charge

Reduces adoption


PAID APP

PEOPLEEXPECT FREE

UPGRADES




One time charge

Reduces adoption


PAID APP




One time charge

Reduces adoption


FREEMIUMREVENUE SOURCES

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


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






Set smart tripwires


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






Set smart tripwires


FREE(mium) APP






Set smart tripwires


FREE(mium) APP






Set smart tripwires

• Features• Capacity• Effort • Support

• Usage quota• Number of seats• Customer class• Bandwidth features

LIMITATIONS BASED ON:


IN-APP ADVERTISINGREVENUE SOURCES

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


IN-APP PURCHASESREVENUE SOURCES

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


IN-APP PURCHASES

Several options

An example





30%

IN-APP PURCHASES

AGAIN

Several options

An example





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





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





AFFILIATED WEB-APPREVENUE SOURCES

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


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


SUBSCRIPTIONSREVENUE SOURCES

SUBSCRIPTIONS

Good for content based apps (newspapers…

…magazines, and comics)

Not limited to those

Low conversion rates (1-5%)

Relatively reliable revenue


SUBSCRIPTIONSSUBSCRIPTION BASED GAMES

http://www.insidemobileapps.com







SUBSCRIPTIONS




Low conversion rates


SUBSCRIPTION CONVERSION

RATE 1-5%


SUBSCRIPTIONS






• Annual subscription• Monthly subscription• Automated recurring billing• Subscribe for a service/feature• Subscribe for support plan• Good/Better/Best account

options

IDEAS:


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


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


…have FUN on the beach!

And last, but not the least…


Thank you!

facebook.com/HNeychevlinkedin.com/in/HristoNeychev

twitter: @HristoNeychev

Monetize Your App - by hristo neychev

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