"Passion is without doubt the main driver of a developer’s motivation to build great and beautiful apps. This passion will keep you awake at night and fuel the creativity and hard work necessary to the completion and perfection of a beautiful product.However, passion is not enough."
- [Source - Thomas Sommer. (2013). Monetizing Your App with Game Offers.Available: http://appdevelopermagazine.com/895/2013/12/2/Monetizing-Your-App-with-Game-Offers/. Last accessed 2nd December 2013.]
Free Apps
While it is true that some of the world's most downloaded apps are free (Angry Birds, Facebook, Twitter, Facebook Messenger, Fruit Ninja [source 1 & 2]) Free apps make money through advertising, a lot of free apps have a paid version where you can enjoy the app without advertisement interruptions or a premium service. Initially attracted by the free download, some apps then offer in-app purchases which are optional but generally persuasive (depending on the market) and will generate revenue that way.
While it is true that some of the world's most downloaded apps are free (Angry Birds, Facebook, Twitter, Facebook Messenger, Fruit Ninja [source 1 & 2]) Free apps make money through advertising, a lot of free apps have a paid version where you can enjoy the app without advertisement interruptions or a premium service. Initially attracted by the free download, some apps then offer in-app purchases which are optional but generally persuasive (depending on the market) and will generate revenue that way.
"Ad spending on apps of all kinds – both mobile and desktop — is growing. Most industry analysts choose to measure only mobile app spending though, as most apps are created for the mobile and smartphone space. Mobile advertising revenue increased nearly 1.5X in 2011, to top out at $1.6 billion for the year.
The future of app monetization clearly lies in ad-supported model. A recent study by Cambridge University computer scientists found that 73% of apps in the Android marketplace were free, and of those, 80% relied on advertising as their main business model. Free apps are also far more popular in terms of downloads, the researchers said. Just 20% of paid apps are downloaded more than 100 times and only 0.2% of paid apps are downloaded more than 10,000 times. On the flipside, 20% of free apps get 10,000 or more downloads."
-[Source - Manoogian, J. (2012). How Free Apps Can Make More Money Than Paid Apps. Available: http://techcrunch.com/2012/08/26/how-free-apps-can-make-more-money-than-paid-apps/. Last accessed 5th December 2013.]
Here are some examples of advertising within apps, working as live links, if you tap on the image banners shown in the app you'll be redirected to the web page origin of the app for browsing of it's products and services. Some apps also lead directly to app downloads e.g the Amazon app.
{Left: The DailyHoroscope App, Nike Advertisement Shown - Right: Pic Jointer App, Amazon Advertisement Shown}
In app purchases are usually more popular for games, in which you can purchase extra "lives" (turns) and in-game bonuses (more points!)
{Candy Crush since it's release has harboured over half a billion downloads on Facebook and as an app.}
"70% of the people on the last level haven't paid anything. It's designed so you can complete the game," says Tommy Palm, whose official job title is "Games Guru" at King, although his role is more akin to a head of global studios for the social and mobile games publisher."We focus internally a lot on the player experience, making sure it's really fun to play. And we do not differentiate between people who pay and people who don't: we just see them as players, and optimise in making sure the game is really fun. So far, that's been a great strategy for us."
[Source - Dredge, S. (2013). Candy Crush Saga: '70% of the people on the last level haven't paid anything'. Available: http://www.theguardian.com/technology/appsblog/2013/sep/10/candy-crush-saga-king-interview. Last accessed 5th December 2013.]
For My Research
The Store Pass app will initially be free, much like Voucher Cloud and Groupon as I believe with restaurants and stores investing it'll be enough to cover the cost of the initial construction of the app. To test the market also the launch should be free, users should be encouraged to download and then from it's success it can be a paid app. Like a multipass discount card, similar to how railcards work, if you use the app enough times you eventually earn back the £1 or £2 that you'll be asked to pay for it. People will see past this small cost and continue to download and use the app.
With the right marketing and promotion, this app could be released and working then earning money back at the low cost of make.
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