When you are just starting to develop a new mobile product, or you are ready to release the end version, one of the most important steps is planning ways to earn money your mobile application.

We’ll consider the following monetization methods:

Selling of mobile application

Selling of virtual goods (In-App billing)

Building in ads into the application

Let’s start with the first one.

To sell the application on the Android Market / in the AppStore:

Your product will have a fixed cost. For downloading the mobile app, a user has to pre-pay it. In this case, you should consider many factors, one of which is the cost of your end product. By estimating value, consider the factors of product utility, urgency, age category, and its quality. Every factor has to be reasonably weighted. The final price should be compared with existing rivals’ analogs. The uniqueness and quality of the product let quickly profit from high popularity among users.

In general, most users are reluctant to buy new products, which have less than 10-50 thousand downloads, as well as with a rating of less than 4 – 3.5. In this case, in order to achieve greater success, a free demo version has also to be available. This version must attract a potential customer demonstrating its possibilities to make him wish to purchase the full version of your mobile app.

In most cases, the end user expects that by purchasing an application or a game, its full version should be available, and he won’t pay for additional features of the mobile app. If it is not the case, this disappointed user can perform purchase abolition and lower the application rating what affects the opinion of potential new users.

In-App billing

Selling virtual goods is purchasing within the mobile application. Payment technology is often provided by the Market, but when you want to to maximize the number of committed purchases, you can use some third-party services of SMS payments. The key point is that by payment through the Android Market / AppStore, you should enter your card’s details; and most users may not possess this card or the ability to pay. For such situations, SMS payment service is provided, when the money is charged from the user’s account.

When the mobile app has rich functionality, it is a good idea to place it on the Market free of charge, but with the possibility of opening additional functions / subscribing / purchasing through billing within the application. In the case of mobile games, for example, the system of internal payments is often the most cost-effective option. Since a user is keen on your game and wants to open new levels to avoid waiting few hours, he simply would have to pay. The In-App billing system lets earn money from the user an unlimited number of times. Therefore, you get the possibility of increasing the income several times more than by a single purchase.

Building in ads into the application

And the third option is the implementation of ads into the application. This method is not the most cost-effective one, and the income can go only when users are online. Profits in this case are due to users’ clicks on a banner. For small apps and games, this can be the best option. It is desirable to implement a banner in mobile applications that require a constant internet connection, for example, for music downloading, communication, and online games. It is better to implement in free versions, as after application purchasing and seeing a banner there, the user won’t be happy.

Summing up, I want to say that you should make your mobile application paid, if the functionality can’t be divided into paid and free (if the application loses its meaning and value in that way). If your app has a lot of features, or the user’s handling of application can be facilitated, then you should implement the internal payments system.