With so many App's being developed recently, I was curiously studying "who makes money from Apps and how"
Apps are either paid for by users or by advitisers. Based on this , various business models are followed by developers.
There are three categories;
Enterprise App- These are Apps suitable for large companies ,used for various aspects of running a business.
Gaming App- What typically is done is create a free basic version of App, tie up with Ad networks ,
once people start using it, release the premium version. The User is induced to buy the premium version with additional features.
Advertising App- Bring full service to their client and create customer engagement.
It's easy to believe that Apps will increasingly be a part of our everyday lives- at work and at home.
It's very clear that apps will be ubiquitous in a few years time and will be the preferred way of doing everything- from shopping for goods and services to keeping track of security at home and office.
"The future is mobile for every customer and consumer"
Considering that the App Business has relatively low entry barriers, too many are chasing this business.
No Wonder that there has been a rush of app startup in last couple of years.
An estimated 300000 small and medium companies are building Apps in India and the population is growing.
However it is noteworthy that the market for paid downloads are basically non-existent in India, although we see a continuous increase in Smartphone consumers.
So building Apps to order is a better option
The main target can be enterprise clients and build Apps to order for corporate customers.
Companies are realizing that Apps are a way to improve customer relations. make business transaction easier, and improve internal efficiency.
Few months back I received a marketing message from AllenSolly about its Colour Lab App, which allowed its customers to choose color from the palette and design their own shirts .That was really Interesting!!
Icici bank encourages its customers to shift from Internet Banking to Mobile Banking by downloading the ICICI BanK App on their handset or tablet.
A power distribution company in Mumbai got an App developed to reduce corruption in meter reading.
The companies are realizing that Apps can serve multiple purposes - from brand building to cutting transaction costs to improving internal efficiencies and bringing transparency.
There are four business models that are emerging.
The first being the time and material model wherein a flat dollar rate is charged
The second is scope and milestone model. In this the developer meets the set deadlines and charges a flat fee.
Third is the transaction based pricing model. Here the developer gets paid in accordance with the traffic that flows to the App, mostly preferred by Ad agencies.
Fourth is outcome based , one where the developer not only builds an App but also takes percentage of the Ad revenue that flows to the App.
The enterprise segment seems to be the most lucrative for developers because it involves long term maintenance contracts and upgrades.
However we should not rule out business from Individual Customers as well, if the focus is on the type of potential customers and their needs. Some could be,
An App for paranoid parents to keep track of their children
An App to spy your house for working couples.
Apps for frequent travellers, to track weather, bookings, emergency connects for that locality, alongwith a handy travel guide
Apps could be migrated to local languages to target a wider audience.
With India's app developer base estimated at 300000 and app download around 8.4 billion by 2016, the market potential seem to be huge. The advertisers are realizing that apps are become very popular they embrace in -app advertising as key component of their media mix.
We can safely conclude that in few years the App economy would mature and have large opportunity as the more mainstream IT business currently.