There are millions of mobile apps out there, some of which are entirely free to download and use. But even the free apps are designed to make money—if they weren’t, few developers would take the time to create them. Chances are, when you develop your mobile app, you’ll need to think carefully about how you’ll handle financial transactions—whether that means collecting advertising revenue from an ad network, or handling micro-transactions from your users. There are best practices in place for app-based financial transactions, but you still have many choices to make. That’s why, rather than instructing you as a how-to-guide, this article is meant to help you make those decisions.
These are the topics and questions you’ll need to research:
1. How will your app be profitable ?
One of the biggest questions you’ll need to ask is how your app is going to make money. It’s a big question, with many possible answers. Some apps charge a one-time fee to be downloaded, which constitutes much of their revenue. Other apps are free to use, but offer optional micro-transactions to enhance the experience. Still others make money through third-party ads, products, or services that are either displayed or sold through the app. With advertising, you’ll need to partner up with an ad network (and get more daily active users). With sales, your profitability will depend on what you’re selling (like in any business).
2. How long will it take to become profitable ?
If you’re building the app yourself, you’ll be investing time, but if you have a team of people, you’ll be investing time and money. If you want to maintain support for your app, you’ll need money coming in as soon as possible. Will your app start generating revenue immediately? How fast will people adopt it? At what point will you start to become profitable, and how are you going to get there?
3. How much are you charging and when ?
Fortunately, most app transactions are on a small scale, often $10 or less, and many transactions are handled immediately; customers may withdraw funds from their digital wallets to cover the charge. But if you’re planning on bigger financial transactions, or ones for services garnered through the app, what are you planning to charge? Will you be responsible for billing your customers later, and following up on unpaid debts?
4. How will you handle security ?
Your app’s security features need to be rock-solid if it’s going to be featured on major app stores. You also need to prevent the possibility of cybercriminals getting ahold of your users’ personal information. What financial and/or personal information is your app going to collect, and how are you going to store it, if at all? And what third-party services are you going to use?
5. How will you scale your app ?
Your app might be able to make money in its original state, but how will you make your app grow from there? Do you have a marketing and advertising strategy in place? Are you going to roll out new updates for the app? Are you considering creating a referral program? And with a larger user base, how will your financial model need to change?
6. How much will this cost to develop ?
Before you finalize your transaction costs, you need to know how much it’s going to cost to develop in the first place. How many people are you going to hire? What kind of servers will you need? What ongoing maintenance will need to take place, and how many hours are you budgeting to spend on this?
7. How might you change your financial model in the future ?
You might be satisfied with your financial model on paper, but you may change your mind when you see it in action—or after you’ve been able to gather a few months’ worth of user data. Agile development practices can keep you from making your financial model too restrictive, giving you options for the future. It’s especially recommended for first-time app developers; the more options you give yourself down the road, the better.
If you’re not sure of these answers, or know what you want to do but not how to do it, there are many resources you can call on for help. You could seek out platform-specific help on developer forums for Apple and Android operating systems, seek business advice from a mentor or peer entrepreneur, or consult financial and legal experts to make sure you’re doing everything properly. Though it’s possible to build an app by yourself, if you want an app that will generate a profit and strong sales indefinitely, you’ll need a team of talented people backing you up.