Five mobile business models to guide your mobile development project
Mobile usage officially surpassed desktop sometime in 2014, as Smart Insights reports. This shift in user behavior plays a major role in the development industry as a whole. In fact, according to ARC, 800,000 new mobile app developers enter the scene on a yearly basis.
Here are five mobile business models that these employees put into practice:
1. Application as a service
A mobile app as a service does just what the name implies: It facilitates a specific service from a mobile device. Examples of this business model include the Uber app and 5miles, a peer-to-peer marketplace that connects sellers and buyers within a specified geographic radius.
Both of these apps took an established, high-demand service and improved upon it using the distinctive capabilities of mobile devices. They sped up the payment transaction process, provided access to social networks to prove the identity of the person on the other side of the transaction and gave users the ability to take advantage of their service in any time or place.
In other cases, the app can create a new service to fix an old problem. For example, Nowait, a restaurant app, lets users check current wait times at local eateries and put their name on a waitlist, without having to be present at the actual location.
The application as a service model converts common services to meet the demands and needs of users’ mobile-centric lives. This model can make a task or service — such as waiting for a cab — more convenient. Furthermore, an application as a service can create a mobile avenue to fulfill an older, legacy online service or one that wasn’t available at all before.
2. Application as a subscription
A subscription mobile app has a fairly straightforward revenue model: Users pay a subscription fee on a monthly or annual basis. This model is particularly popular for publishers and games, such as The New York Times Crossword app.
The challenge to this mobile business model is finding enough users who have the motivation to make the financial commitment. According to Localytics, the average churn time for 58 percent of users of any given app is 30 days. Because the direct costs of user churn serve as a major issue for developers that work on this type of app, this model’s operating plan must focus on subscriber retention and re-connecting with lapsed users. In order to meet this challenge, these apps must provide a constant, consistent stream of high-value content.
3. Mobilizing existing technologies
When you think of the mobile versions of most B2B business platforms, it’s clear that CRM, collaboration and productivity software are natural fits. However, the industry also sees a wider variety of B2B software extend their service through accounting, HR and logistic applications.
These mobile apps aren’t an independent revenue stream. Instead, they’re needed to fulfill the expectation that useful business software be provided through a mobile app. This model fits apps that stem from legacy enterprise software (pre-dating the mobile age). In accordance with this setup, an app is considered to be falling behind if it doesn’t have a mobile outpost to a B2B application.
In some cases, the mobile version layers in new functionality that’s built on mobile capabilities.
4. Developing applications that extend a web business
There are two subcategories to this model. The first is made up of apps that can enhance an existing service. This may include an app that lets you track your time when you’re offline and sync it back up when you’re online. Another example is a scheduling app that uses GPS to track the current location of field techs and manage their service schedules accordingly.
The second subcategory expands a service. This differs from enhancing an existing service in that it’s providing the same service, but through a mobile device. Square’s payment processing software is a good example. This app is able to process payments on a variety of devices.
5. Selling products through the app
In-app purchases are the mainstay of the mobile gaming industry. The apps themselves are typically free to download and use, but if you want access to tools to improve your game, you need to pay up. As Business of Apps reports, in-app purchases are expected to account for 48.2 percent of all app revenue in 2017.
This model is also particularly prevalent among shopping and lifestyle apps. In these cases, the apps could be directly selling products or services, or they could have affiliate agreements.
No bright lines
Some apps put more than one of these models into place. For example, Readly, a reading app, combines the service, subscription and business extension models. Users pay a monthly fee to gain access to thousands of magazines. Readly doesn’t create content; instead, it provides a service to readers on a subscription basis that extends the reach of existing businesses (in this case, publishers).
Mobile app developers shouldn’t feel constrained by the five mobile business models above. By being creative, you can develop a mobile app that most effectively meets the need you’re trying to fill.