Choosing your business model

You may be happy to create and distribute your apps for free. We applaud you for that, it’s very much in the spirit of everything we do here at Mozilla. However, we also understand that you may want to make app development your source of income and there is nothing wrong with that. Selecting the most appropriate monetization model your apps is a critical step if you want to maximize the revenue you earn. It's about a lot more than simply loading your app into Firefox Marketplace and setting a price: it's entirely possible that you could make more money by not charging for your app at all.

To assist you with implementing the best monetization option, this page describes the models available before looking at the criteria to consider in deciding which option to use.

Monetization models

When it comes to making money from your Firefox Marketplace apps there are a number of monetization models you can use. This section describes the options available.

The Paid App or Premium model

This is the simple, traditional model for monetizing apps: You generate your revenue from sales of your app by setting a price for it in the Marketplace. The user must then pay before being able to download and install your app.

The advantage of this model is its simplicity, you simply write your app and price it. There are however several disadvantages:

• Pricing an app can be a barrier to users downloading it in the first place:
  • Some users will be reluctant to download a paid app because they may find it difficult to judge an app fully based on the store description and screenshots alone: they want to know what they're getting before paying.
  • Increasingly developers are adopting other monetization models for their apps, so it's likely that users will be able to find a similar app that is available for free.
• In those countries where operator billing isn’t available your target users may not have ready access to credit cards. This may mean that few users could purchase your app even if they wanted to.

Try and Buy model

In this model you make a version of your app available for free and then offer a paid app version with enhanced features, using Marketplace's 'promote as an upgrade' feature. This enables you to retain the simplicity of the premium monetization model, while addressing some of the issues with using the premium model alone.

There are several approaches you can take to differentiating the free and paid versions of your app, such as:

• Including advertising in the free version, then offering a paid version that is ad free.
• Offering the free app for a limited time before some or all of its features become unavailable, with the paid app removing any limits. Take care to ensure that the time limit is sufficient for the user to experience most of the apps features. For example, in a time recording app you might want to provide at least a month’s trial, so the user can use any end of month summary features.
• Providing limited features in the free version, with no limit on the features in the paid app. In the free app you could disable some features or offer all the features but limit the number of items to be stored or displayed by the app. For example, in a notepad app you might limit the number of notes a user can create, then offer unlimited note creation in the upgrade version.

This approach can overcome the resistance to buying apps, as it allows the user to understand the app’s value before making the purchase. However, it doesn’t overcome any limitations created by the means of payment available in some markets.

If you choose to use this model, Firefox Marketplace offers the Promote as upgrade to free version option. Using this option you link a paid app to its free version and Firefox Marketplace then provides a link to the paid version from the free one's Marketplace listing, as shown below.

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In-App Purchases model

In this model you distribute a free version of your app only, but then offer users various additional items from within the app. These in-app purchases fall broadly into two categories:

• Durables — items that are permanently available to the user. Examples include unlocking an app at the end of a time or use based trial, adding new app features, adding levels within a game, adding collections of information, removing ads, and such like.
• Consumables — items that the user consumes within the app. You could treat almost any item as a consumable, such as offering an app feature on a time or use limited basis, but you can also offer such things as an in-game currency.

This model can often be easiest to implement in games, where additional levels, characters, power ups, and various other game unlocks lend themselves well to separate purchases. But equally an information app could offer a small set of information for free and an expanded or more details set from an in-app purchase.

One particular benefit of in-app purchases is that it offers the ability to generate a recurring stream of revenue from installed apps. Games are a particularly good example of how this model works. You might offer a free download with 5 levels. Then, when the user has completed those levels, offer an additional 5 levels as an in-app purchase. Then at the end of those levels, offer 5 more for an in-app payment and so on. And as long as each new level pack is as engaging as the last, users will most likely continue to purchase new level packs.

This model, overcomes the issues associated with any reluctance to download a paid app, but could still be effected by the same disadvantages notably any limitation on payment options.

Ad supported

In this model you incorporate advertising into your app and generate revenue from ad views and clickthroughs to view the advertised product or service. You will usually offer your app for free when it's ad-supported, but you can include ads in a premium app or in conjunction with in-app purchases, but do this with caution — particularly in premium apps — as users may consider you're 'charging ' them twice. You could also combine this approach with Promote as upgrade: offer the full app with adverts as the 'try' and a premium version without ads as the 'upgrade'. Alternatively you could use an in-app payment to offer a 'remove the ads' feature in the app.

If you want to take this approach you can use any ad network you wish. There are a number of companies that offer ad services for websites and mobile apps, for example Google AdMob and Inneractive.

This model completely removes the barriers that paid app or in-app purchases have, in that you don’t have to worry about the willingness or ability of users to make payments.

Choosing your model

Finding the right monetization model for your application isn’t an exact science; even simply deciding what price to charge can be a difficult process. The information you gathered while getting to know your users is the best place to start. This should provide you with some insight into their expectations:

• Would they download a paid version of the app?
• Do they have an interest in buying premium services?
• Would they prefer a free app with ads?

This information needs to be combined with that on the available payment methods. This will help you determine if users will be willing and able to purchase apps or in-app products. You also should consider that the Firefox Marketplace will allow you to convert a free app to one users have to pay for, but you cannot make a paid for app free. So, unless you release a second version of the app, once you've chosen a paid model it’s hard to change to a free one.

If you choose to use a paid or in-app purchase model, you’ll need to assess what your users will tolerate in terms of app price. Here it’s worth investigating what models and prices are being used by your competitors. Even if there is no direct competition, look at similar classes of app and see what they do.

Even if you want to price your apps, err towards a model that provides users with a free download of some sort — as a paid download, even a low priced one, will be a barrier to many users.

If you've any doubts about the effectiveness of a model with a paid element, then consider implementing in-app advertising in a free to download app.

You can also mix the models, for example by using both advertising and in-app purchases. The only combination that should be used with caution is advertising in a paid app, as users may view this combination negatively.

Bear in mind that there are some apps where you may be practically limited to either free or paid options only. For example games targeted at children may work better as paid apps: parents may look for games without advertising or in-app purchases that they can safely let their children use.

If you come to no firm conclusions from your research, consider trying these general guidelines when choosing your model:

• Use the Premium model for feature-rich apps or apps in specialist niches, also where you've an establish brand that users trust.
• Offer a free version of any premium app and promote the premium app as an upgrade.
• Use in-app purchases where you've granular or incremental content that can be sold as low priced additions, but beware of the development overhead in implementing each item the user can purchase — start with a few and add more over time.
• Use in-app advertising in apps that offer a 'browsing' style interface, where the user is likely to notice ads while looking for and consuming content. It may also be a good option where the market or target audience might be more price sensitive.

You’ll probably have to experiment with different models to find the right one for any particular app. You may also find that you need to use different models for different apps in your portfolio, particularly if the user base varies between those apps. Similarly, variations among markets may mean that you can price your app in one country, but need to use in-app advertising in another — for example, you might be able to position a soccer app as paid in the UK or Brazil, but need to use in-app advertising in a version for the US.

Also see

• Profiting from your app
• Promote as upgrade to free version