What Does It Take to Effectively Monetize a Product?
As 2016 approaches, you may be looking to take the big step of turning your product into something profitable. Unfortunately, the proof shows that simply building an audience for a free app and then finding ways to monetize it doesn’t always work. You need look no further than the failures of monoliths such as Snapchat that had massive audience bases but no way to get them to spend any money.
So what does it take to get people financially invested in what you’re doing? It’s actually a lot harder than it probably should be. It’s tempting to go free and stay free for long periods of time so you can build a base and then find avenues to monetize it, but as sound as this strategy sounds, it hasn’t worked out for many companies.
Once people get an expectation of free in their head and you let them settle on that, it’s very hard to convert them into paying customers. So what’s the key? What’s the trick to get people spending money when every instinct tells them not to? When they could easily turn to a newer, freer version of your product as soon as you set up a paywall or ads or microtransactions?
Well, it all begins with a sound monetization strategy going into any product launch. We’ve talked before about how important it is to recognize the opportunity to monetize before it passes you by. Many companies get too fixated on building an audience and they lose sight of the fact that making money really should be a part of this process at some point.
So what are some of those strategies? Obviously, it depends a lot on what kind of product you’re putting out there. Not all apps are made equal and the same monetization avenues don’t exist for everyone.
So let’s take a look at some different ideas that are widely useful to whatever sort of app you’re making.
1. Don’t Fear Ads
Ads are scary, there’s no doubt about that. You want your app to be beautiful in terms of interface, usability, and aesthetic. Ads are not pretty and it’s admirable that you wouldn’t want to damage a user’s experience with disruptive ads, but in many cases, it’s just not practical.
Surprisingly, many consumers don’t actually mind advertising too much. So long as they aren’t too intrusive or too disruptive, people recognize they have a time and a place especially if your product is providing a genuinely useful or compelling service.
2. Sell High-Quality Content
If your business is geared toward content then one of the easiest and most effective ways to get people spending money is to tier it according to quality. The most important thing here is to recognize what people want and how badly they want access to it.
Find out which pieces of content you’re putting out get the most traction and build a business out of them. If what you’re offering is truly high-end and truly valuable, then there’s a good chance people will throw a few bucks your way.
3. Doing Freemium Right
Freemium is tricky depending on the type of app you’re putting to market. Especially when it comes to navigating the balance between creating a premium version that’s genuinely valuable without cutting the legs out from under your free product.
The first key here is to be upfront about what you’re doing. Sell the free version as valuable, but the premium version as indispensable. If you’re dishonest or underhanded about how you sell premium, that’s a quick turn off for many people.
There are many examples of freemium apps that made it work and found a way to have a free service that people wanted and a premium one that genuinely added to the experience.
All these strategies can be boiled down into a few steps that are generally pretty successful.
Step 1: Get people invested.
If they’re sold 100% on your idea and if they’re evangelists for your brand then they’ll be prepared to buy into the next step. The best way to do this is to build a great product and to have a story to tell about it that resonates with people.
Step 2: Learn from the feedback.
People that care about your product and its success will have a lot to say about how to make it better. This is key to adding features that you can make premium and to continue to build a great product worthy of paying for in general. Take a long, measured look at all the data you can get and make sure none of it goes to waste.
Step 3: Find spending patterns and work with them.
Certain people are more willing to spend more money for different things. There’s no way you’re going to get everyone to spend a lot or even a little on what you’re offering. Identify the people that spend, build usage patterns, and use all that data to predict and work towards the most profitable efforts.
None of it is fool-proof and none of it is guaranteed. Getting people to spend money is still as hard as it’s ever been, but if you have a strategy and a real plan of action, there’s a much better chance that in 2016, your app will be making more money then you could have ever anticipated.