A Local App Monetization Model

As a new developer it can be frustrating to generate self-sustaining revenue by competing with apps on the “global market”. It is largely a matter of supply and demand, where the number of app of potential interest to “anyone” can make it difficult to reach someone – because everyone else is trying to do the same.  There is the potential to achieve better, even faster, revenue through apps for your local market.   The kicker is that once you have a functional app for one local market, you have a template for many other local markets.

One type of local app can be likened to a “community portal” – representing area establishments, businesses, sports, clubs, etc.   You will likely want to apply a theme to it – related to sports, community, entertainment, etc.  It could be presented as much as a game or utility, or both.   Conceptually, this is far from new, there are plenty of examples out there that you can draw some inspiration from.  The core component is monetizing your app under this model.

Market Research is Required.  If you run with sports, you will want to know which sports to target, how many local high schools, colleges, and private leagues are in close proximity to your target city.   Your theme can just as easily be focused on night clubs, local bands, general business, education, religious or charitable organizations.  To qualify the potential of your “theme”, you might also physically survey their activity levels – frequency of events, number of special events, attendance levels, etc.

The larger the local population, the better off you are.  While you might want an app for a small town, you would likely want to broaden your target to encompass a county or district.

Define Your Possible Revenue Sources.   It is important to be creative in listing out all of the “even remotely possible” sources of revenue that could be associated with your app.

  • Business Advertising – standard in app ad sales, not limited just to your app, but your web site, newsletter and/or promotional emails.
  • Sponsors – getting local business and establishments to fund your app’s development, don’t forget to check with your local Chamber of Commerce or Small Business Association office.
  • Reseller Agreement – offer their products in your own in-app store or get a commission for any sales you direct to their site.
  • Memberships/Subscriptions – evaluate whether your app offers enough to warrant charging customers a monthly, quarterly or annual fee, but you would do well to offer the first 30 or 90 days for free.
  • VIP Package – work with local business and establishments to offer VIP only discounts or trial freebies – ranging anywhere from a free month of a local newspaper, free web site access, a free oil change with your yearly automotive inspection, a free shampoo with a hair cut.
  • Alternative Options – crowdfunding, local business development grants, possible local business incubators, scholastic and industry contests can also be researched and evaluated.

With creativity, almost “anything goes” – these days you don’t necessarily need a product to have a product, just as long as you know and have an agreement with someone who does.  Your role is to promote their business through your app.  The difficulty, as we know, is that there are so many apps, that they are often given away for free.  It is difficult to monetize free, but not impossible.  Functionally, it is much easier to monetize something when you know where it fits and how it interacts with everything relevant to it.

Define Your Breakeven Point.   Include your projected development time and all the expenses associated with developing your app.  You want to know in advance how much you will need to generate before starting on your app so you can evaluate whether the market will bear it – whether just $5k or $25k.

Knowing how much you will need can help you define how much you would need to raise from each possible source of revenue.  Conducting a survey of local people about how likely they would be to spend money on any aspect of your app will provide you a better basis for assessing the potential of the revenue components.

If you estimate that you will need $10,000 for your app and you know that you can likely get $3 from 1,000 local subscribers, then you have some basis for considering the VIP upgrade for $30 to possibly 20% of them.  That wouldn’t be out of the question for a developed market with a population of over 250,000 people.  That accounts for $2,400 + $6,000, leaving you theoretically shy of $1,600 from your base target.

You can then look at other means of revenue or possibly expanding your target market to pick up the shortfall.  The goal is to find as many revenue streams as you can, so that if one falls short, another can pick up the slack.

By working with local areas businesses and establishments, you substantially increase your total marketing capability.  If your app helps a business connect better or more frequently to their existing customers, and help bring them new customers, they are likely to promote it.  You can offer to help them by providing the content to make it easy for them to do so.

Repeat.  Once you have one app that shows signs of success for one area, you have the capacity to bring it to other locations.  That’s really the true goal, because the vast majority of your development cost is already taken care of.  All you need to do is create another version of your app that focuses upon a different theme or location.  That’s likely to include just graphical and text adjustments – and then the networking and relationship development efforts to get new businesses on board with your new app.

However, now that you have one successful app out there, you can sub out for a community relations manager to help in building up the client base for your new app.  By showing that it works in one location provides reasonable basis that it can work in other locations of a similar demographic and business breakout.   Moreover, you are not limited to working on just one new app at a time, but can aim for doing the same for multiple cities or counties.  In short, you don’t need to go global to be profitable.

Project Manager at the Opera Mobile Store providing Sales-Marketing support. Content development and research.

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