We normally think of the subscription model being connected to a business that offers software or content for a set monthly fee. Another common subscription model is the provision of goods for a set fee per month, for example, Dollar Shave Club. However, it is not just desktop websites or product deliveries that can make a profit from the subscription model and apps are now becoming a good source of subscription income.
The Growing Trend Of Apps
Apps are an effective medium for communicating with audiences because of their very nature, sitting on a mobile device, ready to be interacted with. This is why so many brands are now releasing apps to allow their target audience to be in continuous contact with them.
While many apps are free, there are numerous apps which have to be paid for to be used. There are also other apps which are free to download but require extra payment if the user wants to maximise their use.
Then there is the growing number of businesses who are seeing apps as a way to grow their profits by offering subscription services. One example is the New York Times that offers their crossword puzzle to subscribers for a nominal fee of $40 per year.
There are also game companies who require a monthly subscription to play their game.
One of the biggest advantages of this model is that it provides another revenue stream for organisations and little effort is required to market the app. Anyone who regularly uses the product from the main business can be contacted and informed about the app and how they can gain access. And because they already use the brand, and are presumably happy with their service, they are more likely to make the purchase.
It also allows the business to market more of their products to subscribers by including responsive adverts in their app. For instance, the New York Times could advertise the latest news items that are available on their website or in their publications as the app is being opened. They could also include a ‘buy now’ link that will automatically charge the customer when they go to buy an electronic copy via their mobile device.
Finally, these apps can be used to acquire more information on users, which can be used in marketing campaigns. This can improve results and generate more revenue on other products / services.
There is one major disadvantage to the development of an app and publication – cost. Apps can be very expensive to produce with some costing more than $5000 to develop before anyone can download it for use. In organisations with small margins, this might be too expensive. Then there is the new content that needs to be generated constantly for these apps (i.e. creating new crosswords). This can be expensive and lengthens the return on investment time.
There are also other costs such as upkeep for the app’s server to keep it running and constant updating of the app to ensure it works on the latest devices.
The Final Word
What businesses need to do when they are looking at developing an app is consider whether or not they can afford to make the app and keep it running. This can only be done by engaging with your main customer base and seeing whether or not they will be willing to pay a subscription for your app.
If you don’t do this, you could end up paying for an app and diminishing your business’ profits. Yet get it right and you could end up with a good ‘cash cow’ product that will propel your business to the next stage.