The monetization of digital products for UX/UI
How to seamlessly integrate the most common monetization strategies into UI/UX
Monetization is a big topic for almost any app. Therefore, as designers, we need to account for it during our work. It is crucial to figure out the way to implement monetization strategies in the apps to make them efficient without harming the design and user experience. To do so, a designer needs to know and understand the different types of monetization and their relationship with design. It also comes in handy to have some tips on the design solutions.
I worked on several monetized apps with different monetization strategies before and learned a lot about the topic, so if you’re a product designer who wants to learn more about monetization, keep reading. I will sum up the theory and share my tips and tricks with you.
For this article, I’ll focus on B2C applications. B2B apps usually use different patterns and strategies.
Digital product monetization
Store purchase
Probably the oldest and arguably the least creative way to monetize. That being said, it’s still a legitimate one. It’s a simple system. The user pays in the app store for downloading the app and expects a counter value. The lifetime value of the user is set in stone here, meaning the money business gets from a user is clearly defined from the beginning. Therefore the price needs to be set a little higher to cover future development costs since the user has updates for free.
There is not much you can do about this as a product designer. It’s more on the Marketing team to communicate why the customer should buy your app. The only thing you can do is to create stunning store listing screenshots. Here is a nice inspiration library: https://scrnshts.club
In-app purchase
With an in-app purchase, the user is buying digital goods within the app he has already downloaded. We can find several examples in dating apps, where users buy extra harts, longer response times, and more. It’s also a common strategy for games, where users buy different skins, game currency or levels. Often the game is for free and is only funded by users buying premium content.
The key thing to keep in mind when designing a store for digital content is to clearly communicate clearly what the user will get. I like to add labels such as “BESTSELLER” to some of the items to promote it. It reduces the decision paradox. Bundles of content work great as well. Apple has it’s own guidelines for in-app purchase, which you can check here: https://developer.apple.com/design/human-interface-guidelines/subscriptions/overview/.
Subscription
Users pay for a subscription on a regular (usually monthly or annual) basis to use product, service or access content. This type of monetization has several benefits; it’s a great approach for company cash-flow and the lifetime value of the user may be significantly higher in the case of long term subscription. Subscription is the most common way of monetization for streaming services and other content focused apps, but we can also find countless examples in gaming and social media. According to the polled US developers, in 2019, Subscription was the most money generating app monetization strategy (https://www.statista.com/statistics/262945/revenue-development-of-mobile-apps/).
It’s important to closely follow guidelines, especially if you want to have a free trial period. It happens many times that the app gets rejected from the store because of design issues on the subscription screen. The other thing to keep in mind is to clearly communicate features users will get as well as having different periods users can subscribe to. The most optimal time frame for most of the companies is 3 months. So you want to promote that one. Apple guidelines: https://developer.apple.com/design/human-interface-guidelines/subscriptions/overview/
In-App Advertising
There are many companies providing ads you can insert into the app. These ads are paid by the business that wants to advertise and the price is divided between the provider of the ads and the developer. It works more like a stock than a physical banner standing next to the street. Companies bit to rent advertising space on the most prominent digital place. We are talking about CPM here which means how much you get per thousand impressions. Usually, this number is pretty low around $10–15 in the US and around $2–3 in India. So the ad needs to be displayed multiple times.
The important thing is to provide value to the user in exchange for watching the ad. Most of the apps reward the user with digital goods. Also, you need to closely watch the analytic and see if there are places where the users may drop off because of too many ads. This type of monetization needs a lot of toggling and experiments. So don’t be ashamed for not figuring it out all at once. While selecting an ads provider, try to implement multiple providers to increase your CPM.
Selling User Data
Some apps have an easy opportunity to gather a lot of data about users. This data might be interesting for some other business. That is when a transaction happens and the app developer gets money for selling it’s users’ data. This strategy is quite common in finance and social media markets. There are ongoing discussions about the morals of this practice. They are arguable, and you can find a lot of information about it online, so I recommend checking resources before you decide to work with selling user data. The truth is nothing is for free. And you may pay either by money, time or information about yourself.
These are the five most common monetization practices. At this point, I would like to emphasize that they are not mutually exclusive by any means. Quite the opposite actually. They work together pretty well and combining the right tactics might bring the best results.
Final tips
Firts, always make sure that your design and the moentization in general complies with the policies of the marketplace you want to display your app at. You can find links to both, Apple and Google monetization guidelines, in the resources under the article.
To monetize efficiently, you should test out different ways of monetization strategies as well as designs. Then it’s about AB testing them.
Every monetization strategy requires a different set of metrics. For example, when monetizing by ads we measure how many ads per session the user saw, what were the placements and user retention. We look into the lifetime value of the user, what annoyed him etc. That enables us to optimize the ads and reach their full potential. The goal is to have the ads integrated into a flow in a way that makes the user feel they are beneficial for him; that he is getting something for free. You can unlock some content for watching them, give extra lives in games or extra swipes in dating apps. You get the idea.
To make the most out of monetization, a high level of user retention is needed. User retention means how often the user returns to the app. It might be multiple times a day when the user opens his social media. But in most cases, 3-day and 7-day retention is measured.
To improve this metric, we try to create a hook loop. It’s quite simple; we create a trigger for an action, which brings reward and supports further investment. A good real-life example of this is Ikea. You are triggered by a banner to go to buy a new shelf. So you take an action, you go to the store and find the shelf. You wait in the line, pay, and feel rewarded with your new shelf. Then you invest your time investment into building the shelf. Since you’ve built it yourself, you will give it a higher value. And that’s why next time you need a chair you will fo back to Ikea.
Play the fair game
As a product designer, you want the user to feel amazed and go back to your app again and again. However, the ultimate goal is to achieve it ethically. That means through mutually beneficial processes, instead of hooking the users on bad habits. That is a crucial thing to keep in mind while integrating monetization & retention strategies into the app… Many businesses aspire to bring service and make users lives easier or better in a way. We as designers can help with that. We co-shape the app and that is a great opportunity to add some extra value for the user. If you read till here, you know some of the practices that will help you to do so. Good luck!
Resources:
Inspiration library: https://scrnshts.club
Apple Guidelines: https://developer.apple.com/design/human-interface-guidelines/subscriptions/overview/
Google guidelines for monetization and ads: https://support.google.com/googleplay/android-developer/topic/9857752
Statistics and facts about mobile app monetization: https://www.statista.com/topics/983/mobile-app-monetization/
