Software monetization allows you to generate revenue from your intellectual property. You can create income from the software application’s rental or sale and earn from the rental or sale of the value-adding services that complement the primary software apps you offer. Monetizing your software also prevents authorized usage, minimizing revenue leakage. The software industry lost $51 billion in revenue in 2009 due to piracy.
With software monetization, you can safeguard your apps from unauthorized usage, copying, and distribution while generating more revenue, enabling business growth and evolution. Monetising your software can be challenging, which may lead to costly mistakes. This article shows you how to monetize your software.
1. Find a software licensing solution
Software licensing solutions enable you, an independent software vendor, to license the applications you’ve created to clients on specific terms. They ensure the clients can only use the applications based on the particular license terms. When licensing software, avoid traditional licensing solutions that rely on dongles or software license keys because they may not safeguard your IP and can’t help ensure a precise match between paid license fees and usage. Modern licensing solutions are the way to go, as they improve cybersecurity, reduce costs, promote market growth, and don’t require you to install or generate license keys.
2. Offer a freemium business model
A freemium business model is an excellent way to monetize your software. With this option, you offer the first app at no cost. This helps you acquire a broad user base that you can upsell with more premium services or features. The freemium model ensures extensive adoption of your software, letting a substantial user number try the applications than if an initial charge was implemented. It drives network effects and provides upselling opportunities later on.
3. Implement in-app purchases
In-app purchases are among the primary app monetization models you can use to monetize your software. They imply that users can pay for the app’s extra features, services, or content. Here are various types of in-app purchases:
- Non-renewing subscriptions: These subscriptions aren’t renewed automatically. They provide content or services for a limited period. Should users wish to maintain access, they’ll have to buy a new subscription when the existing one expires
- Auto-renewable subscriptions: This model allows users to be charged continuously to access services, content, or extra features in the app. The subscription ends when the user cancels it
- Non-consumable: When users purchase non-consumables, they’re available to them permanently. They don’t expire with use or time. Non-consumables are usually premium features
- Consumable: When users buy consumables, they get depleted as users use them. Upon using a consumable purchase, users should purchase other consumable in-app purchases again to leverage those benefits
4. Leverage open-source model
The open-source model is a strategy that lets you give your code to anyone to access, personalize, and control. It’s free and provides features that enable end-users to conduct their daily tasks, tailored to align with their business needs. Nonetheless, monetization applies where end-users require extra technical support hosting services, premium features, and SaaS.
5. Consider in-app advertising
In-app advertising is a software monetization involving embedding ads into your software. It works well together with subscriptions and in-app purchases. You can offer your application free with mandatory ads or provide it ad-free but include a subscription payment. Giving your software for free but including ads can raise the download volume while boosting your revenue. Combining in-app advertising with in-app purchases is an excellent way to earn more money from your software.
When you seamlessly integrate ads into your app, you improve user experience. For instance, you can reward users for interacting with or watching ads at particular points in the application lifecycle. This may result in higher in-app purchases. In-app ads designed for your software and added in the right areas with the right pacing and capping can help improve in-app engagement, lifetime value, and user retention. However, an in-app advertising strategy’s success primarily depends on your application’s traffic volume.
6. Use a subscription monetization strategy
The subscription monetization model involves selling a service or product and getting annual or monthly recurring subscription earnings. Its focus is on customer retention, not acquisition. If you decide to adopt the subscription-based monetization strategy, note that your pricing and offer models should be flexible to keep up with changing consumer needs. The alignment between price and offering value should be easily understandable and transparent.
With a subscription model, you offer customers what they regularly need for a predetermined recurring fee, meaning your revenue stream is predictable. This pricing strategy’s full revenue potential depends on your customers’ lifetime value, meaning your subscription-based pricing strategy should focus on customers. It should be customer-centric. Consider leveraging a billing platform because it helps you grow your monetization strategy easily.
7. Implement the pay-per-use pricing model
Pay-per-use is a pricing model you can apply to software to effectively parcel value into saleable units. It’s a metered product or service where you charge users for access. The pay-per-use monetization model offers a clear usage value proposition that users can easily understand. It’s simple as its revenue formula is straightforward, and users love the predictability of a single-time charge. To make the most of this pricing strategy, be careful with variable and fixed costs to ensure per-use profitability.
8. Use the open-source model
The open-source model is a developer-focused technique that lets you leave your code for anybody to access, control, and customize what you’ve developed. It’s an excellent way to encourage the adoption of your software. This model generates an engaging user experience and lets users contribute to your software’s improvement. While the open-source model offers its code for free and provides features that help the end-user do their daily tasks as it’s customized to meet their needs, you can apply monetization where customers want extra technical support, hosting services, premium features, and Software as a Service.
9 . Leverage the voluntary contribution strategy
The voluntary contribution model is all about urging users to willingly contribute to your business to let you keep offering a product or service. You don’t force users to make subscription payments. However, they can pay monthly or make one-off payments if they want. For this model to be effective, you must offer a high-quality product or service and have a loyal following to earn enough revenue.
Endnote
Monetizing your software allows you to generate revenue while protecting your apps from unauthorized use. Use these strategies to monetize your software.
