The Five App Business Models That Get Funded

If you want investors to fund your business idea, you should consider one of the app business models
that commonly get funded. When you don’t you risk building an app that
isn’t focused on bringing in revenue and instead becomes a hobby. You
can avoid this fate choosing an app business model that has a proven
track record and that investors can instantly “get”.

App Business Models

E-commerce / Marketplace
Audience-Based / Advertisement
Software as a service
Micro Transactions
Pay to Download

E-commerce / Marketplace

Think
Uber, GrubHub, Airbnb or any app that sells real world goods. Mobile
commerce disrupts the status quo by providing users with a faster and
streamlined experience than its real world counterpart. Hailing a cab in
New York City was a frustrating experience until Uber came around and
disrupted the taxi industry. Now, customers can hail a cab anytime,
anywhere with a few taps.

Ads are the most
common way to make money. Ads, however, require a big audience.
Instagram, Facebook, and Snapchat are all ad based apps. They capitalize
on their broad audience through advertising and selling usage data to
advertisers. If you chose this app business model, you have to build an
audience quickly. Snapchat had explosive growth, in less than a year
they had 1 million monthly active users. Not only do you have to build
an audience, but you also have to keep them coming back for more. You’ll
need to create something that your audience will use on a daily basis.

Software As A Service

The
SAAS business model gives customers the opportunity to hire cloud-based
software to perform a job. This job can be managing a customers sale’s
pipeline like SalesForce. Salesforce is a paid subscription service.
Customers get access to sales management tools that bolster
productivity. SAAS companies give customers the opportunity to do more
with less. Their customers reward them with subscription fees on an
annual or monthly basis. If you want to build a SAAS product, focus on
making your customer’s life easy.

MicroTransactions

This
model consists of building an app where customers pay for virtual goods.
The top grossing games such as Angry Birds and Candy Crush on the
Google Play Store and the Apple App Store are free to play but are rich
with micro transactions. Designing an experience that converts free
users into paid users is tricky, but once achieved, can have billion
dollar results.

Pay To Download

Last but not least, the
pay to play business model require an upfront investment from your
customer before they experience your application. Apps like this usually
have a clear and focused value proposition. This value proposition
incites action from potential customers converting them to customers.

Those are the top business models that get funded. If you have an app idea and you need help conceptualizing or developing it, we can help. We’ll help you determine which business model is correct for you and your target audience.