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In case you haven’t heard, developing apps for mobile phones isn’t exactly a cash cow for your business, according to a study from the Communities Dominate Brands blog. While there are a few great selling apps that make a crazy amount of money in a short time (played “Angry Birds” yet?), the majority of apps barely pay for themselves.

That bit of depressing news doesn’t mean you shouldn’t create an app though. In fact, as the number of mobile users continues to skyrocket, more and more customers are going to be making use of apps and mobile websites. The potential for profit is out there — you’ve just got to take advantage of it. Here are four secrets of how to generate cash flow through mobile app development:

1. Make a Niche App

App development is such a hot field right now that that there are many variations of the same theme jockeying for attention. So before you create your own take on, say, the mobile camera lens, think long and hard about how your particular idea will differentiate itself from its multitude of competitors. While it might seem profitable to create simply a variation of an already successful product, the truth is that if people have found a product that works for them, they’re unlikely to change unless there’s a REALLY compelling reason.

But if you can a fill an empty niche? App buyers will be willing to pay for something that meets a need in an innovative, game changing way. So think outside the box. Take the time to scrutinize potential competitors to make sure you’re not just replicating what’s already been created.

As Joshua Condon at the Inc. Technology blog pointed out in his post on the dangers of creating broadly useful apps, “Selling a niche app that just one or two percent of platform users are willing to pay for can still make for a solid payday, and cuts down the likelihood the vendor will look to add the functionality into the next iteration of their OS.”

2. Design for Love

A great idea will only translate into profitability if it’s easy to use and provides a consistent user interface. In other words, the customer has to love not just the idea behind the app, they have to love the app experience itself.

GigaOm recently published an article about Color, a much-heralded product that generated large amounts of start-up funding but didn’t deliver in usefulness. The tech blog notes, “An app can’t just hope to profit by being at the intersection of a number of promising mobile trends. Developers still have to … remember that user experience, especially the one following first launch, is still the key to wide app adoption.”

How do you do this? First, conduct user tests early and often. Use real-world users as your guinea pigs instead of fellow developers. Focus on which parts of the UI confuse and/or mislead them. Second, use standard interface design. Don’t try to reinvent the wheel when it comes to scroll bars, radial buttons, progress indicators, etc. Third, don’t make the user register as the first step. Many app users have little patience for anything that slows down their initial use of the product. Delay them too long, and they might give up for good.

For a more in-depth look at UI design issues, check out an excellent post on interface design mistakes from Jakob Nielsen at Alertbox.

3. Choose the Correct Revenue Model

There are lots of ways to make money with an app besides selling through one of the big app stores. Here are some of the options:

    • Offer a free lite version and a paid full version
      This is a model that dates back to the days of shareware. (Anybody else remember those once ubiquitous programs?) Give your users a limited use version of the app for free, then offer a full version for a (reasonable) price. In order for this to work, you’ve got to have devoted users that love your product and can’t imagine life without it. Pre-sales user testing is integral to determining whether this will work for your business model. One great benefit of the “try before you buy” option is that it involves a low threshold of customer risk, thus making new users more likely to try you out than if they had to fork over $9.99 from the get-go.
    • Use ads integrated into a free app
      Ads are moderately profitable. The level of revenue you can command through in-app advertising depends on how many times the program is downloaded and then how many times it’s used after download. If people use your app again and again, great! If they only use it once or twice, you’re in trouble. One way you can determine how well your free app is doing is by integrating analytics into the product and tracking the results for several weeks. You may discover that selling the app would be more profitable than trying to generate ad revenue.
    • Have an app that drives people to your business
      Some apps generate revenue by allowing mobile customers to shop your online store from the comfort of their handheld phone. There’s an ease of use in apps that’s hard to duplicate through mobile sites alone. That’s why developing an app that makes shopping at your online store as easy as possible is an important revenue generator. People are beginning to abandon their desktops for smaller, lighter computers, especially tablets and smartphones. You must be prepared to reach out to this new wave of customers.
    • And the de facto option: generate revenue through app store sales
      In order for this option to work, you’ve got to generate good buzz! More on that in the next section.

4. Spread the Word

No matter what type of revenue model you choose, your app will only start bringing in money when people begin using it. That’s why you’ve got to spread the word through  marketing. First, create a SEO page for the app that links to the download site. Second, send out press releases to app review sites (and if you need help drafting press releases, check out some of the PR specialists available for hire on oDesk). Let some high traffic bloggers review your app and provide them several copies to offer as giveaways to help generate buzz. Finally, follow mentions of your product in social media venues and respond to customers’ questions and feedback as quickly as possible. Remember, all the standard rules of word of mouth marketing apply — make use of them!

In truth, there’s no hard and fast guarantee that your app will be the next big hit. But if you don’t apply the above points, I can guarantee that your app will be a failure. Maximize your chances of success (and a good cash flow) by putting this post into practice. And maybe you’ll discover that money really does grow on virtual trees.

What have you learned about successful app development? Tell us about it in the comments below.

Julia Camenisch

Contributing Author

Julia Camenisch is a freelance technology and business journalist. She also works as an editor and copywriter for a wide range of clients, including national magazines, small businesses and nonprofit organizations. Julia brings to Upwork a passion for empowering small businesses through the innovative use of technology.