Working at celadonsoft.com to help companies solve their AI/ML related challenges. CMO
Developing a dating app can be a profitable investment. Whilst it is impossible to calculate “love” in plain numbers, there is lots of data out there which shows the need for dating apps in today’s market.
Dating app development has a huge monetization potential. In 2019, the average user was spending around 1.5 hours a day using dating apps.
I have up-to-date experience developing successful dating apps both for iOS and Android, which I'm going to share with you so you can learn how to develop a high quality and profitable product.
There are three main monetization strategies for any dating app: paid subscription or premium accounts, advertising and in-app purchases.
This is a common method in which users pay to use an app for a certain period of time or pay a fee to unlock some additional features.
Users can pay for premium features for a month, two months, half a year and so on. This strategy works best when your app is already popular and has a lot of active users. It would however, be wise to offer different plans and different time periods, to provide users with a choice of how much they want to, and can afford to pay.
The fee can be paid regularly (e.g. once a month) or paid once (e.g. yearly subscription). Discounts can be included within this strategy in the case that the user chooses a one-time payment over a long time (e.g. £10 a month or £110 a year). Instead, you could offer a one-time fee, allowing users to enjoy all premium features.
Most dating apps are free or claim to be so. Freemium is when a paying user will have access to the set of additional features and advanced functionality. It increases the users’ loyalty and helps to spread the product. Other ways to monetize your app using this model include virtual gifts or increasing the radius of partner.
Let’s have a closer look at some of the most common examples.
Another way to make money is to use ads. These ads pop up on the app when it is being used and money is made when a user views or clicks on these adverts.
Have a look at Grindr. Revenue comes from ads and Grindr Xtra itself. It’s paid version allows users to see more matches and to choose from.
The issue with using adverts is that this method is intrusive and if you depend on ads only, there is a huge risk that your users will leave. This is an issue because apps such as Tinder and Bumble do not use ads at all.
Ads banners in an app. Source: dribbble.com
Having adverts in your apps is a good way of making money and it does work when you have a lot of non-VIP users. If the functionality of the app is respected, native adverts are the best option for a dating app. This is utilized by Tinder – the ads do not interrupt users’ experiences and they do not annoy them. Whilst adverts do work, they are expensive – costing up to $5000.
Ads formats to use in your dating app:
Offering users the chance to buy additional points or functions in-app is a good way to monetize and if you are developing a free app, in-app purchases are a simple and easy way to monetize, whilst also enhancing user experience. In most cases, these purchases are virtual gifts to be sent to dates or profile boosts, making a profile page more attractive.
One important point to considerbefore investing into in-app purchases is the way they will enhance user experience. In-app purchases help to reduce churn as users get additional benefits. It is worth spending some time to find a balance between in-app purchases with additional benefits and free app with great user experience.
TOP-3 simple ways to optimize in-app purchases installing:
There are also apps, offering some branded offline goods like flowers, sweets, greeting cards and so on. They can be very profitable on special occasions, like Women’s Day and Saint Valentine’s Day when users are more likely to buy them.
Another option to make your app more engaging is to offer third party services like booking or a taxi service, so the users can plan a date without leaving the app. This is great for all – the app gets some additional income and the users save time planning.
Another option to consider is offline events to make money – by hosting dating events or sending event tickets right in the app.
Overall strategy should include more than one way of monetization. Thus you can ensure revenue generation without disrupting the user experience. Therefore, the more techniques and methods you use, the better for the app’s income, and the better the experience is for your users. For example, you can run ads and at the same time offer users the ability to pay to get rid of the ads while using the app. This is one of the best and most widely used examples of combining two monetization methods in one app.
“Underwater rocks” to keep in mind
As mentioned above – to make money, your dating app should gain new users as well as retaining old ones. In order to do this you should ensure your app is engaging and stands out in the market. You must therefore develop a marketing strategy. You can check out this simple step-by-step guide to not only attract customers, but improve KPI metrics as well.
One point that is essential for the success of your marketing strategy is KPI defining. If you have correct metrics at each point of the user’s journey, you can analyze the data and define the milestones and brick walls, preventing your users from spending more in the app. In other words, you get an opportunity to work with real time data and see the users’ intents, allowing you to optimize the app’s performance.
Three essential metrics for any dating app are: Cost per Acquisition (CPA), Lifetime Value (LTV), and Abandonment Rate. Let’s have a detailed look at all of them to make it clear why they are that important.
Cost per Acquisition (CPA)
These metrics show how much a new user is active and paying user costs. As a rule here the marketers include the ads cost, tech costs (hosting and so on), the amount you spent on development itself and on creating text content users see. These costs seem to be not that obvious, but they are important for finding out how much a user really costs. This metrics can serve as an indicator of what parts of your marketing strategy to make a priority.
Total Cost of Campaign / Number of Acquisitions = Cost per Acquisition
This metric is the ratio of all transactions, taking place in the app versus abandoned ones. Among the most common reasons why users abandon transactions are poor performance, extended load time and bad user experience. Abandonment rate serves to help you define the gaps and fill them, to make users complete as many transactions as possible without abandoning the app. This strategy will help you to improve the performance of your app.
Lifetime Value (LTV)
This is the revenue you get from the customer during his lifetime. This metrics allows you to check the value of each segment of your target audience and make a decision on how much to spend, attracting new users. Don’t forget about churn rate and the metrics, mentioned above.
To put it simply: LTV must always be higher than the customer acquisition cost.
LTV has another purpose. Having all the data in hand means you can calculate the potential income in the near future. Lifetime value is metric and easy to increase. You should follow the users’ requests, fulfilling their demands by according to the feedback they give. Experienced Customer Support is another point which makes an app more attractive.