Every software provider wants to know how to monetize a desktop application as it is a good source of income. There are numerous options how to do it, and in this article, we’ll look at the three different software distribution models (on-premise, SaaS, hybrid) to understand better the ways of software monetization. If you’re curious to know, how to monetize a desktop application most effectively, keep reading
How to monetize a desktop application is now an extremely popular question as the software market is growing fast and a lot of various apps appear. Nowadays, there are various desktop software monetization solutions, and everyone can choose the suitable one. However, performed in different ways, the idea of monetization itself does not change, and almost each software provider someday comes to the question “How to monetize desktop apps”.
Monetization has been taking different forms since the moment its conception first appeared but the fact that every provider wants to monetize a desktop application stays the same. MS Office would be a good example to explain different software monetization models. First, the money was received only for on-premise solutions. It will be considered in the article later but now let’s in short say that it is when a customer pays for an app only once while purchasing it. MS Office started exactly from this. Then, you had to pay for each update that practically means that you were buying each version of an application. Nowadays, the model of MS Office distribution has transformed greatly, and now it is a cloud solution. It means that the application is distributed over the cloud infrastructure and you don’t need to buy a one-time license and later pay for the updates to the next version of the MS Office as long as you have an active subscription. Cloud software monetization solutions differ from the on-premise ones and will be considered later.
Altogether, because of the transformation of software distribution models, monetization had to change as well. That’s why the question of how to monetize a desktop application is so essential now. Especially considering the fact that people’s perception of things has also drastically changed, and they are ready to pay for the services on a monthly basis, which is obviously good for app providers. So, let’s dig deeper and analyze various distribution models in order to understand different software monetization models better.
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To understand clearly how you can monetize a desktop application, it’s better to familiarize yourself with different software distribution models. Its concept implies how apps are delivered to customers. There are different options. However, there is no such a unified system to divide these into some definite categories, and in the IT community, it is normal to classify them into three groups:
- On-premise solutions
- Cloud software
Each of these options has its pros and cons that we’ll look at in the next paragraphs. They are all different, which implies how much resources there will be spent on building an application, maintaining it, and giving the needed support to the users. As for the last point, its difficulty varies very much depending on the distribution model. For example, it is much easier to provide all the support and updates while speaking of cloud apps than the on-premise, or hybrid ones. In addition, people expect the different outcome of purchasing an app and using it online, so a lot depends on the way the customer receives the software. Let’s look closer at each of the options to realize which ones will help you to monetize a desktop application properly.
The on-premise distribution approach means that a client buys the software once, and since that moment, he keeps it on his one computer, inside its infrastructure. However, additional costs may appear when an app needs to be updated. Then a user has to pay for it, which basically means buying a whole new version of the application. This approach is a little bit outdated but still feasible in some cases, especially for enterprise solutions.
Many people think that on-premise software is no more popular and totally displaced by SaaS but it is not true, as it has its advantages, which help to monetize a desktop application. Let’s look at them:
- Comparably low long-term costs. A user pays only once while purchasing software plus annual or multi-year updates and support.
- No dependence on the Internet connection. The application can be used anytime even if the connection is bad.
- Security. A client keeps all the personal data on his own computer.
- No extra cost for buying additional licenses. You can have as much users as you need.
On the other side, pros of this approach are also quite critical:
- Extra costs include training users for this kind of software. The reason lies in the in-house IT team that is in charge of the app maintenance.
- High requirements to the infrastructure. As all the processes are handled in the data center, owned by the company that uses the app.
- Many processes including backup and recovery have to be implemented by the customer.
- A rather long implementation and dubious scalability.
- Updates are difficult to track.
Despite on-premise solutions having rather significant downsides, they are not fading away, and many people use such applications. From the provider’s perspective, there are different ways to monetize a desktop application of such type. Actually, they almost don’t differ from one another while speaking of the three most popular distribution models.
The term SaaS stands for “software as a service”. This kind of apps can also be called cloud. It is when a provider hosts an application on the webserver and gives access to the clients via the Internet as well. Usually, a subscription is used to monetize a desktop application with such an approach. In such cases, users pay either for installation or for some extra features that are available only for a certain price. Different kinds of subscriptions will be discussed later in the article.
Despite cloud software is considered more popular than the other types, it still has its advantages and disadvantages. Among the positive sides:
- Quick implementation.
- You can access an app from any device and anytime as soon as you have an Internet connection. However, this feature can be treated as a downside as well.
- No additional costs or no costs at all depending on the type of subscription. SaaS products often provide such function as freemium, which means that you can use software absolutely free until you want to use some extra opportunities.
- Only one version of the software for all customers. It is a good advantage for developers because in the case with SaaS, they have to maintain, update, and debug only one version of software unlike, for example, on-premise applications.
- Great scalability. More storage can be organized easily.
- SaaS apps require less technical involvement from the user as IT specialists conduct all the operations on the server themselves.
Apart from such important upsides, SaaS products have their disadvantages as well:
- Keeping private data on the server. It might be concerning for some people. This point includes not only private data but also industries with high security.
- The features that make users want to download an application are mostly premium and have to be paid for.
- Cloud apps are not so customizable as some people want them to be.
- No internet – no application. While the Internet is among the advantages of SaaS solutions, it’s also a big downside.
SaaS products have their pros and cons but it doesn’t make them less popular or used. Cloud apps are now widely used by people all around the world as they are easy to use and the way they are monetized is comfortable for users. When it comes to the question of how to monetize a desktop application with the approach, it most often includes only subscriptions, which is a good option for both providers and customers.
The hybrid distribution approach means a union of SaaS and on-premise software. It provides the opportunity to monetize a desktop application using methods of them both. In simple words, such a product is kept on the cloud but also provides the opportunity to download some of its parts, and in need switch between one another. Adobe Creative Cloud would be a good example of it. Photoshop, e.g., can be installed on the user’s computer but access to the additional tools is provided via the Internet. Such an approach is not so commonly used as the ones described previously because as it combines the features of them both, it means a doubled number of problems with deployment, maintenance, updating, etc.
First, let’s look at its advantages:
- A client chooses where his data will be stored. A private part can be left in the on-premise part of an app, and something not important – on the cloud.
- The broken Internet connection is not a problem, thus the app can still be used as it is already installed on the user’s computer.
- There is no need for a customer to track all the updates as they are ensured to be made by the provider. Also, in the case of the hybrid products, people don’t have to pay for each new version of an app.
The downsides of the hybrid approach, as it was already said, double because they combine ones of on-premise and cloud software:
- Customization is not so easy to perform as in the case with SaaS products.
- A problematic integration with other applications. However, a team of good specialists can surely handle this task.
- Considering the fact that the interface of the cloud-based part of an app and the on-premise one is barely the same, the number of front-end development increases drastically.
As the hybrid method combines the two others, more software monetization solutions can be employed.
HOW TO MONETIZE A DESKTOP APPLICATION: INCOME STREAMS
There are many answers to the question of “how to monetize software”, and it is where the most important part begins – revenue streams. There are different methods to monetize a desktop application, and some of them were already mentioned in the article. The ones are good for a certain kind of apps and don’t fit for the others. So, let’s look closer at each of the desktop software monetization solutions.
In-app advertising means that you are practically selling some space inside your application to the other software provider who will place his advertisement there. This is probably one of the most used solutions to monetize a desktop application. However, often it is not very correct thus is not as successful as it might be. “Correctly” implies proper placement, it’s relevance to the application’s content, and maybe the most important – its amount. As sometimes such ads can be placed all over the app, it can irritate the users and thus the provider’s monetizing strategy might fail.
Paid App Purchase and License
The next way to monetize a desktop application is the app purchase, or license. There are two kinds of license: traditional and usage-based. Let’s look closer at each of them.
A traditional way to monetize a desktop application while speaking of licenses means buying a software only once, for the installation. Such apps do not imply other additional costs, and as soon as you paid for the app at the time of the first usage, you no longer have to pay for anything.
Such a desktop monetization model might have its downsides. For example, a user might not want to pay a certain amount of money for the application he cannot try before the purchase. However, it is greatly recognized by the customers.
In B2B applications, a usage-based license is among very popular software monetization solutions. It means that a customer can use an app free until he or she wants to use some app space to deliver his services. To clear the understanding, let’s provide the example of the e-commerce apps that a customer uses free but has to pay if wants to sell something. Such a policy is also engaged in some freelance websites where you have to pay for posting more than, for example, 15 announcements.
At the first sight, sponsorship might look like the in-app ads but these concepts are rather different. Sponsorship as a way to monetize a desktop application implies encouraging customers to buy some services or products of your business partner that are placed in the exact application. For example, such a way to monetize a desktop application is often used in some sport apps. They employ such a strategy by advising you to buy a device that will track your steps, for example.
Subscription is a great way to monetize a desktop application because it allows app providers to receive revenue as long as the customer is using the software. There are three different types of subscriptions, so let’s take a look at each one.
Traditional subscription means that a user pays once in a certain period, which is most often a month, and after this the customer has unrestricted access to all of the possible functions that an app enables.
The next type of desktop software monetization models is called “free trial”. It is a very common approach among those who want to monetize a desktop application successfully. In all likelihood, this option is widely used by the providers of high-quality software. Despite it being quite popular, it is understandable why sometimes it leads to dissatisfaction from the user’s side: first you use an app with all of its features, and then suddenly you are not allowed to do it anymore until you pay. However, it is a good strategy, thus, used very often.
Probably, one moment in which this option gives up to the next one called “freemium” is that after the free trial has ended, a customer cannot use it at all, unlike the next solution.
The concept of freemium subscription, as it has already been mentioned, implies that a customer has free access only to a certain range of possible features. The others are available for some specific price. A great advantage of such an option is that if a user refuses to pay for the features restricted in a free version of an app, he still can use it, just without them.
Want to know how to build a strategy on app monetization?
There are some approaches to monetization that prevent you from starting from scratch. What monetization strategies are there, what are their types, and how to choose the one suitable exactly for your project?
Let’s summarize, and look at the picture with the possible revenue streams for the desktop applications:
After having read this article, you’re familiar with the different distribution models, which consequently bring to the different desktop software monetization models. It wouldn’t be correct to say that ones are better than the others but some are inevitably more used as they are more profitable for providers and comfortable for the customers.
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What are the advantages of on-premise software?
This distribution model offers low long-term costs, high security, no dependence on third-party services, no expenses on additional licenses, etc.
What are the advantages of SaaS software?
The distribution model supports quick implementation, one version to maintain, high scalability, maintenance by the vendor, etc.
What are the advantages of hybrid software?
This distribution model is known for high security, offline app version, maintenance by the vendor, etc.
How to monetize a desktop application?
Businesses can leverage a desktop software monetization strategy via
Paid app purchases and licenses