Business model for an app

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Business Model for an App
Electronic commerce and applications present users and subscribers with various options that match their business needs. The models that electronic commerce provides for businesses that have an intention of online revenue generation include the paid applications, the freemium applications along with the freemium apps that are embedded with advertisements. Mafia business school is an establishment that not only desires to attract clients and users but also to encourage their commitment to the services. The ideal business model is, therefore, the freemium app. The application functions such that the users can access the features for free during the trial period with latter coercion into purchasing the app to continue enjoying the services (Roma and Ragaglia 187). The feature of ‘free’ will attract the users to try out the service and after a while coarse them to purchase.
The freemium model is better than the paid model which demands upfront payment thereby discouraging the users to give it a try. Additionally, the freemium with advertisement model creates the concern of revenue performance in the app market. The research by Paolo Roma and Daniele Ragaglia reveals that paid along with the freemium revenue models in the app market have presented a high revenue performance in comparison to the freemium advertisement model (Roma and Ragaglia 187). Further, the studies utilize the illustration of the Apple consumers who after using the free version of an application present no problems in upgrading to the paid model.

Additionally, the metrics for the three models explain the differences in the value they offer to the business. In the metric analysis for CPA/CPI value, Viral index, retention, additional churn and the monthly active users, the values for the freemium advertising app include 0.40 euros, 20%, 30%, 0% and 0% respectively. On the other hand, the figures for the freemium model include 4.00 euros, 50%, 100%, 0% and 0% respectively. For the paid model, the values include 1.50 euros, 50%, 100%, 0% and 0% respectively. The freemium and the paid models include the analysis of paying user conversion (PUC) which is 100% for both alternatives. Also, the cost of obtaining the app is 2.99 euros for the paid app, 3.99 euros for the freemium app while it is free for the freemium with advertisement app. Thus, with the drawbacks that the paid and the freemium with advertisement options present, the ideal consideration for the business school is freemium which allows the users to test run the application before the commit to a purchase.
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Work Cited
Roma, Paolo and Ragaglia, Daniele, “Revenue models, in-app purchase, and the app performance: Evidence from Apple’s App Store and Google Play,” Electronic Commerce Research and Applications 17 (2016) 173–190, Web 29 May. 2018. https://pdfs.semanticscholar.org/6d22/174561084fd1dd07e3387a859f6ee8c8e2c7.pdf