How to Monetize an App: Top 5 Strategies

Every developer should ask themselves, “How to monetize an app?” long before initiating the app development. This approach will help avoid compromising the user experience while adapting the strategy to the target audience and market. So, let’s dive deep.

How App Monetization Works and Key Factors to Consider

App monetization is the procedure of generating money from an app’s usage. Sounds simple, right? But if your app is free by definition? Interestingly, app monetization works quite effectively for free apps, meaning users pay only for the exact content or features.

When picking the monetization strategy, evaluate the following things:

1. Target Audience. Think about who the potential audience of your app is. Based on this information, try to estimate their choices and purchasing habits.
2. User Experience. Some models imply intrusive ads or aggressive tactics that can drive your users away and make an unfavorable impression.
3. Competition. Analyze the models used by other apps in your niche.
4. Transparency. Be honest with your audience and provide true value with your app, avoiding hidden fees or inconvenient restrictions.

App Monetization Models and Strategies: What to Choose

Picking the most effective monetization model should be part of your app development journey since it shapes both functionality and marketing. Let’s dive into the most popular ones!

In-App Advertising

In-app ads are a well-known monetization format and a primary income source for app creators. They are relatively easy to implement. How to get ads on your mobile app? To add ads to your app, follow these straightforward steps:

1. Choose a reliable ad network like Google AdMob, Facebook Audience Network, or Unity Ads that fits your app’s needs.
2. Create an account with your ad network and set up your app’s profile.
3. Download the network’s SDK and add it to your app’s code. This allows ads to emerge in your app.
4. Decide what ads to show in terms of formats.
5. Position the ads thoughtfully within your app, ensuring they don’t disrupt the user experience.
6. Before launching, test the ads to make sure they’re working properly and don’t impact your app’s performance.
7. Release your app and keep an eye on how the ads are performing.

By following these steps, you can smoothly add ads to your app and start making income. If it sounds too hard for you, just hire an Affiliate Marketing agency to do the job for you.

Benefits:

1. A broad variety of ad formats helps enhance the UX.
2. Free apps generate the most downloads, allowing monetization to start immediately after launch.
3. Flexible content moderation policies enable ad placement even in grey-area niches.

Drawbacks:

1. Banner blindness—users may become accustomed to ads and ignore or dismiss them.
2. Not the most satisfactory option for niche apps designed to meet urgent user needs.
3. Low revenue per user—scaling the audience is necessary for substantial and stable income.

For more details on in-app advertising, click here.

In-App Purchases

In-app purchases (IAPs) are a prevalent monetization strategy for free iOS and Android applications, particularly in gaming, photo and video editing, and education. This model empowers users to gain virtual currency or exclusive premium functionality that remains inaccessible in the free version.

Since gamers are well-acquainted with IAPs, they offer a dependable revenue stream with mitigated risks. However, seamless integration is paramount—disrupting gameplay or core functionality can backfire. Additionally, user reluctance to make frequent purchases presents a hurdle to sustaining long-term profitability.

Freemium Model of App Monetization

Freemium, a blend of “Free” and “Premium,” is a widely adopted monetization model that combines complimentary access with paid upgrades. Users can enjoy essential features at no cost, while advanced functionalities require an extra purchase. For instance, a fitness app might let users track calories and create meal plans for free but offer personalized diet plans as an exclusive premium feature.

Advantages:

1. The app dwells free, making it more painless to attract users and maintain loyalty.
2. Can be mixed with other models.
3. Good for a vast range of app categories.

Disadvantages:

1. Only a small percentage of users are willing to pay for premium features.
2. Finding the right balance between free and paid features can be hard.

Subscription Model

Some mobile apps on the App Store and Google Play are free to download, but you’ll need a subscription to unlock full access. It’s kind of like freemium, but with a twist—payments are recurring, whether monthly, semi-annually, or yearly. Some apps even offer a lifetime subscription for a one-time fee, so you never have to worry about renewing!

This monetization model is generally used by streaming services, e-book and podcast platforms, and music and educational apps. For example, Spotify Premium allows users to listen to music and podcasts without restrictions, while Super Duolingo provides an ad-free language-learning experience with additional features like video calls, review tests, and vocabulary drills.

Benefits:

1. Stable income and long-term profitability.
2. Increased user loyalty and improved LTV.
3. Adaptive pricing plans tailored to various user segments.
4. Effortlessly customizable for diverse regions, audiences, and feature enhancements.

Weaknesses:

1. Not easy to attract users ready to pay for premium features.
2. Retaining subscribers requires continuous value delivery (new content, updates, or exclusive features).
3. Acquiring new subscribers can be problematic.
4. App Store and Google Play take a commission (up to 15–30%) on every transaction, reducing developers’ net revenue.

Paid Downloads

Wait, make users pay before they even try the app? Yep, this model isn’t as popular as before, but it’s still around. Here’s how it operates: developers set a fixed price for downloading the app, and some users pay for it upfront. You’ll mostly see this with premium games and high-performance utility apps. But if you’re going this route, your app needs to offer something truly unique, valuable, and an exceptional user experience that people can’t easily get elsewhere.

Benefits — instant income from each download. Drawbacks:

1. Heightened risk of piracy and unauthorized distribution.
2. Users are more hesitant to pay for an app they haven’t tried.
3. The condition is to provide superior quality and uniqueness to justify the upfront cost.

Mobile App Monetization Recommendations

Monetizing a mobile app should be done wisely to keep users engaged and loyal. Here are some key tips to optimize your monetization approach:

1. Plan how you want to monetize your product. Study the heads in your category.
2. Experiment. Try various monetization models; subscriptions might work better for iOS, while in-app ads could be more effective for Android applications. Use a hybrid monetization model when one method plays the primary role, while another complements it seamlessly.
3. Test different approaches within the same monetization strategy. For subscriptions, experiment with diverse prices and periods to find the most profitable combination. For ads, try various ad networks and formats, and set up your waterfall* to maximize ad revenue. (*A “waterfall” refers to the sequence of ad networks and formats that will be triggered one after another if the previous network is unable to show ads.)

At Acquisition.mobi, we master boosting mobile apps through in-app advertising and ASO. If you’re interested in productive collaboration, send your inquiry to info@acquisition.mobi.