App Monetization Models – How to Make Money From Mobile Apps

App monetization is one of the most prioritized revenue-generating strategies, catalyzing the bedrock for repeat and lucrative business growth for organizations. According to a report by Statista, mobile app downloads reached 255 billion annual downloads in 2022. It is clearly an indication of the tremendous viability of mobile apps in helping businesses skyrocket their growth in revenue generation. However, what really matters is identifying your app monetization strategy proactively before considering building an app. Having well-defined app monetization models in place will help you justify your time and money prudently.

What Defines Mobile App Monetization?

It is a process of building revenue growth to support your mobile app. You can involve different app monetization methods to create diversified revenue streams, based on your product’s vertical and target audiences, as well as mapping your user journey.

App monetization doesn’t mean frustrating app users through hard-hitting campaigns and invasive ads. It would be counterproductive, in terms of leading to poor brand reputation and surge in churned users. Therefore, having the right app monetization strategies in place trumps everything when it comes to making money from your apps.

Does Business App Automatically Generate Revenue?

That’s highly unlikely.

Just because you have created an app doesn’t mean it will generate revenue streams automatically. It’s like starting a new business and believing it would drive financial growth, automatically.

What Does App Monetization Need?

Well, it requires a rock-solid app monetization strategy, just like what top app development companies adopt in mobile app development or other businesses. Without strategies or models, you won’t leverage your app lucratively, even if you’re aiming to create some of the best apps to make money.

Apps generally make money on models like in-app purchases, advertising, sponsorships, and affiliate links. Now, the dependence on ads or affiliate programs to make money from your apps steps in if you are selling a product, service, or subscriptions. These methods can also help you make money from your apps if they are downloadable free of cost. However, increasing downloads on your apps doesn’t always translate into monetary gains, , especially when you’re focusing on the best apps to make money. Building an app is quite a herculean and expensive task, let alone the hidden development costs, in terms of app design, quality assurance, functional services, etc. that you come across in the process. Therefore, ensure that your new mobile app would generate money before you spend a fortune on its development.

Best App Monetization Models to Generate Money Through Mobile Apps

1. In-App Purchase Model

In-app purchase is one of the most intelligent app monetization models that can even help you boost the user experience on your mobile app. You can classify it into consumable and non-consumable models. The first model means limited purchases, such as Pokemon GO. It is a leading AR-based mobile app-game in which users are allowed to purchase Premium items using in—game currency, like PokéCoins, which, in this context is a consumable in-purchase.

On the other hand, non-consumable in-app purchases require a one-time purchase that comes equipped with many features, including upgrades to remove in-app ads. Stay updated with app development trends for the latest insights into these strategies.

Key things about in-app purchase model:

• Allows users to purchase an upgrade to unlock some additional features or levels
• Users get any bonus, premium content, virtual currency for games
• Easily unlock any additional level
• Over 50% of renowned mobile apps leverage in-app purchases to make revenue streams
• It is a popular app monetization model, especially in the gaming arena helping users to get anything from free lives to extra coins, unlocking hidden levels, etc.
• With simplified payment set-ups, users can cover app-related costs by adding a credit card
• One of the downsides of this model is that it may, in all likelihood, alienate users if they are constantly reminded to make purchases

2. Freemium Subscription Model

Spotify is arguably the best example of the freemium subscription model. Developed in Sweden, the music app was introduced as a pay-per-song model of iTunes. In the freemium monetization model, users download a free app and later are offered in-app purchases so that they can access many premium features, content, or digital goods. Report suggests that freemium apps drive average conversion rates of 2-5%, hence being one of the best models to generate revenue from your mobile app.

Key things about freemium monetization model:

• It is a scalable monetization model, helping businesses to scale up and attract users without incurring expensive costs of traditional marketing
• Users are allowed to try out app features before they decide to purchase
• Helps your business generate stable revenue from wider user base not willing to go for premium version of the app features
• One of the best models to drive engagement boosts on your app and then pitch for premium services to the users

3 Subscription Monetization Models

Consider using both freemium and premium subscription app monetization models to drive stable revenue streams from your applications.

4. Premium Subscription Model

Premium or paid mobile applications require users’ sign-up for a fixed payment right upon download. In other words, revenues on paid apps are generated based on the number of downloads of these apps. The premium applications also drive higher user engagement and customer acquisition.

Key things about premium monetization model:

• Generates revenue based on the number of app downloads
• Drives higher engagement and user acquisition
• Trusted and reliable revenue source for app developers
• Revenue generated through this model helps fund web app development cost and maintenance
• Ensures usability of the apps for users over time
• The model may be expensive for users (if they use the paid app less often), thereby reducing user numbers

5. In-App Advertising Monetization Model

If you want to make money from your mobile apps, this is one of the easiest app monetization models you can follow. Once a developed app is about to be launched, decide if the app features ads.

Based on the impressions on ads or number of times they are clicked, or the type of ads being shown will ultimately determine revenue generation on your mobile apps for your business.

Key things about in-app advertising model:

• A valuable revenue source for apps which are free in the App Store
• Drives greater user experience through content and ads specific to user’s intent
• Running ads attuned to the discretion of users would solidify your marketing to popularize your apps and earn revenues from them
• Types of in-app advertising ads are banner ads, native ads, interstitial ads, and video ads. The first one is animated or static ads placed across a banner within your mobile app. The second one describes paid ads matching the content with user experience. The third one describes ads shown in full-screen user experience. Lastly, the video ads are highly engaging and very popular.

Closing Statements

App monetization, if strategized wisely, can churn out great revenue streams for your business. The significance of having a rock-solid strategy for monetizing your app is that it gives a right direction to how to make money from apps.

We have covered some most fundamental aspects for generating revenue from mobile apps. However, we also recommend hiring a mobile app development company so that you can have a futuristic app that you can monetize later for your business benefits. Hiring a reputable software development company has its upsides. For example, you get high-quality products that cost-efficiently serve your business purpose. Besides, you have the opportunity to work with top minds in the field of mobile app development.