App Monetization Strategies: How to Make Money with Your Mobile App

The mobile app space is still thriving with millions of apps spread over the various platforms in front of an ever-growing and more diverse audience. But even if you manage to build a killer app – that is only half the battle. For app developers and businesses making money is a necessity for sustainable growth. In this article, we will look at some of the most common app monetization techniques and advice on choosing the best strategy for your app.

In-App Advertising

One of the most popular methods where many free apps make money is in-app advertising. Ads can be placed directly in the app’s UI and developers can monetize based on impressions, clicks, or some interactions. Common ad formats include

• Banner Ads: Two-dimensional (small) ads that are displayed at the top or bottom of the app screen

• Interstitial Ads: These are full-screen ads that show up at natural transition points, such as between levels in a game.

• Rewarded video ads: videos that give in-app rewards to users for viewing

• Native Ads: This type of ad is designed to make it look as if they are simply a part of the app.

Pros: Cost-effective, in-app ads help generate a stable source of income free from direct charges to users.

Cons: Average implementation of ads creates disruption in user experience and will eventually reflect on engagement and retention.

In-App Purchases (IAP)

Users get to purchase digital goods within the app as in-app purchases including premium features, virtual currency, or additional content. In-app purchases (IAP) are generally geared towards games and lifestyle apps, giving users optional treats that help them get more out of the app. In a farm management type of game, a user may purchase a tool or even a tractor to have easier experience in the game.

Advantages: IAPs provide flexible revenue opportunities, meaning users can determine their level of investment.

Cons: Excessive IAP dependence can drive away users if most of the content is hidden behind paywalls

Subscription Models

Subscriptions provide predictable cash flow and work for applications that deliver ongoing value, examples are productivity apps, entertainment apps, and learning platforms. Some common types of subscriptions are:

• Freemium Subscription: The app is free with limited features, and a subscription for more advanced features or content.

• Free Trial to Subscription: If a user would like to continue using the app after trying it, they need to sign up for a subscription after being given limited access during the free trial.

Pros: Subscriptions can create a more stable revenue model if users continue to derive value from the app.

Cons: Users might shy away from committing to a subscription if it isn’t self-evidently valuable

Paid Downloads

Direct charge: This simple method is only suitable for apps that provide high perceived value, have unique features, or have good brand loyalty. Despite this model being less used due to the rise of free apps, it can still work if you have a unique app that your users would want to pay for.

Pros: Allows for immediate revenue, discourages non-pay users from downloading the app

Cons: Downloading costs a dime; apps for fellows may be as well, but many would never download without knowing what the application has to offer.

Freemium Model

The freemium model is somewhere between the sweet spots of free and paid models. Free notifications are offered, and advanced features need to be paid for. It allows for a trial period incurring no cost as users can use the app without restrictions, upgrading if they find value in additional features.

Advantages: The Freemium model has a huge user base with some dedicated premium users providing the business with another revenue stream.

Difficulty balancing premium and free features; few premium features lead to bad monetization potential due to the app being too free, while too many discourage free users.

Sponsorship and Partnerships

Through app partnership or sponsorship, we charge fees from brands to integrate brand-related features or content into an application. An example of a cross-promotion could be collaborating with a nutrition brand, creating co-branded content and/or special offers to encourage healthy eating tips via your fitness app. The following types of partnerships are possible:

• Sponsored: Content that occurs in exclusive articles, videos, or events produced by sponsors.

• Partnered or branded features: A branded tool, in-app option, etc.

Pros: Provides a reliable stream of revenue and can enhance experience for users if applicable to the app audience.

Cons: The partnerships must match the purpose of your app, otherwise, the user experience will become bad.

Crowd funding

Another key difference is in how they are funded; crowdfunding is more of an altruistic model, where users contribute funds for an app to be developed or updated via platforms like Kickstarter or GoFundMe. Best Suited for New or niche apps with communities willing to support the app.

Pros: Crowdfunding enables you to connect directly with your potential users of people whose money is now in your app  

Cons: Campaigns are rarely funded, and most campaigns require a lot of marketing and outreach.

Data Monetization

If done properly and with user consent + a robust privacy policy apps can monetize through collecting + sharing aggregate, anonymized user data from users to third-party organizations. This approach is commonly used by free apps to keep generating revenue from users while giving businesses a way to conduct market research and target their ads.

Advantages: Data monetization offers an additional revenue stream, with low user-effort friction.

Pros: Privacy is a hot topic and one that you need to be upfront about for customers to trust your service and comply with data protection legislation.

How to Pick the Right Monetization Approach

The checkbox for monetization strategy decided on how the app is built, who it targets, and what the competitive landscape looks like. Below are some questions that may help inform what they decide:

1. What does your application offer value?

Subscriptions work well for apps that provide enduring value—like productivity tools—but games may find more success with in-app purchases or ads.

2. Who Is Your Target Audience?

While casual users may need ads or a freemium model to take the bait, niche audiences might be open to fronting the cost of an app up-front or signing up for a subscription in exchange for premium content.

3. What Is Your Growth Plan?

However, if your intention is fast user growth then instead freemium or ad-supported models might be better fitting. Subscriptions or partnerships might provide a solid consistent revenue base for steady sustainable growth.

Conclusion

Implementing app monetization is one of the most important strategic decisions, as this will have a huge effect on user satisfaction, retaining the app, and long-term revenues. There are many ways to monetize a mobile app (each has pros and cons) but the right strategy to make money with your application always depends on your business goals and users. With the right strategy, focus on your users, and perhaps monetizing using in-app purchases or advertisements, and leveraging partnerships you will be able to create a successful app that is profitable and scalable.

Author Bio

I, Usman Ali Khan, as of now, i'm filling in as an SEO expert, I have proficient experience of 5+ years in website audit, website analytic's & search engine optimization, understanding search engine behaviors, technical SEO, off-page SEO, and keyword research, Google Webmaster, ubersuggest, semrush, and ahref. An up-to-date, working knowledge of current, past, and projected trends in the SEO industry, etc. And so on, responsibilities stretch from expanding web traffic to further developing web scan positioning for organization sites.

Currently, I am working for the TechnoTargets blog, TechnoTargets provides a very good opportunity for professional content writers to submit guest posts on our website. If you want to write for us technology, and business-related content or articles, feel free to contact us at writeforus@technotargets.com.