9 App Monetization Strategies That Work

September 18, 2023

9 App Monetization Strategies That Work

Here’s a reality check: Mobile apps are undoubtedly popular, but that doesn’t guarantee automatic success for everyone who wants to develop one to make money. Instagram, Tinder, and TikTok have achieved massive success with their app monetization models, but it doesn’t mean those models will work for every app.

So, how can you ensure the long-term sustainability of your mobile business and avoid being a one-hit wonder? Well, it all starts with choosing the right app monetization strategy!

This blog will introduce you to the most popular app monetization strategies that work and help you decide which one is best suited for your mobile business!

What is App Monetization?

App monetization is the process of making money from your app users. But here’s the thing: if you look around, you’ll see that most apps these days are actually free. Yup, most apps don’t charge you a dime for simply downloading the app itself.

But if the apps are free, where does the revenue come from? They likely follow a mobile app monetization model.

Most app monetization models revolve around in-app purchases, showing ads, offering subscriptions, and more. Mobile business owners employ these monetization methods to generate revenue, keep their businesses going, and ensure user engagement is high.

Different apps may require different app monetization options. Of course, a gaming app isn’t quite like a news app, so it’s important to plan your mobile app development strategy accordingly.

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How to Choose an App Monetization Strategy?

Before you launch your app, it’s important to test out monetization strategies. After all, only well-tested products and apps will give you the boost you need to scale your revenue.

There are multiple monetization methods out there (and we will get on to them in a bit), but you can narrow them out by the following factors:

  • Audience demographics: Think about the age group, gender, and location of your user base. This will help you determine which monetization strategy is more suitable for your app.
  • App type: Different apps may require different monetization models. For instance, in Spain, the 3rd most used app is social media apps. You can use this to your advantage and plan your monetization strategy accordingly.
  • Content type: What can users find in your app? Is it streaming content like music or video, or are you offering unique and interactive features such as augmented reality? Answering these questions will help you decide which monetization method is more suited for your app.
  • User experience: You want to make sure that your app monetization model does not disrupt the user experience. Ads should be relevant and non-intrusive, and you should offer in-app purchases or subscriptions with a transparent pricing structure.
  • User engagement: Last but not least, user engagement is key to the success of any app monetization strategy. Track user behavior and measure engagement times to identify the areas where users find your content valuable and interesting.

9 Effective Mobile App Monetization Strategies

Now that we have discussed some of the factors to consider when you’re choosing an app monetization strategy, it’s time to provide you with the choices that we’re talking about.

Below are the most effective mobile app monetization strategies that you can use to make money from your apps:

In-App Advertising

If you’re a Facebook user, chances are you’ve encountered this model before. IAA, or In-app advertising, is a popular strategy for monetization now that mobile devices are reigning in the market in Europe with 51.89% market share, surpassing desktops.

incorporating ads within your app quote

By embracing the IAA model, you can remove the cost barrier and allow users to download your app for free. However, you need to have a substantial user base and gather insights about app users first. This valuable data is then organized and shared with digital advertising publishers, who pay to display tailored ads in your app.

Incorporating ads within your app is frequently the swiftest and most efficient method of monetizing it. You have the flexibility to use different mobile ad formats, such as:

  • Banner ads: App banner ads typically consist of graphics and text elements positioned at the top or bottom of the screen, accompanied by a call-to-action button.
  • Video ads: Short video clips that play before another video. They often take the form of pre-roll videos, which appear before the main video content.
  • Rewarded video ads: These offer in-app benefits for watching a full video, making them a lucrative ad format for gaming apps. Rewards can range from unlocking new characters to earning in-app currency, making them popular primarily in gaming apps.
  • Native ads: From its name, a native ad blends with the design elements of your app and might even be crafted to resemble another post or feature within it.
  • Interstitial ads: Interstitial ads are full-screen ads that usually appear during app transitions, like after completing a level. They can be rich media, including videos, images, and/or text.
  • Playable ads: Playable ads, also known as gamified ads, are mini-games designed as advertisements that encourage user interaction.

When deciding to monetize your app with ads, there are several factors to consider, especially when it comes to ensuring a positive user experience.

Paid Download or Pay Per Download (PPD)

The paid app model is the oldest and simplest way to make money from your app. With this model, users pay a one-time fee when they install the app, and you earn revenue based on the number of downloads.

Developers make this choice for a variety of reasons, ranging from selling exclusive features to maintaining control over their apps. Usually, you will find paid apps in the productivity section of the app store.

While the paid-app model sounds like a guaranteed way to make money, it comes with its own limitations. Unless you already have widespread brand recognition and demand for your app, it’s unlikely you’ll be able to charge a high fee. Plus, you need to hard-sell users on why they should pay for your app.

Strategic pricing and powerful features are essential for the successful execution of this strategy. While paid apps can generate increased user engagement and loyalty in the short term, free apps are generally more profitable than paid apps.

Free with In-App Purchases

If you’ve played mobile apps, you’re probably familiar with the in-app purchase monetization strategy.

In-app purchase models, also known as IAP, are a popular way for app developers to make money. According to Business of Apps, users are spending $380 billion worldwide on in-app purchases.

While IAP can be effectively utilized across almost every type of app, it works effectively for gaming apps. Typically, the basic features of the app are free, but if you want to level up faster or get exclusive items, you can enter the pay-to-play mode.

The challenge with mobile games that employ this model is maintaining the value of in-game currency with real-world money. Successful in-app purchases are those that offer real value to users. This means making sure the IAPs you offer are worth their cost and make your app more useful or enjoyable.

Subscriptions

Subscription services are also a popular way to enhance user experience in-app. With this model, you can provide a unique and rewarding experience to paying users, setting them apart from those using the free version of your app.

When it comes to setting up a subscription model for your mobile app, don’t limit yourself to all or nothing. You can get creative and offer multiple subscription packages with different value levels. Think of it like a buffet of options, serving up a free service, a basic subscription, and a premium subscription. You’re giving users choices, like a menu tailored to their tastes.

Suppose you’re offering content-centric apps like news or magazine apps. You can offer subscription plans like weekly or monthly plans or even annual subscriptions. Your in-app subscription should be tailored to your app’s value and what you offer users.

Either way, keeping your app free to download, it’s more easily discovered in app stores.

Affiliate Marketing

Imagine if your app had the power to charm its users into downloading other apps or purchasing products. That’s the magic behind affiliate marketing, a clever app monetization strategy that’s all the rage.

While the commissions offered in this app monetization strategy may not be high, app developers do have the choice of which apps they want to promote. This gives them some control over the brands their app is associated with and can encourage users to keep using their app.

For example, Amazon. Amazon has a lucrative affiliate program that rewards developers for referring sales to its massive online marketplace. App developers can partner with Amazon through the Amazon Associates Program and get paid whenever someone makes a purchase using their app.

mobile app data monetization strategy quote

App Data Monetization

First-party data is the golden ticket in today’s digital world. It’s like having insider knowledge about your users—their demographics and behaviors within your app. Advertisers can’t resist this goldmine, as it helps them hit the bullseye with their target audience.

And this appetite is only going to increase when third-party cookies stop providing third-party data like they used to. In the future, most app monetization strategies will revolve around collecting data.

Keep in mind that mobile app data monetization strategy is most effective for apps with a large and engaged user base. If you don’t have enough users to generate a substantial amount of data, the data you do have may not hold much value.

Transaction Fees

Free apps that present itself as an online marketplace. How this “marketplace” works is users buy and sell goods or services with a transaction fee. Essentially, you earn a commission whenever a user buys or sells something.

This app monetization platform is best for apps that provide marketplace services, such as ride-sharing, food delivery, and e-commerce. For instance, Uber takes a small cut out of each ride booked through its app.

This monetization model has become popular with peer-to-peer marketplaces like Airbnb, Etsy, and eBay. It’s also gaining traction in other industries, such as in the financial space. Cryptocurrency and investment apps often charge a nominal fee for each transaction when users buy or sell assets.

User Messaging

Companies are always looking for ways to stay connected with their customers and build a relationship of trust. User messaging is one way to do that.

It allows app makers to provide personalized, real-time support and updates to users about exclusive products and services, often leading to increased engagement. And with high user engagement comes more monetization opportunities.

Here are a few different monetization strategies you can use with user messaging:

Push Notifications

Push notifications are a powerful way to keep users engaged and informed. With busy schedules, users may forget about offers and abandoned items. By using push notifications, you can remind them of the latest offers and products in their shopping cart, ensuring they stay connected and engaged.

Email Marketing

Since people rarely change their email addresses, an email marketing campaign is an effective way to ensure users see and engage with your content. Regular emails also keep your brand top-of-mind, increasing the likelihood of customers making in-app purchases. Your email strategy can be diverse: include an access code that users can enter for promotions or deals in the app.

SMS Marketing

By utilizing in-app prompts similar to those used for collecting email addresses, you can send notifications for app updates, reminders, contests, and promotions directly to your users’ text message inboxes. This marketing approach is one of the most effective ways to strengthen your brand, as it encourages users to revisit your app.

Hybrid Monetization

Don’t put all your eggs in one basket if you want to generate revenue with your app! Be a savvy apppreneur and embrace a hybrid app monetization strategy. Mix and match cleverly to unlock maximum revenue potential!

You can start with a free app with a combination of in-app ads and in-app purchases. Not sure which strategies would work best for your app? Why not try a few and see which ones generate the most revenue?

The key is to adapt and modify each app monetization strategy to make it work for your requirements.

app developer designing an app

Let’s Develop Mobile Apps with Monetization Strategies Today!

While there are no-code platforms that let you build your own app in an instant, nothing beats working with professionals to design and develop a user-friendly mobile app with the right strategy for generating revenue.

Our team of experienced app developers at StarTechUP can help you design Android to iOS apps for your business. From user experience to coding and development, we’ll make sure that your app is the best it can be.

So why wait?

Let us help you start making money through your mobile app today. Reach out to us today to get started!

About the author: Andrea Jacinto - Content Writer

A content writer with a strong SEO background, Andrea has been working with digital marketers from different fields to create optimized articles which are informative, digestible, and fun to read. Now, she's writing for StarTechUP to deliver the latest developments in tech to readers around the world. View on Linkedin

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