Mobile app monetization is essential, but before I highlight the 6 best ways to make money from your app, I will define mobile app monetization.

What is a Mobile App Monetization

Mobile app monetization is a combination of techniques that create additional revenue within an app. Ultimately, We can define this as an app creator or developer’s approach to make money from their apps. Having a valued proposition and molding it into a successful business are two very different things. Many people want to make an app, but they are held back by the money-making determinant. Will they ever benefit from the investment they made?

I am often asked hundreds of questions about mobile application development. The most frequently asked question is how to make money with an app, which motivated me to develop this guide.

Fortunately, there are numerous monetization methods for mobile apps.

If you are new to app creation or simply making money from an existing app, I will teach you everything you need to know about online app marketing and mobile app monetization.

How to Make Money With an App

Most app monetization methods fall into the primary mobile app monetization or secondary mobile app monetization category.

Primary mobile app monetization is very common. If you’d like to generate revenue from apps, almost all the models I will share will fit into this box. But before we get into the details, I want to make more explicit that there are two main types of app monetization.

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1. Primary mobile app monetization

The idea behind the primary mobile app monetization is that money is generated directly from your app.

When an iOS or Android user pays money to buy your app from the Apple App Store or Google Play Store, the money that is paid to your company comes directly from the app. When anyone uses your e-commerce platform to purchase a specific item from your company, the transaction is coming from your website.

This is somewhat self-explanatory. We need to grasp the Primary mobile app monetization before we dive into secondary mobile app monetization.

2. Secondary Mobile App Monetization

Secondary Mobile App Monetization is not as black or white as it sounds. By making an app, you can also make money, but the exact monetary amount is not connected to the app.

A standalone product or utility with a free app is the perfect example of Secondary Mobile App monetization. The app is subservient in this case. Whether or not the app is used, you’re making money. For an application, the product would be more attractive to future clients as customer engagement and experiences eventually increase.

Secondary Mobile App Monetization for mobile apps software is increasingly common. I will provide you with some accurate examples soon, as we discuss more thoroughly in the very next app monetization strategies.

Related: Ways Mobile App Can help Small Businesses

6 Mobile App Monetization Models and Strategies

App makers can earn money in six different ways.

Examples of apps that are earning revenue in these models will be shown.

1.  Paid App

Charging users a fee to download the app is one of the simplest ways to make money through an app, and hence it would probably be one of the ways that traditional investors would look to advance in the market.

So how much money should you charge? This 2020 study from Statista expects that; most downloaded apps are commonly less than $0.99.

As you can see in the chart, most paid apps cost less than $5 in price. This study sought as little data as possible and focused on the information from services on the Google Play Store.

Using technologies made available to them, Statista found out that the average cost of paid apps in the app store was $4.37. Compared to the apps on the Google Play Store, it is a bit higher than the common range but still falls in the less than $5 compass segment.

On Google Play and Apple App Store, any member can charge for their app in any manner they choose. But if you’re going to charge users a fee for the download, it should be in the range that they have been charged for previously downloaded apps.

Buying this app is indeed a straightforward implementation of the “shop and pay upfront” model, but it does have its drawbacks. It is unrealistic to expect to accumulate the same number of downloads as you would if the app were free. Some users wouldn’t consider an app that is paid like a subscription service.
However, it can be said that paid users are more likely to engage the app functionalities more.

If one pays for a download, he or she wants to get the most out of this. If those people are on the app often, you may be able to get even more money out of them if you introduce other mobile app monetization models listed on this page.

2. In-App Purchases

Whether it be free or paid, this mobile app monetization model can be used for both paid and free apps alike. Using this method, you can also apply it to physical and virtual products.

Games that use in-app purchases tend to work with gaming technology that leverages using coins or experience levels. An example of game developers’ new video game models could be similar to players who paid real money to unlock new weapons, vehicles, other in-game items, etc.

Pokemon Go shows us a good example of how a free app can potentially make its money through in-app purchases.

According to the video game stats website ‘Video Games Stats,’ Pokemon Go has generated more than $3 billion in revenue as a free app.

Overall, this revenue is made from roughly one million downloads. Actually, the app does not require anyone to pay for it, and it makes even more money because it is free. It has in-app purchases. Within the game, users earn “PokeCoins” to make upgrades to the app, making the gaming experience better.

However, it is not a must you use in-app purchases. You can monetize your apps with other routes too. It can be significant to offer an app on an eCommerce site and to make sales.

If a customer buys a shirt, pair of sneakers, book, watch, or whatever you are selling through our app, it would also fall into the e-commerce category. Using an app to sell physical or digital products online is a no-brainer for anyone who already sells goods online to generate money.

3. Subscriptions

For subscription-based apps like ours, subscriptions are a great way to generate recurring revenue. With the Apple App Store and Google Play Store, it only takes a few minutes to set up a business model “Subscriptions” where your users can pay for a certain feature or service in your app on a weekly or monthly basis.

Users only need to sign up for a subscription, and they start incurring charges on a Weekly, Monthly, or Yearly basis until the subscription is canceled or expired.

In most cases, you will pay a monthly subscription for most apps. You can create and schedule the payment at any time period you want. It is common to offer a better monthly rate for longer subscription terms.

There are many potential uses for subscription apps, such as making subscription-based applications that would apply to various industries.

If you have a fitness app and you’re charging users for access to workout routines, videos, and training regimens, you can therefore profit from that. Also, such as a small entrepreneur, such as a mom-and-pop dry cleaner, may jump-start the subscription models and offer pickup and delivery cleaning services.

4. Freemium Model

The freemium app model is basically an app that has both subscription and in-app purchases features.

To clarify, the term “freemium” comes from combining the words “free” and “premium” into one term. Free + premium = freemium; see the hallway?.

The basic app must be available to the public free of charge to use the freemium monetization strategy. Next, you need to market a completely different version of your app (Free & Premium).

5. Advertisements

Apps that generate income through advertising are popular among developers. For extra revenue, you’re selling advertisers some space within your App for advertisements. Ever heard of affiliate marketing? Chances are you have if you own a website monetized with adverts.
According to a recent market research study, mobile apps that use mobile advertising are the most effective way of mobile app monetization.

App advertising can come in different sizes and shapes. There are different ad formats, such as video ads, banner ads, native ads, pop-ups, interstitial ads, etc. What’s more, there are also different revenue models; the same goes for these types of ads.

CPC (cost-per-click)
CPI (cost-per-install) (cost-per-install)
CPA (cost-per-action)
CPM (cost-per-mile)
CPV (cost-per-view)

The way you are paid and how much you are paid depends on a wide range of different factors. For example, simply displaying a banner ad with a click-through revenue model usually won’t pay as much as a cost per thousand (CPC or CPI) model.

Check out this guide on the top mobile advertising networks to facilitate ad mediation within your app. This resource article goes into the details of various revenue models, which you can use too. Ad networks are the ones who ensure that ads displayed within your app are relevant for the app’s targeted audience.

Advertisements within an application are quite popular and profitable, but no one takes them seriously. Ads on apps tend to tamper with the app user experience and ultimately make your app less desirable. So you need to take into consideration the placement of ads in your app before blindly adding them.

6. Product Extensions

A product extension falls into the secondary mobile app monetization category, which I discussed in the previous paragraph.

This strategy is something that you can use to make a lot of money using your product, service, or business. However, there is no direct control of money generated through the app itself. And now I’ll give you an example to help explain what I mean.

Take a product like Grammarly as an example. I am sure many people know about Grammarly; it is a writing software used by millions of people worldwide.

It is paid software like Microsoft Office. To get the software, users can use the iOS and Android mobile apps but for free.

How Do Free Apps Make Money?

In terms of monetizing your app, if you do not charge for app downloads, you might wonder how to make money with that free app. Your app will still be top-rated if you charge a flat rate or even a freemium.

(From the previous paragraph) refer back to the strategies we discussed in the previous section about monetization, and five of the six strategies can be applied to free apps.

• In-app purchases.
• Subscription
• Freemium
• Mobile Advertisement
• Product Extension

For example, plan to implement the integration of the monetization strategy for in-app purchases. You can advertise while developing a better product. Using multiple monetization methods can help you make money while you develop a free app.

The vast number of downloaded apps from the Apple App Store and Google Play store are free apps.

How do You Choose the Right Mobile App Monetization Model

With all the options you have regarding how to monetize your mobile app, how are you supposed to pick one best for your app?.

There is no single, correct answer to this question. Now that we’ve talked about all of the pros and cons, it is now in your best judgment to choose the right model for your business.

There are some industries and apps that are easier to identify, such as the e-commerce industry. Fortunately, e-commerce for mobile apps is likely the easiest means of creating a revenue stream for developers. However, ads for free apps or free downloads are usually ok, as others might not want to use the paid apps monetization model.

But if ads can take your attention away, you should not have ads on your app. Ads can also hurt the potential revenue by competing with your product, so do not make users pay more to have ads on your app.

Depending on the type of app you are designing, you could run into different payment models. Figure out which method works best for you and check which KPIs will show that these methods will be the most profitable.

Do You Need To Monetize Your App?

More often than likely, yes.

Your app cannot make any money unless you integrate a mobile app monetization strategy. It would be best to make sure that you would have obtained your app’s profits and charge a lower price than your app development cost.

But with that said, not every app necessarily has to be monetized. Some apps can make lots of money without a real monetization strategy. Like a subcontractor project, which builds an app internally, for example. Clever (and sometimes crass) communication methods are permitted without an expectation of a monetary return.

You would never charge your employees for the downloading of an application used in your own company. However, developing an app for these purposes will ultimately save a lot of money in labor costs and production time. Your profit totals will increase from your other revenue streams somewhere else, even though the app itself does not directly drive any revenue.

Final Conclusion

In the app world, mobile app monetization can be a serious challenge for app developers and business owners. But making money on an app doesn’t need to be as complicated as people think.

The first thing that you must look into is how the app can make you money. And then it’s just simply a matter of finding which one of these stated models works best based on your personal preference.

Our App maker will show you everything you need to know about Creating and Monetizing Your App. You try us out as you are going along with your research.