5 Popular Ways to Monetize your Mobile App

Mobile app monetization is the process of converting your app users into revenue for your business and should be considered carefully as part of your overall product strategy. There are many ways to earn revenue from a mobile app, but there are some things you should consider when deciding the right approach for your product. Each monetization strategy can have an impact on your app’s growth and engagement. We’ve focused on the 5 most popular ways in this blog.

1. Free vs. paid app model
   • This popular approach includes offering both free and paid versions of your app. Two options for this model are to offer in-app advertising or limiting specific features in the free app. Benefits to this model are that users get to experience the basic functionality of the app for free. This allows you to grow your user base, test out feature ideas, capture data, and get feedback. You can then use that data to provide a more robust paid app.
2. Free with in-app purchases
   • Apps generate money by selling virtual or physical goods from within the app through in-app purchases, or IAP. The app itself and some basic features are free to use, but some features require purchases within the app (ex. premium features in a dating app or extra lives in a game). Some apps even offer ad-free experiences if you pay to use the app. This is a popular method in gaming apps, where users don’t want to be interrupted by ads while playing a game. In addition, gaming apps often offer virtual currency. Roblox is a popular gaming app that offers virtual currency (Robux) that allows users to buy clothes, cars, etc. for their characters. The key here is to make sure users feel they are getting value for their money.

     Note: Be aware that Apple and Google both take 30% of every in-app purchase through your app.

3. Free with subscription model
   • Some app creators choose to offer free apps with a subscription model, where users pay monthly or yearly fee. This strategy provides the app for free to download but includes limited access to some content or services offered. This is a common strategy for service-oriented apps like Calm, or news-oriented apps like Apple News+, where some articles are free but others require a subscription to access.
4. Paid app model
   • The paid app model is where there is only one app version available, and it’s the paid version. This is a popular choice for productivity apps where there is a unique value being offered that isn’t available elsewhere. Typically, a paid app model requires a one-time purchase to download the app. This model has become less popular in recent years in favor of in-app purchases.Note that with this approach, you should provide sufficient unique value or functionality for your user base to keep paying or you’ll have a hard time building up your user base. You should only use this approach if your brand holds a dominant position and is in high demand, otherwise competitors can lure customers away by lowering their prices.
5. Data monetization
   • This model is one that users won’t notice, but needs to be considered carefully. The data that you collect can be valuable to interested parties. For this reason, it can also be exploited or stolen if your app isn’t secure. Interested parties can include researchers, marketers, or product companies whose demographics or behaviors align with your user base. If you choose this method, you’ll need to ask for consent from your users prior to capturing or selling their data. You should only monetize non-personal, basic data.

Each mobile app monetization strategy comes with some pros and cons and should be considered carefully in conjunction with your overall business goals. Check out this in-depth guide to learn more about each strategy and what the pros and cons are for each. Once you have your monetization strategy selected, it’s time to focus on good product design and product strategy. Not sure which strategy is right for you? Get in touch and we can help.