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15 Nov 2021 14 min to read

Mobile App Monetization Strategies – Which Model to Choose to Make a Profit?

In today’s highly digital world, mobile apps can be incredibly lucrative. In the third quarter of 2021 alone, global app revenue was $33.7 billion on the Apple app store and $35.7 billion on the Google Play store.

There are many different app monetization strategies that you can use to generate revenue. In this article, we’ll take a look at some of the most successful monetization strategies and how to implement them.

How To Choose An App Monetization Strategy

When selecting an app monetization strategy, you’ll need to consider your app’s target audience. Some audiences are willing to spend money on paid apps, but in some cases, you’ll need to use in-app advertising or other strategies to generate revenue.

Look for examples of other apps that are similar to yours and how they chose to monetize. This can give you a better idea of which strategies will be most successful with your target app users.

You’ll also need to consider the upfront cost of implementing any app monetization strategy. This means considering any financial investment you’ll need to make and the time and effort involved to implement it. Overall, you’re looking for a monetization strategy that provides a good return on investment.

 

time spent in apps

The average time spent in apps has increased significantly in recent years. This also means more revenue for app creators. /source: APP ANNIE

Best App Monetization Strategies

Here are some of the most common app monetization strategies on the market. We’ll discuss how each strategy works, what type of app it works best for, and some of the benefits of using each strategy.

Freemium Subscription Model

Freemium apps have become incredibly popular in recent years. With this app monetization model, you’ll develop a free app that has certain features or benefits behind a paywall. Users can then opt for a paid subscription if they want to access these premium features.

This strategy works particularly well because it gives users a taste of the app for free before they have to spend any money. Many people aren’t willing to pay for an app right off the bat, but would be willing to spend money on it once they see the value that it offers. Your paid subscribers will also consistently generate revenue on a monthly or yearly basis. Many app developers prefer this method because it results in a very predictable business model.

The subscription model is very effective at keeping users engaged, so both the Apple store and the Google Play store have started incentivizing developers to use it. They do this by offering a better revenue share agreement for subscription apps than for other apps. Both stores take a standard commission of 30 percent on app sales, but that commission falls to 15 percent on subscriptions after a year.

In order for the freemium model to work, you will need to find the right balance of free and paid features. If you offer too many features for free, there isn’t any incentive for users to sign up for the premium version. However, if you don’t offer enough features for free, users may not want to download the app at all.

In many cases, developers will put in-app ads on the free version of an app and then give users the opportunity to pay to go ad-free. This might be enough to draw in some users, but it’s not going to be enough for everyone. Adding premium content or extra services as part of your subscription is very important to keep users coming back over and over.

It’s also very important for a freemium app to offer a seamless transition from the free version to the paid version. You will need to consistently update the app and provide new content in order to keep your paid users happy and engaged. This goes beyond updates just to keep the app functional – your users are going to want to see new features that provide real value.

It’s definitely worth adjusting the app monetization model at the beginning of the digital product development. Thanks to that the whole software will be coherent and the functionalities can support the business strategy. Fortunately, we see that the startups we cooperate with have a growing business awareness. The right monetization strategy can decide the scale of the project’s success. Paul Jackowski CEO, ASPER BROTHERS

We’ve seen many different types of subscription apps become successful in recent years. For example, most of the top dating apps now use a subscription model. Business and productivity apps are other categories where the freemium model has worked very well.

A subscription freemium model is going to require you to invest more time and money than just adding in-app ads. However, you’re likely to get a better return on investment with this monetization strategy if you use it effectively.

In-App Purchases

Instead of having separate free and paid apps, many developers will opt instead to have in-app purchases. The advantage here is similar to a freemium subscription model – users get to download the app without spending any money and then have the option to purchase advanced features if they would like.

The difference here is that an in-app purchase happens one time, whereas subscriptions are ongoing. This can make revenue a bit more difficult to predict. However, this app monetization strategy can work well if your user base wouldn’t want to pay for an ongoing subscription.

In-app purchases often work well in games. Some examples of purchases you could make in gaming apps include powerups, premium levels, extra lives, or in-game currency. These are things that typically work better as a one-time purchase rather than a subscription service.

Paid Apps

Another popular app monetization strategy is to have users purchase it upfront, rather than offering paid subscriptions or in-app purchases after the initial download. This monetization method works best for high-quality apps that deliver a huge amount of value.

In particular, this is effective for apps that don’t have much competition and provide a helpful service. The advantage of using this type of app monetization is that you know exactly how much money you’re going to generate from each download. The downside is that many people just won’t pay for any apps regardless of quality.

 

top revenue apps 2021

As the data shows, some of the most profitable apps are those geared towards consuming video content. / source: https://sensortower.com/blog/top-grossing-apps-worldwide-january-2021

 

In-App Advertising

Arguably the most popular way for app developers to make money is by putting ads in free apps. The benefit of putting ads in your app is that you can make money without having to charge your users anything. Once your app develops a large user base, these ads can be very lucrative, as advertisers will want to get their content in front of a large audience. However, it can take time to build up a user base that is large enough for mobile advertising.

The downside to using in-app advertising is that the ads can negatively affect the overall user experience. Many users will get frustrated with an app if there are too many ads or if the quality of the ads is poor. One in almost every two apps is uninstalled within 30 days of the initial download, and bad ads are a huge contributor to this. The key is to figure out what type of ads and how many ads your users will tolerate.

There are many different types of ads that you can implement in your app. Here are some of the most popular.

Banner Ads

In the early days of smartphones and mobile apps, banner ads were one of the most popular forms of advertising. Banner ads typically sit on the top or side of the screen as you use the app.

While these ads are very easy to implement in your app, they are very disruptive to the overall user experience. As a result, they have fallen out of favor with many app developers. While they can work in some scenarios, in most cases they just end up being distracting.

Interstitial Ads

Interstitial ads have become a very popular alternative to banner ads. These ads take up the entire mobile screen and will pop up temporarily. They are particularly popular for mobile games and will typically be placed in between levels or stages. If you are using these ads for your app, it is very important that they work with the natural flow of your app rather than distracting from it.

A popular twist on this strategy is the reward ad. In this scenario, users are rewarded in some way for watching the ads. This works particularly well in games, where you can reward users with in-game currency, extra lives, or power-ups for watching ads. In order to make this strategy work, there has to be enough incentive for the users to watch the ads.

Native Ads

Native ads are creatively designed to fit naturally within your app. These have become very popular with mobile app developers as they don’t disrupt the user experience. Having the ad fit with the overall design of the app can help to increase user engagement.

Affiliate Ads

These ads direct your users to make a purchase on another website. You’ll get a small commission every time someone makes a purchase from your ad. These ads can come in many different forms but are usually either interstitial ads or native ads.

It’s important to note that you will usually only generate ad revenue from this when someone makes a purchase – it’s difficult to charge a fee just for ad placement if you also have an affiliate agreement. In order for these ads to be successful, it is very important that they are relevant to your overall audience and can realistically generate conversions.

 

mobile apps revenue

According to estimates, mobile app revenue will grow at a very fast pace in the next few years. / source: statista.com

 

Data Monetization

Many apps opt to make money by selling data rather than offering in-app purchases, charging for subscriptions, or placing ads. Apps collect a huge amount of user data that is very valuable to marketers and other business professionals. This data can be incredibly valuable.

The upside of this is that you can focus entirely on user experience when developing the app. However, selling your users’ data comes with huge privacy concerns. Many consumers consider this to be a huge breach of trust, so it’s usually not worth it to sell data.

Summary

There are so many different app monetization strategies available these days, all of which have their benefits and downsides. To find the right app business model for you, you’ll need to consider what exactly your target audience is looking for and how they are going to interact with your product.

 

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