A Complete Guide to Mobile App Monetization Strategies

So, you have come up building a groundbreaking solution with a unique app idea, right? But this is just the beginning. The real struggle starts with applying the monetization model and the planning behind it. As we already know there are plenty of mobile applications on Apple Play Store and Google Play Store currently including both free and paid.

They all apply different mobile app monetization strategies to survive and maximize their revenue. Also, app monetization can be attained in numerous possible ways with an ensuing goal of viability. As mobile app utilization endures to ascend to new heights, entrepreneurs are keeping an eye to make a profit by applying the best app monetization strategies.

But do you have any idea how to monetize your app? If not, we have penned down a guide on how to make money through a mobile application for you that will help you to know the whole procedure.

With the right amount of marketing, creativity, and customer service, it is easy to implement a profitable business model that will work in your favor. And the below guide to app monetization will lead you to a path to show how you can do it.

Here we will discuss different ways to make money through mobile apps, the future of app monetization, and key considerations for this process. To know further, keep scrolling-

What is Mobile App Monetization?

Mobile app monetization refers to a process through which apps can make money in different ways. It refers to diverse means by which mobile app developers and publishers generate supportable revenue via the user base of an app. In short, “the process of generating revenue from a mobile app without applying a download fee is called mobile app monetization”.

Here, users don’t have to pay a single penny while downloading an app, but they must pay to access advanced features, buy something on the app, get a subscription, or use the app without seeing advertisements.

Mobile app monetization includes strategies ranging from rewarding video ads, implementing advertising ads, and showing banner ads to provide subscriptions.

In simple words, mobile app monetization involves applying strategies allowing app owners to make money while delivering better experiences to app users.

Why App Monetization is Important?

With the increase in the free mobile apps on Play Stores, it has been significant for app developers and businesses to look for unique app monetization models.

As per the reports, there are 97% free apps were available on Google Play Store in July 2023.

The number of free apps available on both Google Play Store and Apple Play Store was likely to be higher than the paid ones. Compared to it, the free Android apps on Amazon Appstore were around 82% in March 2023 while 18% of apps were paid in the store. Alongside this, the goal to create a mobile app is generating revenue that must be fulfilled anyhow.

Above all, monetization models for apps are helpful to provide a tangible return on investment for developers as well as businesses. Undoubtedly, developing & maintaining a high-quality application needs a lot of time, resources, and time.

And this generated revenue allows them to continuously improve and maintain the app and update its features & functions. Furthermore, generating profits is essential for apps for consistent development and sustainability.

Why User Experience is Important in App Monetization?

User experience (UX) plays a vital role to make an app monetization model successful. It highly impacts user engagement, satisfaction, and retention which affects the efficiency of monetization models for your app. Whether a user will download and use the app or not depends on UI/UX.

Below are some reasons to define the importance of user experience, have a look-

• Higher Traffic with UX Optimization
• Stay Ahead of the Competition
• Business Lead Enhancement
• Improved Credibility
• Increased Customer Satisfaction

1. Higher Traffic with UX Optimization

Every app owner wants to acquire higher traffic and user acquisition and it can be achieved by implementing an augmented UI/UX app. It will help you to increase traffic and attract new users as well.

An interactive UI design will not only make users download your app but also provide them access to unique features to grab their attention and provide them with a satisfactory experience.

2. Stay Ahead of the Competition

Take help from the best mobile application development company to provide features to your visitors with something unique from your competitors. Here, an appealing user interface with attractive graphics and visuals can do wonders for your app while distinguishing you from your competitors in the same niche.

3. Business Lead Enhancement

Generating revenue is the purpose of mobile app development. And providing augmented user experience is something that every business may unheeded. Not only to gain new users, BUT a good UI is also beneficial to generate more business leads. Yes, you heard it right, UI/UX can work as a potential lead-generation strategy to expand the business.

4. Improved Credibility

Gaining credibility in the market can directly lead to increased conversion rates and overall sales. It is hard to make it longer in the market without the trust of customers and trust building takes time. If you provide a good user experience, then there are high chances you can gain customers’ trust easily and in no time.

5. Increased Customer Satisfaction

The more satisfied your customers will be, the more they will get engaged with the app, and its activities and will recommend it to others as well leading to better revenue.

Hence, you must focus on delivering a high-quality user experience, continuous app improvement, addressing user feedback, and optimizing monetization strategies.

Future of Mobile App Monetization

No sector is left where people don’t use mobile applications, be it banking, gaming, dating, or financing. In the past several years, the number of mobile application downloads has skyrocketed valuing at 255 billion yearly in 2022.

More and more customers are getting involved in this sector by downloading and using different apps on a daily basis. It will be no surprise if the mobile app development industry becomes the most profitable sector in the future.

But still, the ultimate purpose to obtain mobile app development services is to gain profit or monetization. Applying monetization models has not been a hard process these days but you have to come up with new ideas with time due to the increasing competition.

In-app purchases, app subscriptions, advertisements, etc. are some common strategies to make money with your app. For more details, look at the below stats-

• In-app ads are still the most preferred monetization method globally and in the US market particularly.
• There were 30% of global app publishers in March 2023 who run ads in their products, on the other hand, in-app billing only attracted 4% of app developers worldwide.
• Advertising has made the largest app market revenue share in 2022 by having around $US268 billion, while in-app purchases made around $US205 billion.

Discussing the mobile app revenue at a global level between 2019 to 2027, it is predicted to experience significant growth in the year 2027. The revenue is forecasted to reach the maximum value in all 21 varied areas at the end of the comparison period. Probably, it is going to have the highest value of $US352.1 million.

Look at the below graph to know more about the revenue of mobile apps in different segments-

Different Types of Monetization Models

Every business is looking out for top app monetization strategies to apply for their app and gain maximum profit. There are a lot of different monetization models available in the market that they can apply with the assistance of top mobile app development companies.

No matter if you are launching a paid app or a free app, these below-mentioned monetization strategies will help you to know how to earn money via the apps. Keep scrolling-

1. Freemium Subscriptions Model

Various mobile applications are stepping towards this one of the app monetization methods to generate revenue. In this, businesses offer a basic version of the app to users with core features and functionality, while users must pay a fee to use the premium features or content.

This model helps to create a large user base by alleviating the initial barrier and grabbing users’ attention by providing services, so they get curious about unlocking the upgraded features.

Here businesses need to strike a balance between their free and premium features so that users can continue getting quality content and the best user experience. So, if you are looking at how free apps earn money, here is your answer! This model enables users to leverage the concept of ‘Try it before you buy it’.

This free app version also works as a marketing tool giving users an idea of what are the app’s capabilities and how much efficient it is while using. Here are more advantages of the freemium model:

Advantages of Freemium Subscriptions Model:-

The freemium subscription model works as the best strategy with a fascinating app, look at its below advantages-

• Better Scalability

This is one of the best monetization strategies for your app as it helps newbies to scale up and secure a place in the market with the help of their unique functions. And the main benefit of this model is that businesses can increase the app scalability without any higher cost spending on sales & marketing.

• Try Before You Buy

This concept is necessary to ensure users that they are going with the right solution. First, they can use basic app features and if they like it, they can go further and buy an app subscription.

• Extensive User Base

No matter if users are going to have a subscription or not but they will love to try the app for once. It will help you to get a large user base and then you can entice them to get premium access as well.

2. Premium Subscriptions Model

Subscription-based monetization models have gained a lot of popularity in recent times. Various app owners and developers are applying this model offering access to their premium features and content via recurring payments. It is more beneficial to generate a stable flow of revenue and profit.

Users can’t access any of the app features without getting subscribed to the app. The premium subscription model also permits mobile app developers to set up a tiered pricing structure with different subscription levels with advanced benefits.

This fine approach accommodates a large base of user preferences and budget limitations with the intention of increasing paying subscribers. This revenue model is connected to the number of downloaded apps directly along with higher user acquisition and engagement.

Advantages of Premium Subscriptions Model:–

Check out the below advantages provided by the premium subscription model:

• Steadfast Income Stream

The premium subscription model is one of the beneficial mobile app monetization models as it offers a viable, stable, and trustworthy revenue stream for ventures and developers.

• Guarantees Endurance

This strategy guarantees app users about the app’s availability and effectiveness with uninterrupted access to advanced features and content as long as users have an active subscription.   

• Expand Development Opportunities

The earned recurring revenue stream from this model can be used to do research and development enabling developers to upgrade existing features and add new ones to improve the overall user experience.    

3. In-App Purchases Model

The in-app purchase model is the best strategy one can apply to gain higher profit or revenue, especially in the realm of gaming. It offers additional content, unique features, and virtual goods as in-game purchases within the application. This monetization model permits developers to offer the app for free or at a minimum cost along with leveraging users to spend money on virtual goods.

It includes different aspects such as removing ads, unlocking premium features, logging on selective content, purchasing virtual currency, or buying virtual items like costumes, power-ups, or other things.

The main motive behind implementing this model is to deliver the best and most augmented experience to users beyond the core functionality of the app. Here developers need to maintain a balance between alluring users to buy things and not forcing those who don’t want to spend any extra penny.

Coming to gaming apps, they offer users the chance to spend money and get access to some advanced features, and in return, the app gets a fixed commission from the spent money. But let us tell you that this mobile app monetization strategy is not a suitable fit for all types of apps.

Advantages of In-App Purchases Model:-

Here are some advantages of the in-app purchase model that you must know-

• Convenience

The in-app purchase model enables users to buy additional features, virtual goods, or content within the app. They don’t have to visit any other external website or make separate transactions.

• Effectiveness

This effective model allows developers to make revenue via additional features & content. By providing users with value and making their purchasing experience better, it will be easy to earn higher revenue and user engagement.    

• Flexibility

Users are offered a broad range of features, content, and virtual goods redirecting to app flexibility. It enables developers to satisfy distinct user preferences and customize the monetization strategy appropriately. 

4. Sponsorship or Partnership Model

Applying a sponsorship or partnership model to an app can be a lucrative idea to make money. Businesses can hire mobile app developers to add this model where businesses can collaborate with other brands that associate with their target audiences and can provide in-app promotions and sponsored content with mutual benefits.

It is not only for revenue generation but also helps in providing users with the best experience by proposing valuable and related offerings. In this model, developers can also create a strategic ally with any sponsor who has good exposure and resources, brand integrations, and access to a large follower base.

With this model, good revenue can be achieved via in-app content including virtual goods or featuring branded items. For instance, a fitness app can be partnered with any sportswear brand showing off their products with exclusive offers, and that way, they both can gain profit.

This partnership forms a win-win situation where both parties get benefits by seizing user engagement and generating revenue.     

Advantages of Sponsorship or Partnership Model:-

The following are key advantages of the sponsorship or partnership model, check out them-

• Targeted Audience

Sometimes, sponsorship ads can be redirected to a particular audience to ensure effective engagement, promotion, and monetization opportunities. It can lead to greater conversion rates.  

• Cross-Promotion Opportunities

Promoting each other’s services or products within the relevant platforms or apps enhances revenue & user acquisition. It also helps in increasing visibility and mutual benefits.   

• Brand Loyalty

App developers can align with the brand that is associated with their users to foster loyalty among their targeted audiences. It directs to long-term revenue generation, and higher engagement via repeat app usage & activism.   

5. In-App Advertising Model

This is the most applied monetization model that comes to everyone’s mind while thinking about how to monetize an app.

The in-app advertising model displays advertisements within a mobile app for revenue generation. Businesses need to place ads strategically within your application and then, they can earn revenue based on user interactions and impressions.

If you want higher earnings, you must ensure that ads are related, non-invasive, and helpful to enhance user experience. Partnerships with ad networks or getting benefitted from programmatic advertising can also assist in process management.    

In-app advertising offers numerous benefits to both advertisers and developers. First, developers can offer the app to users at a lower cost or completely free to increase the user base and then, in return, can collaborate with other brands so that they can reach an extensive user base for product promotion & marketing.

Advantages of In-App Advertising or Advertising model:-

Have a look at these below advantages of the in-app advertising monetization model-  

• High CTR and CPM Rates

Getting higher CTR (Click-through rates) and CRM (cost per thousand impressions) rates largely depend on aspects such as ad placement, relevance, and targeting.

By providing relevant & engaging ads, using efficient targeting strategies, and improving ad placement, developers are able to enhance CTR & CPM rates for this best mobile app monetization strategy.    

• Powerful User Engagement

The in-app advertising model helps to strengthen user engagement via personalized messages, attractive visuals, amazing features, and smooth integration.

It all leads to maximizing brand exposure, advancing conversions, driving higher click-through rates, and encouraging a loyal customer base.      

• Drive Better Campaign Performance

Improve your in-app advertising campaign with targeted audience segmentation, seamless user experience, and personalized ad creatives for better performance. It will help you maximize conversions, higher engagement, and ROI via active ad placement and insistent CTA.      

• Better Brand Relationships

Building brand relationships emphasizes fostering powerful connections between app users and brands. It prioritizes non-intrusive, personalized ads matched with the users’ preferences and improves their experience.     

• Build Trust Among Your Customers

Applying transparent communication, personalized experiences, prompt issue resolution, right testimonials & reviews can do wonders in order to establish trust among your app users or customers. Implementing security measures will also help you gain customers’ trust.

• Easy to Execute

Advertisers can easily execute this app monetization method by partnering with top mobile app developers in USA or using ad networks and end up getting benefits like higher engagement rates, precise targeting, and prospective revenue generation via ad placements.

• Potential for High Revenue

This model has significant revenue potential because of its capability of grabbing an engaged and large user base. With the increased users’ time spent on the app and mobile app proliferation, it has become easy for advertisers to leverage interactive and targeted ad formats for more revenue-generation opportunities.

• Effective in Retaining Users

User retention in the in-app advertising model stands for keeping the users active and engaged within the app. It also concentrates on strategies like personalized content, smooth user experience, and rewards to generate revenue.

• Drives Bigger Results

To drive bigger outcomes in the in-app ad monetization model, it focuses on providing engaging content, precise targeting, and smooth user experiences. You can leverage data-driven insights, apply effective CTA strategies, and improve ad placements.

• Limited Impact on User Experience

There has been put a lot of effort to alleviate the impacts on user experience. All the ads are placed strategically and crafted to be non-intrusive to make sure they don’t hinder the functionality of the app.

In-App Advertising Formats

There are different in-app advertising formats to be considered and implemented by developers in their mobile apps. Here are some common in-app ad formats-

• Banner Ads
• Interstitial Ads/Full-screen Ads
• Native Ads
• Video Ads
• Rewarded Video Ads
• Playable Ads
• Offerwall Ads
• Gamified Ads
• MREC Ads
• Notification Ads

6. Data Monetization Model

While talking about the best mobile app monetization strategy, we can count this one on the list. With data accumulation and anonymization, you can get analytics and understandings to ventures or promoters seeking market trends or user analysis & behavior patterns.

You just need to prioritize user privacy and conform to the data protection regulations to continue user security and trust. In this model, data will play the role of a valuable asset that can be evaluated, processed, and traded to interested parties like researchers, advertisers, or other organizations.

Here data monetization comprises steps like collecting & storing data and then processing it to derive insights and valuable data.

Once the data has been turned into valuable insights, businesses can find out various ways how to make money with your app. One of them is providing targeted advertising services, another one is offering data-driven services or products.

The data monetization strategy can be also applied to enter data-sharing alliances or collaborations. Consider that you need to keep in mind some critical factors such as user consent and transparency to run the process smoothly.           

Advantages of Data Monetization Model:-

There are numerous businesses which are applying data monetization as the best money-making strategy, let’s see what kinds of advantages they are getting-

• Revenue Generation

If you don’t want to sell your collected data to a third party, the implementation of data monetization can still generate new revenue streams for your business. For instance, you can go to look at new customer trends or create new products to meet the users’ demands.

• Better Data Management

By treating data as a valuable asset and leveraging it for different purposes such as managing data or generating revenue, firms are incentivized to put their money into data gathering, storing, evaluating, and protecting it leading to better data management.   

• Increased Efficiency

Leveraging data insights can surely increase efficiency via process optimization, effective target advertising, informed decision-making, and the creation of data-driven products & services. It results in better operational efficiency and resource sharing.      

• Insights and Analytics

Data monetization models allow firms to extract valuable analytics and insights from the collected data. With data evaluation, ventures can have a detailed understanding of user preferences, behavior, and current market trends ensuing in improved performance and decision-making.    

• Improved Data Security

 Security is one of the important aspects to consider while taking mobile app monetization tips. Businesses must implement robust measures to protect users’ data. Some other aspects like encryption techniques, strict data access controls, and compliance with privacy regulations also ensure the safety of sensitive data via data collection, processing, and sharing processes.        

• Access to New Markets

The data monetization model comes up with the opportunity to access new markets via leveraging data assets. Firms can evaluate and sell data to other interested parties; businesses can enter different sectors beyond their niche while expanding their reach and unleashing new revenue ways.   

7. Location-Based Model

The LBS monetization model comprises leveraging the user information about their location to make money. In this, businesses can apply for targeted and personalized advertisements, offers, and promotions according to the users’ geographical location.

In this model, the main concentration is on using real-time or previous location data to provide them with related content and ads.

This model collects information in different ways including Wi-Fi signals, GPS, or cell tower triangulations. This data is being analyzed to gain valuable insights into user preferences, behavior, and demographics.

Here app owners can also earn by collaborating with local businesses such as retailers, restaurants, or other service providers to help them reach the maximum number of people. Alongside ensuring user consent and privacy, this model requires businesses to adhere to stringent data protection guidelines.       

Advantages of Location-Based Model:-

Want to know how the LBS monetization model helps businesses in various ways? Have a look at the following advantages-

• Improved Customer Experience

This model enhances customer experience via personalized location-based content, recommendations, and promotions. Users get benefits from provided related content and suggestions that match their preferences leading to delivering them engaging & improved experience.  

• Better Marketing Efforts

The LBS monetization model allows businesses to put targeted and personalized marketing efforts based on the user’s location to increase the effectiveness of campaigns resulting in better conversions, engagement, and customer satisfaction.     

• More in-app Conversions

This model can be helpful to increase in-app conversions with the help of targeted and personalized ads, recommendations, and offers. With the relevant content and promotions, there are high chances of users getting engaged and converted within the app.

8. Crowdfunding Model

While asking about how you monetize an app, crowdfunding is the best option you can go for. This model enables businesses and individuals to raise or inject funds from an extensive base of users via online platforms.

In this model, businesses or entrepreneurs display their ideas or projects on crowdfunding platforms and ask individuals or funders to contribute anything to accomplish their goals.

It works as a platform for aspirants to pitch their projects by setting a funding target. On the other hand, investors can choose whom they want to support by investing in their projects.

It includes different funding models comprising reward-based crowdfunding, donation-based crowdfunding, debt-based crowdfunding, and equity crowdfunding.

Here crowdfunding platforms can make money by charging commissions or fees on the total raised funds.

They can keep a percentage of overall funds raised or charge transaction fees on every contribution. There are some additional services as well such as campaign management tools, marketing support, and data analytics.

Advantages of Crowdfunding Model:-

Take a look at some advantages of the crowdfunding monetization model-

• Injection of Funds

This model allows businesses to jump into a large pool of people to inject funds for their projects. Leveraging contribution and support from backers via different fund models help businesses to run.  

• Grab a Large Audience Base

This model helps you to tap into a large audience base by displaying your project ideas on crowdfunding platforms. This way, a lot of people get to know about your businesses at one time leading to expanded reach and support.

• Building Community

The crowdfunding monetization model allows businesses to build a large and engaging community of investors or backers to get funds to invest in your project. A community is formed for the project via shared communication and support with a sense of partnership. 

9. Affiliate Marketing

It is a kind of software monetization strategy for apps through which revenue can be generated by doing advertisements of services or products of third parties to your audience.

This method is much more beneficial to convert leads if the available source is reliable. Affiliate marketing forms a mutually beneficial relationship between businesses & affiliates.

Here, entities or individuals are called affiliated partners with businesses for product or service promotion. Affiliates generally use social media presence via a website or blog or email list to reach the targeted audiences. Users sign up for affiliate programs presented by businesses with unique promo codes or referral links.

Businesses get benefits from affiliate marketing by increasing their reach and leveraging their existing audiences.

Affiliate marketing also provides a cost-efficient advertising model as businesses only pay commissions when a sale or referral is made. It leads to optimized marketing budgets and making sure to get a higher ROI.

Advantages of Affiliate Marketing:-

This monetization model acts as an intermediate between businesses & affiliates that provides advantages like-

• Less Expensive for Users

The affiliate marketing monetization model provides access to services and products at a minimum cost. This model can also negotiate exclusive promotions or discounts enabling users to do cost-cutting while getting affiliate-recommended offers.

• Create Brand Relationships

This model helps businesses by partnering with affiliates to promote services or products. These affiliates act as brand advocates to drive sales, increase brand exposure, and create a loyal customer base via promotional efforts.

10. SMS Marketing

It may be conventional for some businesses which have applied this monetization approach earlier, but it is still effective.

By using in-app prompts, businesses can send text messages to users for reminders, app updates, contests, offers, and promotions. This strategy will help you to strengthen your bond with your customers and promote your services directly.

Here, businesses must have a database of customers who explicitly consented to get promotional messages. With this, advertisers have to pay a fee to reach the audience easily via an SMS campaign, the fees will be based on the number of messages sent or the number of audiences it went to.

Further, businesses can leverage SMS marketing as a lead-generation tool as well. They can offer customers discounts, deals, or exclusive offers via SMS. For this, they need to capture customer data and build a valuable database but these all should be done by considering customer privacy and consent.  

Advantages of SMS Marketing:-

Look at the following advantages to know what SMS marketing has to offer-

• Easy to Implement

Undoubtedly, it is easy to implement as advertisers just need to send targeted SMS messages through an opted-in customer database. Here businesses can get direct access to potential customers.    

• Easy User Retaining

SMS marketing can aid in retaining users by sending them personalized messages and adding discounts, loyalty rewards, and limited offers. By applying this direct communication channel, businesses can make users stay loyal and active in their services.

11. Email Marketing

Email marketing is also an effective strategy we will talk about in this app monetization guide. This strategy involves the effective use of email campaigns.

You can leverage an email subscriber list to promote their services or products, boost sales, and establish customer relationships. This monetization model completely depends on a proper email list, creating engaging content or emails, and applying the strategy appropriately.

Here you need to evaluate and optimize the email marketing techniques comprising click-through rates, open rates, conversion rates, and complete campaign performance.

By collecting valuable insights and data from the metrics, marketers, and advertisers can improve their strategies, analyze improvement areas, and customize their content to resonate with the audiences with better services.

After all, this monetization strategy relies on creating an email list, providing quality content, and executing efficient monetization approaches. Continuous evaluation and optimization of email campaigns will increase the effectiveness of the monetization model enabling businesses to improve the outcomes consistently.    

Advantages of Email Marketing:-

Here are some advantages provided by the email marketing monetization model, check out them-

• Fast Buying Process

Email marketing is the most applied and effective monetization strategy than any other approach comparatively. Also, it has a fast-buying process, you just need to create an email list, deliver engaging content, and apply direct product and service promotions along with upselling opportunities to boost conversion & revenue.

• Easily Implemented

To implement this effective monetization model, you need to follow simple steps only. A quality email record, sponsored content, and upselling are all you require for better results. You can generate profit while maintaining customer relationships and having sustainable growth.   

Final Verdict

As a business, you must have also experienced the dilemma of choosing among various mobile app monetization models someday, hence, to save other businesses from this confusion, we have curated this guide to app monetization models in the above article.

While monetizing your mobile application, it is needed to apply a considerate approach to balance both good user experience and maximum revenue generation.

Applying a perfect blend of all the effective monetization strategies such as freemium models, in-app advertising, sponsorships, partnership, email, SMS, & affiliate marketing, crowdfunding, subscription models, and data monetization can help ventures create a supportable revenue tactic.

Don’t forget to analyze and adapt your applied monetization approach continuously according to the users’ feedback and the latest industry trends.      

Consider applying strategies with the right balance of monetization and customer satisfaction. For this, you can also run A/B testing campaigns to get an understanding of the best monetization models as per your business requirements.

For further guidance or assistance, you can contact expert analysts from SemiDot Infotech. We have experienced consultants who will provide you with the right path to your business goal.

FAQs

Here are some frequent questions and answers related to mobile app monetization, have a look-