Mobile Commerce
Mobile Commerce
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 min read
July 26, 2022

How to Choose the Right Mobile App Monetization Strategy?


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After you’ve painstakingly built a mobile app, you will have to ask yourself the million-dollar question - “How do I start making money out of this app?”.

After all, why did you set out to build the app in the first place if not to make money off it?

Choosing a monetization strategy for an app should be given as much importance as you would give to developing and launching it.

In the rest of this blog, we will look at the most popular mobile app monetization strategies and how you should go about choosing one for the app that you are developing.

What options are available?

Before we get into how you can choose a monetization strategy for your app, let’s look at some of the most popular strategies and the reasons to(or not) pick them.

In-App Advertising

This is the most common and lucrative way to monetize an app. It also comes with a lot of advantages. For example, apps that have ads are free to download, which leads to better reach. It is also easy to set up, and you can quickly start generating revenue. However, the biggest disadvantage of this model is that it can negatively impact the app’s usability. Most users do not like apps that come up with ads during the middle of their interaction. This model also lags behind when it comes to tracking and reporting.

Freemium Model

With this model, most of the app’s functionalities are free to use. If users want to use the app’s premium elements, that is when they have to pay. This strategy has particularly proven to be quite effective for entertainment apps. It makes sense because people actively pay for a special feature that will improve their overall experience. This model can be adopted by apps that are not doing so well with in-app advertising.  

The disadvantage of this model is that the free version should be enticing enough that people install it from the app store. Also, it should have a lot more to offer for someone to pay for it.

Subscription Model

Apps that use this model ask users to pay a recurring fee either to use the app or to use certain features. This is quite common in news apps. The most attractive benefit of this model is the fact that it gives businesses/app developers recurring revenue. On the downside, since this is more expensive for users, there will be resistance from most users to shell out their money.

Paid Download Model

As the name suggests, users will have to pay upfront to even download the app. The main benefit here is that you can earn money upfront from users and not worry too much about longtime value. The downside to this model is getting people to pay for an app while there are hundreds and thousands of other apps out there that are completely free to download.

Combination Model

Although we’ve discussed different monetization strategies, it is not very uncommon to find apps that utilize a mix of the above-mentioned strategies. For example, an app could feature both in-app purchases and ads. A combination of monetization models can help generate additional revenue. But, doing so can make the user experience go for a toss.

How to choose a strategy for your app

Choosing the right monetization strategy for your app is dependent on a lot of factors. Usually, the business objectives will provide direction with regards to what type of monetization strategy the app should adopt. Given below are some things to keep in mind while planning a monetization strategy for your app.

Put the app first

At a very base level, business owners should consider what the app does. For example, what does it solve? Or, how does it solve the problem? The monetization strategies work best when they are aligned with the app’s purpose. For example, subscription models work best for services like Spotify, Netflix, and apps focused on content. In-app purchases, on the other hand, work best with free-to-play games and product-centered apps.

What’s the competition up to?

Competitor research should be on top of the priority list of anyone who is building a mobile app. Research the good and the bad of apps that are similar or at least in the same vertical as your app. Find out how they are making money and how well their strategies are working. There might be a gap that you could capitalize on. Or you could do something different with your app to accelerate revenue generation.

Look at the target users

Solid user research can be a lifesaver when it comes to choosing a monetization strategy for your app. Who is your target audience? What are they looking for? And, most importantly, what are they willing to spend money on, if anything? The value an app provides should be made clear to the target audience before you can expect them to start paying. For apps that are free for download, showcase the value proposition through a seamless user experience. For pay-per-download apps, demonstrate the value before acquisition.

Summing up

By now, you would have gotten an idea of the monetization strategies available for apps. You would have also gotten some clarity on how you should choose one for your app as well. Keep in mind that you should not be limited to the strategies listed here or anywhere else. If you are patient enough, you can tap into unseen opportunities and create your own ways to earn money from your app.

Yet to build a mobile app for your business? Try Vajro and build your dream app without writing a single line of code. Want to know more? Book a demo now.

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