Maximize Your App’s Revenue: Top 6 Monetization Strategies

September 25, 2024
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From paid apps, ads or in-app purchases to transaction fees, there are many monetization strategies, but which one is right for your app? In this article, we'll show you the 6 best ways to monetize mobile apps.

In-App Advertising

For free apps, this is probably the most common way to monetize. In-app ads simply work when it comes to monetization, especially in apps that users spend more time on. However, they have their pitfalls - for most users, they are a distraction. Certain types of ads can even make the user experience so unpleasant that users turn off or uninstall the app. Therefore, ads need to be implemented into the app environment in a way that minimally affects the UX while being effective in terms of the performance of the ads themselves.

Freemium

Freemium is a monetization model where the app is available for free, but users pay for additional, optional features - usually a premium version of the app (hence the name freemium = free + premium). This is a popular monetization model, not only for mobile apps, as it represents a kind of compromise. Users get the app for free (probably in the basic version or with limitations), but they have the choice to pay for the app and use it to the fullest.

In the freemium model, other monetization methods are usually used in addition to the premium version, most often in-app advertisements. This combination brings with it other advantages besides the monetization through ads. In fact, in-app ads make the free version more uncomfortable for users, which encourages users to buy the premium version of the app (which, in addition to additional features, often offers users to get rid of various restrictions - including ads).

Well-known freemium apps include Spotify, Duolingo and YouTube.

Paid App

A paid app ( i.e., a paid app download) is a monetization method that is simple, but in most cases inefficient compared to other monetization methods. Successful paid apps often have one thing in common: they are unique value-added apps that are not offered by competitors and that users are willing to pay for. By December 2023, according to Statista , paid apps represented approximately 5% of the App Store. On Google Play, this figure was even lower.

In most cases, we do not recommend this monetization model, especially in a situation where there are competitive apps on the market with comparable features. Most users are not willing to pay for an app before trying it out.

In-App Purchases

In-app purchases are another one of the most used monetization methods. As the name suggests, it is digital content that users can purchase directly in the app. These are most often upgrades, credits, or subscriptions.

According to the latest statistics (01/2024), 50% of mobile apps (excluding gaming apps) use this monetization method. In fact, mobile games are a significant segment of apps that use this model, with 79% of them using in-app purchases.

Sponsorship, partnership

Sponsorships and other types of collaboration are an often overlooked monetization model, but one that offers interesting value potential and is more user-friendly than ads or in-app purchases. When choosing a sponsorship or other type of collaboration, we recommend choosing an advertiser that is highly relevant to the target audience - in this case, app users.

Sponsorship does not have to mean only placing the sponsor's logo or other graphic materials in the app. It can be various integrations, sponsored content, in-app purchases, and more. The possibilities are really wide and if your app has a wider user base and this monetization method is done right, we definitely recommend it.

Transaction fees

Transaction fees are a simple and functional strategy for monetizing mobile apps, but they work primarily within platforms that enable purchases or other financial transactions. This monetization method works on the principle of charging a small fee per transaction, which is also an advantage in the measurement and efficiency of the monetization itself - the app can generate revenue directly proportional to the volume of transactions. Another advantage is the minimal negative impact on user satisfaction, unlike other monetization methods such as ads, in-app purchases, or paid versions. This model is particularly effective for marketplaces, travel agencies, financial services, and other mobile apps that mediate monetary transactions.

Conclusion

Choosing the right monetization strategy is crucial to maximizing revenue from your app. Whether it's in-app ads, paid apps, or in-app purchases, each method offers its pros and cons. In general, we recommend combining multiple monetization methods, but the most important thing is to tailor your monetization strategy to your app and target audience.

Are you ready to effectively monetize your app?

At iDevBand, we specialize in mobile app development including strategic monetization planning. With our experience in various industries, we can help you choose and implement the best strategy for your app.