Mobile App Monetization: Guide to Monetizing Web and Mobile App

As the number of apps continues to proliferate, so do the opportunities to acquire sustainable revenue streams.

According to Grand View Research, the global mobile app market is projected to reach a staggering $626.39 billion by 2030, which shows great potential for app monetization. However, to reap the benefits of app monetization, businesses need a strategic approach.

In this guide, I will explain the primary methods of app monetization and provide real-world examples to help you unlock your app’s earning potential. I hope to help you understand how you can generate sustainable income with your application by utilizing a comprehensive app monetization model without pushing customers away.

What is Mobile App Monetization

Before we proceed, let’s define the web and mobile app monetization concept to clear up any confusion you might have about the term.

App monetization is a set of methods and strategies employed by developers and business owners to generate revenue from web and mobile applications.

Simply put, app monetization is a way for an application to make profits for your business. It can be achieved by utilizing different strategies. The monetization models I’ve seen most often are the following:

1. Advertising
2. In-app purchase
3. Subscription
4. Paid downloads
5. Affiliate marketing

In the next segment of this article, I will explain these app monetisation models in more detail.

Strategies for Web and Mobile App Monetization

Monetization, like any business decision you make for your software, requires a strategic, data-driven approach. If you decide to monetize your app, you should learn about the strategies for monetizing and pinpoint the one that works best for your business.

Currently, in-app advertising leads the list of the most popular monetization models. The graph below shows the distribution of different mobile application monetization strategies across both gaming and non-gaming apps in the market.

If you want to know more about monetization specifically for fintech, read this article, which highlights fintech insights for monetization strategy.

Considering the importance of choosing the right monetization approach, this section will focus on defining the corresponding strategies and the appropriate usage for each.

Advertising

An advertising mobile app monetization strategy is an approach to generating revenue from your app or website by displaying advertisements. To implement such a strategy, a business needs to find a partner or several to collaborate with and display their ads in the application.

Advertising is an incredibly popular monetization strategy and is currently the most widespread, according to Statista. This diverse method has different types, and among them are the following:

1. Video ads. Short 30s videos that are displayed within the app. It can be skippable or non-skippable (6 sec, e.g., bumper add on YouTube).
2. Banner ads. Rectangular ads are displayed in the bottom, top, or corner of the screen.
3. Native ads. Ads that blend with the applications’ UI and are less intrusive compared to other methods.
4. Display ads. Full display advertisement that will remain on the screen until the user dismisses it. It can be animated or static.
5. Reward ads. It can be any type of ads that are displayed to unlock a certain feature or content. This type of advertising is often utilized in gaming apps.

How to use advertising?

Advertising monetization strategy can be used in different scenarios, but there are generally a few rules to remember:

1. In-app advertising is not going to fit business applications such as banking applications or digital wallets.
2. This strategy is best suited for applications with a large user base as it generates lower income.
3. Advertising can be very intrusive, so it needs to be limited and customer-centric to avoid driving users away from the app.

However, as with any monetization strategy, advertising has its pros and cons, and the table below illustrates them.

Use case:

In DashDevs’ team, I remember implementing this monetization strategy for TMZ, a US-based tabloid portal. For a news portal, advertising offered great penetration and enabled high user engagement with the ads.

TMZ was created with the intention of scaling up, so advertising was the monetization model that allowed our client to take their goals into account due to its low entry threshold and great scalability potential.

In-App Purchase

In-app purchase (IAP) is a monetization strategy that enables an app user to buy additional features, content, or virtual goods within an app. This application monetization strategy enables the user to buy an app directly from the owner, eliminating the need for intermediaries.

This monetization strategy generally has two major types:

1. Consumable IAP. Provides a one-time benefit that can be bought and used immediately (e.g., internal currency, rented content, etc.)
2. Non-consumable IAP. Provides a recurring benefit that can be used for as long as the user continues to use the app (e.g., additional features, buying content, etc.)

How to use IAP?

Using IAP generally means that you have something to offer to your audience outside of the content of the app you’ve created. This might be something simpler or more complex, but be sure not to oversimplify it, as this will lower the users’ motivation to complete the purchase.

For example, if you are using an IAP model for a note app, you can add an opportunity to purchase different fonts or backgrounds. But make sure that you’ve added a great diversity of digital products to choose from.

When implementing in-app purchases, remember that they can be beneficial for your business. The table below shows their pros and cons.

Use case:

I’ve worked on Keen, a lifestyle mobile application, with the DashDevs team. We utilized an in-app purchase monetization strategy for it. The app included in-app calls and consultations, which could be purchased as consumable IAPs.

Users had an opportunity to get a high-quality consultation from an expert, generating engagement and profit for the application.

If you need to learn more about the technological aspects of monetization and mobile app development, check out this article, where our expert reveals these insights.

Subscription

A subscription monetization model is a business model utilizing a recurring fee paid by the customer for ongoing access to a product or service. This fee is typically charged at regular intervals, such as monthly or annually.

The subscription monetization model has two types, and both of them are frequently utilized by mobile application developers.

1. Auto-renewing subscription. This type of subscription offers customers a shorter subscription period and automatically renews it.
2. Non-renewing subscription. On the contrary, the non-renewable subscription allows users to subscribe to an app for a fixed period of time and requires confirmation for the next round of subscriptions.

News and entertainment apps, such as Netflix or Medium, can especially benefit from subscription models by providing exclusive content and determining the right amount of media to offer users to entice them to subscribe.

How to use the subscription monetization model?

You must know how to use the subscription monetization strategy effectively. My advice for it is the following:

1. When you create a premium subscription for an app with a free version, add several equally important features to motivate users. This will add value to your proposition.
2. Listen to the feedback to ensure that your subscription covers what users really need from your app.
3. Utilize different subscription versions, such as basic, premium, lux, etc., to create a price range affordable to bigger audiences.

However, despite its wide usage, this app monetization model also has its pros and cons, just like the ones I’ve reviewed above.

Use cases:

The DashDevs team and I have been engaged in different applications that utilize this monetization strategy.

The two most recent ones are:

Whippy is an AI for customer support management that offers different subscription pricing, including a custom package. I personally believe that a custom package practice can be especially effective for business software such as utility B2B apps resembling Whippy.

Vidby is an AI bot for call transcriptions and translations we created with the team. It offers different subscriptions, four packages, and the opportunity to subscribe monthly or annually. Vidby is a tool that can be utilized in both B2B and B2C segments, so the price range and feature range are different.

Paid Downloads

Paid downloads are a straightforward app monetization strategy in which users pay a one-time fee to download and use the paid app. Usually, the user only pays for the app during the download, thus purchasing the application, and it doesn’t have any recurring fees or IAP.

How to use the paid download monetization model?

Generally, this is one of the business app models for monetization that requires dedicated and robust research before you roll out your app. The paid download monetization model is usually utilized for unique applications with a potent brand image. Therefore, you must be sure your application offers enough unique benefits to motivate users to buy it.

These applications do not offer a price range such as IAP or subscription. As the table below shows, this mobile app monetization strategy has more pros and cons.

Use cases:

One of the most famous examples is the Microsoft Office Suite. These applications, united under one holding, offer the user a set of office tools. They are currently the second most popular office toolset in the world, with 30% of the market share. The unprecedented monopoly these tools hold over the market helps them achieve great results with this monetization model. However, it will present challenges for a new application.

If your aim is to create an application to withstand the competition from the get-go, a software development partnership is what you should be looking for. A reliable partner will enable your business to better understand the technical aspects of how to monetize an app.

Our experience in mobile app development enables us to create applications that change the world. If you are looking for a team to help you create a mobile application with the right monetization strategy and features that fit your audience’s needs, reach out to DashDevs.

Affiliate Marketing

Affiliate marketing is a performance-based marketing strategy in which a business can earn a commission by promoting someone else’s products or services. Like the IAP model, this monetization strategy is built on partnerships with third-party businesses or experts.

There are three main types of affiliate marketing as one of the mobile app monetization strategies. Among them are:

1. Pay-per-click (PPC). Each click on the affiliate link integrated into your app will generate revenue for your business.
2. Pay-per-sale (PPS). You will only earn revenue if a user completes the purchase using an affiliate link.
3. Pay-per-link (PPL). Only leads generated from affiliate links in your app will generate profits.

How to monetize mobile app with affiliate marketing?

To use this monetization model for web or mobile apps, you must know your audience and what interests them. Niche websites or applications usually use this type of monetization to promote products or services directly connected to the user base.

It has its pros and cons and might be utilized rather for niche applications.

Apart from the monetization strategies I mentioned above, there are smaller ones that can support your main effort.

Crowdfunding

This monetization strategy essentially means building a presence on crowdfunding platforms and creating a demand for your application before you have an application.

Attracting attention to your software is always beneficial, and with crowdfunding, you can see how many people are not only interested in your idea but also are willing to back it up financially. This is a conjunction between monetization and investment, and it can greatly help newer applications hit the market.

Freemium

Essentially, freemium means introducing a free application that also has a premium package that you can either buy or subscribe to.

The package might include new features, no ads, additional content, etc. This additional monetization effort works great in combination with advertising, subscriptions, or in-app purchases.

I find these monetization strategies to be the most efficient for most businesses that I’ve encountered in my practice. They can be utilized separately or conjoined to create a unique monetization effort covering your business needs.

Hybrid App Monetization

Since I’ve already brushed upon combining different types of monetization strategies in one application, it’s also important to note that you can combine those mentioned above as well to effectively engage app users.

Note: a combination of monetization strategies must be moderate and careful, as an app overflowing with packages, ads, and IAPs can be obtuse to the user.

If you wonder how to monetize an app efficiently, we might be your answer. As a team, DashDevs delivered over 500+ commercial projects, including applications with a hybrid monetization strategy.

In the image below, you can see a step-by-step guide that will help you learn how to monetize an app using hybrid practices.

Find the right balance between generating revenue and keeping users engaged. And always be prepared to adapt your monetization strategy as user preferences and market trends evolve.

Web and Mobile App Monetization: Practical Tips

Now that you already understand different types of web and mobile app monetization strategies, I want to share my expertise by giving you the advice I used during my own development practice to maximize app revenue for my customers.

This is not a step-by-step guide but rather a set of guiding principles to help you integrate the best strategy for your business and monetize app.

#1 Understanding TA needs and financial capability to improve monetization efficiency

First, you need to understand whether your target audience can afford and understand the monetization strategy you are offering.

For example, if you create an app for investors, affiliate marketing or advertising might be intrusive for your customers. Likewise, if you are creating e-learning software for teenagers, they won’t be able to afford an expensive subscription or a paid download.

#2 Using monetization for update distribution

Creating updates that enhance your application is essential, but some of those updates might bring new features you can monetize.

Just like YouTube monetized the play in the background and offline features, you can find something small to improve about your application. Don’t overdo it, however, and don’t make essential updates paid.

#3 Analysing user feedback and data to enhance monetization strategy

Look at your users’ feedback not only to create new features to monetize mobile apps but also to pivot your monetization strategy. In certain cases, you might notice that your regular subscribers prefer fixed-time subscriptions, which might be an indicator that paid downloads might work even better for your app.

In some cases, you might notice that more and more people disengage from your application because of advertising or use in-app purchases for one specific feature only; this might be a great time to introduce a subscription model.

#4 A/B testing to determine whether monetization is efficient

With A/B testing, you can determine whether your app strategy is efficient by tracking user behavior and better understanding it. Certain ads might be inefficient not because they are irrelevant but because users don’t notice them or see them as intrusive.

Final Thoughts

This blog post covered the basic knowledge you might need to understand monetization strategies and find the right one for your business. Each of them has its own merits and pitfalls, and if you know how to leverage the former, the latter should not be a challenge for you.

However, if you need additional help or have questions, you can always turn to DashDevs’ expert team. With over 15 years of experience in software development, we will be more than happy to assist you with monetizing your mobile app.

Contact us.