We are running towards a world with decentralized finance however, whether its gold, dollar, or Bitcoin, there is no doubt that we are going to need some sort of currency to sustain our life. So, unless you are a philanthropist like Tony Stark, we assume that you want/need to earn money from your amazing app. So, you should learn how to monetize an app.

App monetization is basically the collection of methods you implement to create revenue from your mobile app. Some of the most popular ways of app monetization are in-app purchases, in-app advertising, or charging money for the download, as known as paid downloads.  

The use of App Monetization models can vary from one category to another. While in-app advertising works wonders for gaming apps, it may not be the best monetization model for a finance app.  After reading this article, you will have a better idea of the most popular monetization methods and their implementations for different types of mobile applications.


Table of Content

Why is App Monetization Important?

The very first reason is, of course, earning money. You have to generate money to keep your business running. And, app stores are highly dominated by free apps. If charging money for the download is your only game plan, get ready for hard knocks. Because the competition will be tough for you.

Distribution of free and paid apps in the Apple App Store and Google Play as of December 2021 by Statista

This is the distribution of free and paid apps in the app stores as of December 2021 according to Statista. The primary reason is that people dont like to spend money on apps that havent gained their trust yet. Especially when they can get a similar service for free. However, apps continue to generate billions and billions of dollars over the years, growing at a rapid pace. Clever app monetization strategies are surely a factor in this surge of revenue.

Considering that the number of paid apps has been decreasing over the last few years, app developers must have found out that app monetization can be done in more sophisticated but user-friendly ways, right?

Therefore, if you want to keep up with the competition, you too must find a suitable method to monetize your app. 

Moreover, app monetization if done right improves user experience. The better the user experience, the more users youll attract. In other words, a successful app monetization can also help you with mobile user acquisition.

How to Prepare for App Monetization?

As mentioned above, there are several methods for app monetization, however, not all of them might be suitable for every app. So before we look into app monetization strategies, we should do some research.

Steps for App Monetization

First and foremost, you have to know your app. What value propositions do you offer and to whom? 

After answering these questions, you can identify your target users and their behavior. App monetization strategies may yield different results for audiences of different ages, demographics, or social backgrounds. 

The platform holds a great deal of importance as well since Apple and Android users have different behaviors. For instance, according to the research of Appsflyer, iOS users are more inclined to spend money than Android users.  

Last but not least, how do your competitors monetize their apps? Which models do they utilize? Subscriptions, in-app purchases, or something else? Do these techniques bring desired results? Do users complain about the app monetization method? If so, can you find better alternatives or simply provide better subscription rates? 

If you dont know where to start or how to find your competitors, here are a few ideas. 

Keyword Explorer

With Keyword Explorer, you can search for keywords that you would like to rank for and find which apps are alreayd ranking for them. 

Top Charts

Or you can take a look at the Top Charts where you can filter the search results by platform, date, country, and category. This way, you can find the top dogs in your category and analyze their strategies.

What about complaints, right? By examining app reviews & ratings, you can see in an instant how users react to the services of your competitors.

Reviews

For instance, above you can see some unsatisfied reviews. Apparently, this app is utilizing too many ads for monetization which is hurting their user experience. Even if indirectly, a frustrated user base and negative reviews on your product page can be hurtful for your user acquisition efforts. For instance, lower ratings will always put downward pressure on your conversion rates.

App Monetization Strategies

Now that you have some idea of what you are getting into, lets begin discussing strategies for how to monetize an app. 

Paid Downloads

You can monetize your app by demanding a one-time fee for the services of your app. With this model, you can generate instant revenue however, it has some disadvantages. 

Firstly, people might not want to pay for an app that they didnt use. Similar to The Foot-in-the-door technique, you should start with a free version.

Lets start small, try this free version first. If you want more, you can get the paid version here.seems to work better than Pay now, and if you dont like it, well oops.

With a free version, users can get used to your app so they can decide better whether or not to buy it. Since this is a more reliable approach, it can generate more revenue in the future. 

Secondly, instead of getting paid once at the beginning, you can monetize your app in small amounts but on an ongoing basis. This means more revenue is possible in the long run with other models.  

 

Freemium / Subscription Monetization

If paid downloads werent good enough for you, you can try the subscription model. You can offer subscriptions for different periods such as monthly, 6 monthly, and yearly. 

Similar to paid downloads, people probably wont want to subscribe to an app they dont know. So, offering a free trial or a freemium model will be beneficial for convincing users to subscribe. But make sure that your freemium is engaging and persuasive enough to make the sale. For this matter, determine how much content you want to share, which features you want to make accessible.

 

For instance, Sleep Cycle monetize their app with the freemium model. You can utilize a few features of the app, see if you like it or if it solve your problem. And then, if users are happy with the service and want more, they can get the premium. 

Freemium and subscription models are highly popular among health and fitness, news, and education apps. These models are also a good way of ensuring user retention. If they say yes to yearly subscriptions, they will probably come back more often.    

 

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