10 Strategies for App Monetization

Complete with benefits and drawbacks for each strategy

Enyata — App Monetization Strategies

App development is a profitable business that is going to be around for a while. The key to being profitable is to solve a problem, and apps do exactly that. They’ve become such a necessary part of our daily routines that some people may not be able to easily access money, food, or transportation without them.

About 97% of the apps in the Google Play Store are free. It is the same with the Apple Store and Amazon App Store, where there are significantly more free apps than paid apps. According to Serpwatch, while most apps can be downloaded freely, mobile apps could generate more than $935 billion in 2023.

Your app can be part of those making billions when you use the right mobile app monetization process that doesn’t frustrate your users. A frustrating user journey will lead to a bad brand reputation, a high churn rate, and low returns.

In this article, we’ll review the 10 best ways to generate revenue for your app. You can choose the right combination for your business.

The right way to build a monetizable app

Just like any successful product, your app needs to guarantee customer satisfaction. It should function smoothly, be easy to use, and provide content that matters to users. During development, adopt a content strategy that supports regular content updates.

Developing your app

Creating a successful app depends on how good it looks, feels, and works. This begins with developing the right ideas and having a solid product development process.

While using frameworks and existing code libraries can save time, you need original code to understand how your app works and make it adaptable for future changes. Take your time with development, ensuring your team understands your target users’ needs.

If you don’t have a dedicated engineering team, consider outsourcing to experts who can handle the entire process. If you already have a team that needs expert guidance, you can augment them with professional developers for support.

Providing the right content

You need to make sure you provide relevant, valuable, and engaging content that justifies people downloading and continuously using your app.

Frequent content updates help you retain your users by keeping them engaged. If your app was a store, you would need to regularly add new items on the shelves to keep customers coming back.

For gaming apps, this means introducing new levels and challenges regularly. For a news app, you should have daily updates to keep readers informed. Depending on the value your app provides, make sure your content is relevant and solves an existing problem for your target audience.

10 Effective Ways to Monetize Your App

The journey of developing an app is exciting, and it feels even better when your product starts to make profits.
Here are the 10 most effective ways to do this:

In-App Purchases

In-app purchases allow users to buy virtual goods, power-ups, or additional features within the app. To make this work for you, you need to offer something valuable to the users. It should enhance the overall experience of your app and tap into the psychology of microtransactions. You need to ensure the free experience is still enjoyable and that purchases feel like enhancements rather than necessities for the app to work.

Enyata — Types of Products for In-App Purchases

Benefits:

• In-app purchases enhance the user experience by providing additional value, excitement, and satisfaction.
• People can choose how much they want to spend based on their preferences. It encourages repeat purchases and ensures a consistent income.

Drawbacks:

• Some users may be hesitant to make in-app purchases due to security concerns. You need to build and maintain trust for this model to succeed.

Freemium Model

The freemium model allows you to offer your app for free but entices users to upgrade to a premium version for enhanced features, an ad-free experience, or exclusive content. This method attracts a wider user base and appeals to people willing to pay for a premium experience.

You need to create the right balance between what’s free and what’s premium. Offering too much in the free version might discourage upgrades, while too little may prevent users from downloading the app in the first place.

Benefits:

• The low entry barrier attracts a larger audience.
• People have the option to pay for what they find most valuable, which increases customer satisfaction.
• A free version of your app acts as a promotional tool for the premium features.

Disadvantages:

• The cost of acquiring users who convert to paying customers can offset the revenue generated by premium upgrades. You need to manage acquisition costs effectively.

In-App Advertising

In-app advertising is the digital equivalent of a billboard within your app, allowing you to showcase relevant ads to your users. These eye-catching visuals enhance the user experience and bring in revenue every time someone clicks or views an ad. With targeted advertising, you can ensure people see content that resonates with their interests. Apps in the gaming, social networking, and entertainment industries are best suited to this method.

Benefits:

• Advertisers pay for exposure, and this can bring in a consistent income.
• Well-integrated ads can improve user experience by offering them direct links to solutions they need or services they are interested in.

Disadvantages:

• While well-integrated ads can enhance user experience, poorly executed or intrusive ads may annoy users, leading to a decline in app engagement or, worse, uninstallation.
• Relying solely on ad revenue can be risky, as it’s contingent on advertisers’ budgets and industry trends. Economic downturns or shifts in advertising strategies may impact your revenue stream.

Interstitial Ads

Interstitial ads are full-screen advertisements that appear at natural breakpoints in the user’s interaction with the app, such as between game levels or during a transition. They demand the user’s attention with obvious and captivating visuals.

Enyata — Interstitial Ad Layout

Benefits:

• Interstitial ads cover the entire screen, ensuring users can’t miss them.
• Because they can’t be missed, interstitial ads can lead to higher click-through and conversion rates.

Disadvantages:

• Overusing interstitial ads can create a frustrating user experience and make people stop engaging or abandon the app completely.

Native Ads

Native ads seamlessly blend into the overall design and user interface of your app, appearing like natural content rather than standalone advertisements. They aim to provide a non-disruptive user experience while still promoting products or services.

Benefits:

• Native ads match your app’s visual and functional elements, ensuring a cohesive and non-intrusive feel.
• These ads often get higher engagement rates because they mimic the look and feel of your app’s content.

Disadvantages:

• You need to strike the right balance between integration and visibility. Poorly designed native ads may go unnoticed or disrupt the app’s aesthetic.
• While native ads enhance user experience, they might not generate as much revenue as more noticeable advertising methods.

Licensing

Licensing involves allowing other developers or platforms to use or distribute your app in exchange for a fee or royalty. It’s a way to expand your app’s reach and generate passive income.

Benefits:

• Licensing your app to other developers or platforms can broaden your app’s reach, leading to increased revenue.
• Once licensed, you can earn money without actively managing or marketing the app.

Disadvantages:

• Licensing may require handing over control of your app to others, potentially affecting its quality or direction.
• Negotiating fair and sustainable royalty rates can be complex and may impact your long-term earnings.

Subscription Model

The subscription model charges users a recurring fee for access to premium content, features, or services. This approach is particularly effective for apps that offer ongoing value, such as content streaming, fitness tracking, or educational resources.

Depending on what your app does, you should have different subscription options. Consider breaking them into a free basic version, a paid pro subscription, and a premium paid subscription to cater to different types of users.

Enyata — Multi-Level Subscription Model

Benefits:

• Monthly subscriptions create a steady income stream.
• Subscribers are more likely to stick around and explore your app regularly.
• This model is perfect for apps offering exclusive or continuously updated content.

Disadvantages:

• Users subscribe to numerous services and can get tired of joining and keeping track of subscriptions. Some people might be unwilling to commit to an extra monthly expense, especially if they think that the value doesn’t justify the cost.
• Subscribers expect regular, high-quality updates or exclusive content. Failing to meet these expectations could lead to cancellations, so you need to consistently deliver value.

Affiliate Marketing

Affiliate marketing involves partnering with other businesses or individuals to promote their products or services within your app. You earn a commission for each user who purchases through your referral. Only promote products that your audience will find useful.

Benefits:

• When done correctly, affiliate marketing can generate high returns.
• There is a low barrier to entry, and it is easy to implement in your app.

Disadvantages:

• Your revenue is tied to the success of your affiliate partnerships. Changes in their strategies or market fluctuations can impact your earnings.

SMS Marketing

SMS marketing involves sending promotional messages directly to people’s mobile phones. It’s an immediate way to communicate offers, updates, or promotions to your target audience.

Benefits:

• SMS messages are delivered within seconds and are compatible with all cell phones.
• SMS marketing campaigns have an open rate of about 95%.

Disadvantages:

• Users may choose to opt out of SMS marketing if they find it intrusive, reducing your potential audience.

Email Marketing

Email marketing involves sending targeted and personalized promotional messages to users through their email addresses. It’s an effective method for reaching and building long-term relationships with your audience.

Benefits:

• Email marketing allows you to target specific user segments, tailoring your message for maximum impact.
• You can make more sales and convert more leads into paying customers.

Disadvantages:

• In a crowded inbox, your messages might get lost or ignored, requiring compelling content and strategic timing.
• Irrelevant content can lead users to mark your emails as spam, which will harm your app’s reputation.

Setting the best price for your app

Setting the right price for your app impacts its success in the market. The pricing strategy you choose will determine how much you make and if you’ll be able to attract your ideal users. The app needs to be valuable to customers while remaining competitive in the market.

Pricing Based on Market Analysis

The first step is a solid understanding of your market. Analyze the competition to see their pricing structures and know what users are willing to pay for similar apps. Ensure that your pricing aligns with the perceived value of your app’s features and functionalities.

Pricing Tiers for Subscriptions

Subscriptions are a great way to generate consistent revenue while providing users with a range of options. Consider offering different pricing tiers that cater to various user needs and budgets. This allows users to choose a plan that best fits their requirements, increasing the likelihood of conversions.

Clearly define what each pricing tier offers in terms of features and benefits. Provide users with options for monthly, quarterly, or annual billing to enhance flexibility.

A/B Testing

There’s no one-size-fits-all pricing strategy for app monetization. A/B testing helps you to find the optimal pricing point. You can experiment with different price points, subscription models, or promotional strategies and analyze user behavior to identify what resonates best with your audience.

Make small changes and test them one at a time to accurately measure the impact. Use analytics tools to track user engagement, conversion rates, and revenue generation for each pricing variation that you test.

Limited-Time Promotions and Discounts

Create a sense of urgency through limited-time promotions and discounts. Whether it’s a launch promotion, holiday discount, or anniversary special, these time-bound offers can incentivize users to unlock premium features. Align promotions with relevant events, seasons, or app milestones to maximize their impact.

Conclusion

This guide covered ten ways to make money with your app, like in-app purchases, ads, and subscriptions. Remember, keeping your app fresh with updates is just as important as the code behind it.

The goal is to make money, so don’t feel like you need to stick to only one strategy. You can try different methods and see what works best for your application. Test your pricing, run promotions, and listen to your users’s feedback.

Things move fast in the app world, so what works today might need a tweak tomorrow. Stay up to date, be open to change, and enjoy the journey of figuring out what works best for your users.