The Leading Monetization Strategies for Mobile Apps

Making money using IT instruments is a common phenomenon nowadays. And while the possibilities are plenty, their profitability can vary significantly. This short article will discuss some of the ways to achieve income through developing mobile applications.

App Monetization - Definition

But what is monetization of a mobile application in the first place? Simply put, monetization of app is a way for the developer of the application to make money. The ways of doing it are ample, as is the range of available mobile applications nowadays. Apps come in all shapes and sizes. Next to educational applications, e.g. those that perform the function of a calculator, translator or knowledge base in a given field, there are also the more advanced apps that help us locate the car in the parking lot, generate amazing graphics or boost our productivity. You just need to find a niche and dominate it.

Currently, the market offers a wide variety of applications designed to meet every conceivable need of the user. In addition to the growing popularity of applications, there is also a significant increase in annual spending on these applications. Only in the first quarter of 2019, Apple and Google jointly generated an eye-watering $130 million in consumer spending. The application market is booming and the trend is not likely to change in the near future.

App Store View
Monetize your mobile app and generate revenue from e.g. in-app ads

But this mobile app bonanza also entails some challenges. With competition so dense it is really hard for the new players to get their app noticed by the users. When looking for an app, users rarely look beyond the first or second screen of the app store. Achieving success in selling your app can only be guaranteed by a good marketing strategy inextricably combined with an original idea. The app has to stand out from the competition in terms of workmanship, the number of features or the intensity of monetization (applications with less intrusive ads get more love from the users)

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App Monetization Strategies - how to choose the right one

Nowadays, the key barrier to overcome lies not only in the creation of an amazing application, reaching a wide audience and meeting their expectations. The author must, already in the initial design phase of the application, thoroughly analyze the possible monetization strategies helping to recoup the cost of development and bring the expected profits. There are many methods to make the investment bring financial benefits.

1. Freemium

The freemium model is one of the leading monetization strategies for mobile apps, also considered the most transparent and least intrusive. Users are provided with a functional, free application whose functions are limited. But those who want can unlock and take advantage of additional features that will facilitate, improve or enhance the functionality of the application. This, naturally, requires making the purchase.

This monetization method is often used in games where a small fee allows, for example, to unlock additional levels or weapons. But the freemium model also makes sense and is successfully implemented in non-game applications.

2. In-app ads

In-app ads are another popular form of monetization. When introducing this strategy, it is worth remembering that too frequent ads can effectively discourage the user from using the application. Secondly, it is also worth ensuring that the content of the displayed ad is compatible with the theme of the application. There are many possible ad options to consider:

  • Interstitial ads usually appearing at times of "transition", i.e. in-between app screens,
  • Display ads or banner ads located at the top or bottom of the screen, or
  • Video ads which appear in certain screens.

3. White label

If the application can be easily adapted to a variety of specific use cases, it is worth considering the white-label approach. This method involves licensing the app to a company or investor that will customize the application to its needs to maximize its functionality. In this way, the original application is treated as a flexible template and thus both parties benefit.

Choosing right monetization strategy
Choosing the right monetization model for application will recoup cost spend on development and bring measurable revenue.

4. Fully paid applications

Creating a paid, fully commercial app is probably the most intuitive monetization strategy, but it’s also the most difficult approach. The concept is based on the assumption that there are users wanting to use the application and ready to pay for it. The biggest difficulty here is distinguishing the application from similar apps offered on the market, and convincing potential users that it’s worth the asking price. It is therefore important to focus a lot on the so-called app store optimization (ASO for short).

Want to learn more about featuring your app? Read our article: How to get your app featured in the App Store and Google Play?

This approach entails some challenges. First, visibility of a paid application among a large number of free alternatives is often crucial for the app’s success. What's more, users who pay for the application, understandably, expect higher quality and better user experience. There is no space for missteps – your paid app will need to be characterized by transparent interface, frequent updates, high security and... no ads.

5. Sponsors

To reap the financial benefits of developing an application, you can also reach out to a sponsor. By promoting his brand inside the application, you can generate additional revenue. The more people use it, the easier it will be to convince the sponsor to increase the investment. The creator can, at the same time, earn on shares in the sponsor's revenues.