5 monetization strategies for your app

5 monetization strategies for your app

When it comes to mobile app monetization, there are many routes you can take. In this article, we are going to look at 5 popular app monetization strategies and discuss the potential impact on app growth and engagement.

The free and paid app versions model

One popular app monetization strategy is to offer both free and paid versions of your app. With this approach, app developers will either limit certain features in the free app in order to "encourage" the free app user to upgrade to the paid app, or monetize the free app with in-app advertising.

The benefits with this strategy is two-fold. On the one hand, it provides a free option for users to experience the basic functionality of app at no cost. On the other hand, it also provides the app developer with a growing user base for potential monetization via app upgrades or in-app advertising.

The free app with in-app purchases model

Another popular app monetization strategy is in-app purchases, or IAP. The app itself, and usually the basic features of the app, are free. However, if the user would like to advance in the app faster, say get extra lives in a gaming app; or enjoy certain premium features in a dating app, then they enter the pay-to-play mode.

In some cases, users can still get access to premium features or functionality without paying. If they are patient enough to wait for certain features to be unlocked or to engage with the app frequently enough, then they can use the app for free indefinitely. In other cases, such options won’t be available and the app developers would only make certain number of things for free, and others only obtainable through in-app purchase.

The free app with subscription model

Some developers choose to create free apps with a subscription model. With this strategy, the app is made free to download with limited access to the content or services offered. It requires users to opt in to a subscription plan in order to enjoy the full benefits. This app monetization strategy is commonly seen among service-oriented apps (like meditation app Headspace) or content-centric apps such as news apps.

With this approach, the app can be easily discovered in the app stores as a free app when users search for related content. This is great to help developers build up an initial user base and cultivate that user base into paid app subscribers.

The paid app model

In some cases, developers will make their apps available only in the paid version. Usually these apps offer unique value that’s hard to find elsewhere. This monetization strategy is most common among productivity apps.

Note that if you go this route, the apps you create should provide enough value or unique functionality that meets certain user needs. Otherwise, you will have a hard time building up the user base to generate revenue for your app.

The partnership model

If an app is very popular among a certain niche market, companies in that space may approach the app developer for sponsorship opportunities to get their brand in front of your app users.

So when you’re planning about the next app to build, you can also think about the target user base the app may attract and the type of brands that might be interested in that audience. If that user base is large enough, monetization through brand sponsorship, partnership, or acquisition could be a good choice too.

To hear about the latest AdMob product innovation and customer success stories in app monetization, feel free to visit the AdMob blog and subscribe.