Mobile developers build applications with multiple goals in mind. It is not only about coming up with a background idea for a mobile app and turning that vision into a reality. The fact is it isn’t always as easy as it seems. Building a mobile app is just the beginning, but the biggest struggle that mobile app creators often come up with is determining how to monetize their efforts.

Figuring out how you can make money from your mobile application is crucial for planning, development, and future upkeep of the app. It doesn’t matter if your app has been live. It is never too late to monetize your mobile application with various goals, such as helping people or creating a positive user experience, but generating a business revenue is often a primary goal.

However, it should be noted that app monetization isn’t a simple concept as there are several methods you can use to generate attractive revenue from an application. And building a robust mobile app monetization strategy is the best way to do this. You need to make a strategy that will help you monetize your application effectively.

We have created this guide to app monetization to help you successfully start monetizing your app and increase the ROI of your mobile presence. We have added everything you need to know about mobile app monetization in this post.

What is App Monetization?

Mobile app monetization is the deployment of methods and techniques to generate revenue from a mobile. Users often balk at paying for applications because most of them are offered free of cost. Mobile app monetization statistics & facts show that, over the last few years, the number of mobile app downloads has increased and will reach 218 billion annual downloads by 2020. And it is expected to grow more in upcoming years.

One of the most frequent ways to monetize your app is to collect user data and sell it to third parties, usually advertisers. But that often puts data at risk because it may be inadequately protected in transfer. Furthermore, those parties may not preserve the data well, and cybercriminals could access it for identity theft or targeted attacks. Although, mobile app developers may stipulate how they will access user data and what they will do with it.

Types of Mobile App Monetization

The mobile app monetization models fall into one of two categories: direct monetization and indirect monetization. Shipping about both types, direct monetization is more prevalent as consumers can access the paid content or services directly from the mobile application. Let’s take a glance at the two monetization techniques.

1. Direct Monetization

In direct mobile app monetization, the revenue directly comes from the app. Let’s talk with the example for more clarity, suppose you offer a premium app priced at $20 on the Play Store or App Store. If someone purchases the application, the money directly comes from the app.

Another example is an in-app purchase. If a customer purchases anything from inside your application, the revenue that you’ll earn will directly come from the mobile application.

2. Indirect Monetization

In indirect monetization, your earnings may not come from the mobile app directly. One of the most common examples of indirect app monetization is advertisements. If you place Google Ads on your application, Google will pay you for this. But in this case, your application is not generating revenue.

Why is App Monetization Important?

Nowadays, paid marketing is becoming a vital factor in the success of mobile apps. With a large number of mobile applications to compete with on the app store, paid marketing is the only way to scale the distribution of the mobile application. Over the past few years, app developers have become more aggressive in marketing.

Recently Apple launched its Search ads platform that allows developers to advertise their mobile applications on search pages. This change can lead to the organic discovery of an app store being less relevant. In this digitalized era, you should expect to pay for your installs.

Contrary to popular belief, mobile app distribution is not zero margins. There is a high marginal cost in user acquisition, which makes app monetization for freemium apps even more vital. Today, a freemium app faces significant challenges, so balancing the cost of user acquisition and long-term monetization is challenging.

Popular App Monetization Strategies

1. In-App Purchase

Giving your users opportunities to make an in-app purchase is the best way to monetize your application. If your app is free, like 95% of all Google play store offerings, then in-app advertising revenue model purchases will give a discreet monetization method to improve the user experience. But before making in-app purchases available to your users, consider your users. It would be best if you thought about ways in which you can improve the user experience.

The best in-app purchases will also reduce churn because of the additional benefits gained by the user. With this mindset, it is worth your time to find the right balance between a great free application and affordable benefits via in-app purchase.

In-App Purchases: Consumables Vs. Non-Consumables

When determining your in-app purchase options, you should know the difference between consumables and non-consumables. The difference between these two in-app purchases is that consumables are temporary and limited, while on the other hand, non-consumables only need to be purchased once.

2. Freemium Model

The word Freemium is a combination of two words. In this monetization strategy, you offer the app service accessible initially. Afterwards, you can provide different versions of the application, free and premium. Apps with the basic features are free, and users can access content with additional features and capabilities using the premium model of the mobile app. For instance, some mobile apps offer premium versions for removing unwanted ads.

People might face a tough time creating free users to paid ones. So it would be great for you to work on creating free versions. Additionally, you can adjust the cost for the premium version on justified levels, i.e., if the difference between the two versions is slight, people won’t be willing to upgrade it to a premium version. In this Freemium strategy, a monthly free premium version is also offered, and extending free trials of these versions is also a better way to implement this model.

3. Advertising

Digital advertising is an excellent opportunity for mobile app monetization as it dramatically enhances the branch of communication between advertisers and consumers. This is due to the amount of time people spend on their phones. Reports state at least ninety minutes a day, equal to twenty-three days a year.

So, the question is, how can you use this data to your advantage and monetize your application? Well, there are different types of ads created by advertisers, such as:

  • Interstitial Ads
    Interstitial ads are also known as full-screen ads, typically displayed in the flow of an app at its natural transition points between activities like moving across the menu.
  • Notification Ads
    These ads are displayed as pop-ups to alter the users of the app’s presence. While somewhat intrusive, they are adding push notifications that are highly effective.
  • Banner Ads
    Banners ads are like online advertising by an ad server usually found at the top or bottom of the mobile screen. Banner ads tend to annoy users as they are more distracting than other ads.
  • Rewarded Ads
    These ads are one of the most effective and popular ways of mobile app monetization as they increase advertising revenue. It allows the users to engage with playable ads in exchange for a reward within the app.
  • Video Ads
    These are online display advertising in the form of video. Most video ads are bought, sold, and displayed using various interactive elements and targeting methods.

4. Newsletter & SMS Marketing

This app monetization strategy is one of the most excellent ways of keeping in touch with your customers by regularly sending the latest updates on promotions, contests, promotions, reminders, and upcoming events.

SMS marketing helps you increase user engagement and strengthens your brand by tempting the users to visit your application. If you want to give your audience a piece of new and fresh information, then a paid newsletter can be the best option for you as it significantly increases revenue.

5. Strong Code & White Labeling

Developing a mobile app business model with strength is crucial as it works as a backbone of any application. You can build your own code, and if it turns out lucrative, other brands may approach your code and offer reliable strategies that are profitable for your business. It is good to make money by licensing your code to different developers without causing any hurdle in the user’s experience.

If we talk about white labeling, it simply means you are creating a product that other business owners can buy from you, rebrand, and even sell. There is a steady demand for white label apps because they enable you to earn revenue from multiple resources. White labeling is also the best option for you if you have a tough time selling the brand under your name.

6. Subscription Models

This monetization strategy offers paid content that enables users to use all the special enhanced features added to the application. Under this monetization strategy, users are convinced to pay a repetitive fee for the content in your application. At present, subscription models are expanding interest as it attracts many users, which helps increase mobile app engagement.

7. Sponsorships & Partnerships

This monetization strategy is also known as influencer marketing and can be the best way to monetize your app. If you have a large user base or have built an audience on a particular niche, brands may show their interest in using mobile apps to connect with their target audiences.

Exposing your users to sponsors can be a win-win situation for you. Not only can you monetize your mobile app but also connect with your users to a brand they may find helpful. For instance, if you have a grocery app, you can work with partners who share those values and give valuable recommendations to users while generating brand awareness.

Final Words

App monetization can be tricky for mobile app developers and business owners. But generating revenue with a mobile application doesn’t need to be complicated. The only thing you need to do is understand the different ways to generate revenue with an app. Then it is just a matter of figuring out which strategy works for you.

This guide covers everything that you need to know about app monetization. You can use the above-mentioned mobile app monetization strategies and can use them to earn profit from your application. In case of inconvenience, you can take the help of experts from Nascenture. Our experts have comprehensive experience with the app monetization process and can help you resolve every query. Let’s get in touch to discuss more in detail.

Mohit Bhardwaj
About the Author

Mohit Bhardwaj

Mohit is a Scrum Master by training, a Project Manager by profession, and a travel junkie by choice. He loves talking as a third person, is passionate about foreign language movies, football, technology and is learning Python programming language.