A Guide for Best Strategies to Monetize Mobile App In 2021

February 23, 2021

Reading time about 7 minutes

Research by Statista says the revenue from mobile apps is projected to reach $935 billion by 2023! Gone are the days when mobile apps were used by only big enterprises, now every business startup has a mobile app to increase brand awareness. If you have a great mobile app idea for your business, you would want your app to become your primary source of revenue. The concern of app monetization is what every business is worried about. All you need is the right app monetization revenue model to bring higher revenue from your mobile app. Before you hire the expert developers of the reliable Mobile App Development Company in San Jose, it’s time to learn about the best strategies to monetize your business app in 2021.

What is App Monetization & How You Can Earn from an App?

Mobile app monetization can be defined as methods and techniques that are used by business owners to generate revenue from their mobile apps. Before you choose to monetize your app, it is important to understand the latest trends in your specific domain that ensures that you don’t disrupt the customer experience while earning from the app. Some of the popular mobile apps that generate huge revenues through users are Netflix, Tinder, etc. However, it is not the only way to earn from your app as many strategies don’t rely on payments made by users but can still convert user presence into huge earnings.

Monetization can be broadly divided into two types-

  • Direct

As the name suggests, this type of app monetization is the one where apps make money by charging directly from the customer, for the product or service. E.g. Paid apps where users need to pay $4 to download & install the app or users buying products from eCommerce platforms.

Another example is in-app purchases where user purchases for extra services or benefits inside the app, the revenue generated comes straight from the app.

  • Indirect

This is an indirect approach to earn from mobile apps where making money doesn’t reflect user app usage. Some examples are earning through advertisements in the app. This means if you place Google Ads on your app, Google will pay you.

Top Techniques for App Monetization

Several mobile app monetization methods are there but the most common one is an in-app purchase, followed by paid app downloads & advertisements. Here are some of the other ways to earn money from your mobile app-

1. Paid Downloads

One of the most common ways to monetize your mobile app is when customers pay for downloading the app from Google Play & App Store. This model is best as businesses get direct earnings at the very moment when customers install the apps. 70% of the total earnings from each purchase are received by developers while the remaining 30% is the commission fee paid to the app store.

The main disadvantage of this approach is that not all customers are ready to pay for the app downloads and many competitors are offering similar apps for free of cost, which eventually leads to a decrease in the number of downloads & user reach.

2. Freemium model

Another app monetization strategy is the freemium model where customers can download and install the app for free but they must pay for advanced product functionality or additional premium content as the app comes with limited features. This approach is preferred by most business owners as it provides a higher chance of audience reach with an increased number of app downloads, positively affecting the ranking in app stores.

Most of the users love freemium apps more than paid downloads as they can explore app features for free of cost and even have a choice whether they want to pay further for advanced functionalities in-app or not.

3. In-App Purchases

This is another common monetization strategy for mobile apps used by several industry verticals and is especially used in gaming apps where users have to pay for accessories of game characters, extra lives, power, clothing, or weapons. Known as the combination of paid and free mobile apps, users use the app for free at the initial level but with time, the apps will engage or interest users to make purchases.

One example of such an apps is PUBG Mobile, which is free to download from app stores but the game allows users to purchase different crates to buy extra outfits & weapon skins for character. You should go for this monetization model if you are thinking to let users download the app for free.

4. Advertisements

This approach is for those businesses that don’t have a product or service to sell and they can put ads on their apps to monetize it. Similar to ads displayed on websites, you can easily sign up

with companies like Google for Google Ads where the ad network will display ads on your app and you get paid if users click on ads.

Though this model enables app providers to offer free apps with ads & the option to upgrade by paying for the ad-free version, pop-ups & ads can hamper user experience, which eventually affects the app usage & brand image.

5. Paid Subscriptions

Talking about the monetization method, paid subscriptions is the one where users get to use the app for free but the free content with it is limited maybe for a week or a month. To continue access or better content, users have to pay for monthly or yearly access. One famous example from the entertainment vertical is Netflix & Spotify that works on a subscription basis.

The adoption of this model is increasing over the years by more & more developers due to its income-generating pattern with the growth of the customer base.

6. Sponsorships

This monetization model works like the upgrade to regular advertisements where mobile app providers are allowed to work with specific advertisers to dhow the ads of their choice. Irrelevant ads can be the biggest turn-off for many users who are using the apps and the ad network doesn’t guarantee that the ads will be relevant to your users and if users don’t like them, they won’t simply click on them.

Sponsorships help in giving control to app providers and decide which ads to be displayed on the apps. Putting relevant ads on apps will not only help to engage users but also provide them a better customer experience

7. Transaction Commissions

This model is good for making money by selling other people’s services or products through a commission fee when users purchase them. Many business startups like AirBnB, Uber, etc. employ this approach to earn money. Other examples are eCommerce marketplaces or food delivery apps that get commission fees when people order products from different brands or foods from local restaurants.

These mobile apps act as commonplace to connect different suppliers & receive fees from every order.

8. Services/Goods Sales

The last app monetization approach we will discuss in this blog is to use the apps as a sales channel for selling your goods or services. With the increase in online shopping trends, many stores are developing mobile apps along with websites to engage users & serve their needs within a few seconds. Customers today have no time to visit malls or restaurants, they opt for

online orders, which is why this app monetization method can be a great advantage if you are thinking to increase the customer database and the flow of orders.

Wrapping Up

It is clear that there are many app monetization techniques but choosing the right one is what it takes to come up with a long-term money-making plan from your mobile app. Which monetization model will work best for your business? Well, it depends on several factors like product type, target audience, developer’s goals, etc. Some monetization methods can work best for one business but the same may not work for another. Take enough time and put effort to choose the one that can help in generating revenue through your business app.

As app monetization models are changing continuously, we suggest that you keep yourself updated with the latest ones and choose the most profitable one. If you are looking for reliable developers of a top iOS and Android App Development Company in San Jose, get in touch with our experts to help you offer the best app development services with a suitable app monetization strategy.