App Monetization – everything you need to know

So, you’ve got your app designed and made. Now, how will you use it to actually increase your company’s profits?

Today, we’re going to dive in and take a look at the different app monetization strategies you can use, as well as their pros and cons.

So, let’s get started:

Traditional advertising

This is one of the oldest monetization strategies on the web, and it can still be very effective. By including external adverts within your app, you can get paid in a number of different ways without charging for your app – which can, in itself, mean your app gets more downloads as a whole.

There are a number of different app advert types:

  • Banner ads are probably the most traditional type of web advert. However, when it comes to apps they’re often not as effective simply because of the size of the screen! Generally speaking, in 2019 banner ads are not recommended.
  • Interstitial apps appear at set times within your app – usually when the user has clicked through to a new screen or triggered a new action. When this happens, a short video plays which the user can choose to click on.
  • Rewards ads are becoming more common and allow the user to benefit from clicking on the app, such as achieving an in-game reward (if the app is a game). This can work well because the user and you as the app publisher both get rewarded.
  • Native advertising will show adverts that pop up within the app’s news feed. Obviously this kind of advertising only works on certain apps, but when it is appropriate – such as with Facebook or Amazon – it can be very lucrative.

As a general rule, direct advertising of any kind is the right approach if you don’t plan to monetize directly from your users – such as if your app is a game or based around entertainment.

If you do take this approach it’s important to make sure that you use ads in the right way: they can be seen as intrusive if over-used, and will cause users to uninstall the app if they become to bothersome.

Paid downloads

This is a very different form of monetization, but can be very effective if your app is considered worth the money.

Of course, by charging for your app you’re automatically going to put a set number of users off, but then some of them will be natural ‘freebie-seekers’ that you wouldn’t be able to monetize in any situation, so this isn’t necessary a bad thing.

Obviously, priority one if you want to charge for your app is to make sure that the pricing is comparatively valuable. If you’re going to charge $2.99 for an app, you need to make sure that it delivers at least ten times that in value, whether it’s through helping the reader achieve their goals or even simply helping them save money elsewhere.

App prices can vary substantially, from 99 cents right the way up to nearly a thousand dollars!

It’s also worth remembering that the app store of your choosing will take 30% of the cut, so you’ll have to factor this into your pricing.

Paid apps are particularly ideal if you’ve already got a very strong PR presence and an existing customer base. Trying to sell a paid app to an audience that’s never heard of you is possible – especially if your app has a number of good reviews – but it’s tough, especially if there are free apps out there that offer a similar service.

Though, of course, making sure your app is far superior to the free alternatives should be standard practice.

In-app purchases

This is another very popular form of app monetization, and can be seen in everything from console gaming to iTunes.

This model simply means that you make the app itself free, but allow customers to buy additional products or services inside the app.

What you choose to sell can vary depending on your service. Games may choose to sell extra characters, unlock certain levels or reveal new capabilities. Some businesses, meanwhile, offer subscription services renewable through the app store. Other apps are front for online e-commerce stores and allow their users to pay for physical products which are then delivered. It’s entirely down to you.

Some of the most profitable apps in history – Angry Birds is an example – have followed the in-app purchase monetization strategy, so it can be very lucrative.

The importance thing, though, is to make sure that your app purchases are worth the extra money. Not all app developers do this, unfortunately, but those that don’t soon earn a lot of negative PR, and end up getting a bad reputation leading to failure.

It’s always better to adopt the high-quality, long-term approach.

Needless to say, your app will need to be engaging enough to keep users around if you want them to spend money with you, and the purchases will need to be both valuable and enticing. No users, no purchases; it’s that simple.


This is another monetization strategy that’s popular. Freemium means that users can download the app for free, but that they need to pay to unlock the full, premium features.

This is a very useful model for software with multiple features. For instance, musician apps will often be free, but users will be able to pay additional money for new sounds, recording capabilities and so on.

If your app has a number of features and could still be considered a ‘full’ app if some of the more premium features were removed, then the freemium model could be perfect.

Obviously, a freemium app must still offer fully functional features to users that don’t pay anything. Otherwise, you’re deceiving users into thinking the app is free, and you can expect to receive a lot of bad reviews as a result. (Not to mention the possibility that your app may be removed if enough complaints come in to the app store.)

Another option for freemium apps is to include some ads in the free version, which is a good way of bringing in mixed revenue; a feature that many app publishers prefer.

Subscriptions and paywalls

Finally, you can choose to monetize your app by restricting access to it unless users pay for content. This is very common amongst newspapers and other forms of journalism.

Often, publishers will allow users to read a set number of articles or view a set number of videos for free, but then ask for a subscription payment once they reach that limit.

Some may simply charge a set fee once a free trial has expired. Netflix are obviously a very successful high-level example of this.

If you’re a content provider and you feel your work is worth paying for, then the subscription model is an excellent way to generate revenue.

Which monetization strategy will suit you best?

Obviously, this will depend entirely on your business and your app. Every model, as you’ve seen, has pros and cons, and all can be lucrative in the right situation,

If you’re unsure which way would work best for your app, get in touch with Iconic Solutions today. We’re specialists in helping businesses develop apps that improve their bottom line, and we’d love to do the same for you.

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