There were more than 8.58 billion mobile subscriptions in use worldwide in 2022, compared to a global population of 7.95 billion. Yes, that means there are more active smartphones out there than human beings.
Given the massive scale of mobile adoption, it’s now more important than ever for businesses to reach people through their little pocket companions. For business founders, the good news is that the technical side of app development has never been simpler or more accessible. Whether it’s services that enable you to convert your website to an app, DIY builders, accessible dev talent marketplace platforms, or even retaining an app development agency, getting an application up and running is a piece of cake compared to just a few years ago.
But here’s the thing – just creating and launching an app isn’t enough. Even getting people to download and use it regularly won’t necessarily move the needle for your business. You need to actually make money from all those taps and swipes.
As such, finding ways to successfully monetize your mobile app is crucial if you want to succeed long-term. Fortunately, there are some tried and true strategies that you can use cash-in on all that app engagement, and we will walk through five of them in this guide.
The most straightforward way to start making money from an app is by hosting ad injections. Yes, we know, ads can feel kind of old school and annoying, but they have their merits. Simple banner and video ads can bring in steady revenue without much effort on the developer’s end. Just placing them along the bottom or sides of the screen can generate reliable income streams.
There are a few go-to formats for in-app ads:
- Banner ads – These rectangular image or text ads appear at the top or bottom of the screen. They are, for the most part, unintrusive.
- Interstitial ads – Full-screen ads that cover the interface. They’re more disruptive but make higher revenues.
- Video ads – Short video clips play before or during app use. It’s generally recommended to allow the user to skip ads after a few seconds.
- Native ads – Blend seamlessly into the app’s layout and content. Users don’t always realize they’re ads.
While interstitial ads that cover the whole screen do interrupt users, designers can carefully test out displaying them at natural breaks in app use, and most people have come to accept them at certain points along the app journey.
To maximize earning potential, developers can also utilize advanced targeting capabilities based on user data and demographics. This advertising approach gets quite sophisticated, but mixing and matching different types of ads along with tweaking view frequencies can help strike the optimal balance between revenue generation and retaining loyal app users over time.
Premium and Freemium Fees
Now ads aren’t the only money-making game in town. Lots of apps bring in cash by charging users directly for extra content and features. The main versions here are premium apps, in-app purchases, and the freemium model.
With premium apps, users pay an upfront cost to download the app and unlock all functionality. The incentive is getting an ad-free experience or access to super-charged “pro” features. Premium app prices typically fall under $10. Anything higher is a hard sell.
In-app purchases allow users to unlock more features or content after downloading the free base app. This lets users test out an app before spending money on premium upgrades. In-app purchase pricing can vary widely based on the exclusivity and value of features.
Lastly, the freemium model blends free app access with paid subscriptions for pro tiers. Users get core features without paying, while power users can subscribe for enhanced functionality, more content, and exclusives. Subscriptions auto-bill monthly or yearly.
All these models drive revenue directly from loyal users who want more from an app. To make this revenue stream work, you’ll need to truly know your audience and what they’ll pay extra for.
Referral Marketing Programs
Beyond ads and direct user payments, apps can bring in cash through user referrals and affiliation initiatives. The idea is to incentivize your current fans to spread the word to new potential users.
App creators design referral programs to reward existing users for getting friends and contacts to download and try out the app. This generates vital word-of-mouth buzz. Typical referral rewards include app currency, unlocking premium features, entries into contests, and discounts on in-app purchases.
Gamifying the referral process can really boost participation too. Set milestones, use social sharing links, run contests for top referrers, and recognize top advocates to spur competition. Psychology shows that people intrinsically enjoy leveling up social status and publicly showcasing achievements.
Referral marketing also taps into those tight-knit communities who love sharing great app finds with others. That passion then gets converted into new revenues and user growth for the app itself. It’s a win-win for getting fresh eyes on your platform.
Sponsorship deals represent another way to monetize apps by teaming up with outside brands. These agreements blend a brand’s products, messaging, or custom content into the actual app experience.
App creators can strike deals to prominently display sponsors’ gear, surface targeted ads, or even create co-branded app sections. Imagine a weather app partnering with outdoor clothing companies to showcase relevant jackets and gear based on the forecasts at users’ locations.
The key is making sponsored elements add value rather than annoy users. They should feel like natural enhancements aligned to the app’s purpose, not jarring interruptions. When integrations are seamless, viewers perceive brand partnerships as improving their experience.
Beyond conventional advertising, sponsorships from reliable ongoing revenue streams. And brands get access to targeted user bases who are already engaged in activities connected to the sponsor’s products.
We talked a bit earlier about subscriptions with the freemium model. But this approach deserves a deeper dive, since subscriptions have blown up over the past few years.
Offering subscriptions means users pay for ongoing access to an app and its features for set periods of time – whether that be weekly, monthly, or yearly. As mentioned above, freemium apps use subscriptions to unlock premium content beyond what’s free.
But subscription models have boomed into a massive money-making strategy way beyond just freemium. Spending on subscription services, including apps, is expected to hit over $1.26 trillion dollars by 2025. Clearly, this model seems to suit both consumers as businesses alike.
Instead of just one-time purchases, subscriptions lock in predictable, recurring app revenues. Tactics like free trials, loyalty bonuses, and referral perks help get and keep people subscribing long-term. This reliable rolling income allows apps to confidently advance capabilities fueled by this subscription cash flow, thus making it one of the best monetization models out there.
Making Money with Your App
At the end of the day, monetizing apps the right way takes experimentation. No single model is one-size-fits-all or a guaranteed slam dunk. Consider your app’s core value proposition, target audience and use patterns when weighing options – ads, premium pricing, in-app purchases, branded sponsorships or subscriptions.
Track performance diligently, soliciting user feedback to guide evolving monetization strategies. Then, go even bigger, dreaming up hybrid models and new income streams as your app scales.