How to Monetize Your App: Tips and Strategies for App Developers

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As an app developer, you have two primary objectives: expanding your audience reach and generating revenue. While most publishers can easily achieve the former, devising a successful app monetization strategy can be challenging. 

With multiple methods to generate revenue through your app, it's crucial to determine which strategy best aligns with your content, audience, and objectives. 

Different apps may require different monetization options, as a gaming app requires different tactics than a news app. In this article, we will explore popular monetization strategies and offer tips for app developers.

To establish an effective approach, one must consider their business objectives, product offerings, and app characteristics.

Set a download fee

As publishers venture into the realm of mobile apps, charging a fee for app downloads from Apple or Android app stores is often the first monetization option considered.

Set a download fee

While this approach has the potential to generate significant revenue, its success hinges on providing valuable content to users. Unless the content is unique and hard to come by elsewhere, consumers are unlikely to pay for it through an app store. 

Some publishers find it beneficial to charge customers for downloading their apps, especially those that offer an exceptional gaming experience or useful utility on smartphones and tablets. 

However, this monetization method remains relatively uncommon among publishers.

As far as development goes, this tactic is fairly simple to implement. The payment takes place directly in the app stores before the download. However, it's important to note that gaining customers for a paid app requires effort

Such popular apps as VeePN offer a free download instead. Investing in marketing and showcasing the value of your app is necessary to convince customers to spend their money.

To generate substantial income from a paid app, a substantial number of downloads is needed. However, maintaining that level of downloads over time can prove challenging. Explore expert ASO solutions to optimize your app's visibility and effectively market its value, increasing the likelihood of sustained downloads and success.

This is why businesses often rely on multiple revenue streams rather than depending solely on a single paid app.

Use ads

According to stats, 36% of U.S. publishers use this monetization method. Digital advertising was already widely used online as a way to monetize content.

App developers promptly pivoted to adopt app banner ads and adjusted them to fit mobile devices' smaller screen size. As time progressed, banner ads evolved for mobile devices, offering various options such as video or text ads. 

This revenue model for apps is widely adopted and continues to gain momentum. Projections suggest that revenues from in-app advertisements will nearly triple by 2025.

In-app advertising is an effective monetization technique that compensates app developers for displaying ads in their apps. With advanced data tracking and targeting capabilities, advertisers can precisely target their audiences. 

Businesses with comparable demographics will eagerly pay to engage with your users. There are various advertising options available for app developers, as well as numerous ad networks to select from.

Advertisements are ubiquitous in various apps, particularly in games and productivity apps that are free to use. However, to earn a significant amount of revenue from ads, you must ensure that your app is widely used.

If your target market is small, this approach may not be suitable. In-app advertisements are notorious for being bothersome, so integrating them requires caution. 

Your users' experience should take precedence over ad placement. If your ad strategy negatively impacts their experience, it's wise to reevaluate it.

For instance, if you are interested in crypto trading and created an app for buying and selling cryptocurrencies, you should consider whether your clients might be interested in ads. They might use a VPN for trading, which will make geo-targeted ads irrelevant.

People who use a VPN for crypto don't normally click on in-app ads. You don't want in-app ads to drive your users away, resulting in a catastrophe.

Use licensing

For applications that collect user-generated data, such as geo-locations, licensing can be a profitable monetization model worth considering. 

Use licensing

However, it is vital to ensure that any data collected and licensed has received explicit consent from the users involved. By licensing the data, users can still enjoy the app for free while granting the app a source of revenue.

Offer in-app purchases

Users spend $380 billion on in-app purchases. As previously noted, requiring payment at the time of app download can significantly impede sales volume

In response to this, software developers have embraced the Freemium model, offering consumers the ability to download the application at no cost and access specific features free of charge.

However, users are incentivized to make in-app purchases to unlock more advanced functionality.

This approach has gained significant traction due to its effectiveness. It allows customers to sample your app without any monetary obligation. If they find the app to their liking and require additional features, they are likely to make a payment.

The payment may take the form of a fixed-cost purchase, such as unlocking a new level for a fixed fee. Alternatively, the transaction can occur via in-app currency that can be exchanged for actual money.

As developers, it is crucial to balance the provision of free features and premium upgrades. Offering too much for free could diminish the motivation to invest.

Meanwhile, if in-app purchases appear excessively costly or unhelpful, consumers will not make a purchase.

Consumable Purchases

Consumables are the prevalent type of in-app purchases in mobile games, encompassing in-game currency, bonus health, and power-ups. These items are aptly named as they vanish after each use but can be repurchased at any moment. 

Consumable Purchases

Though games generally provide a limited amount of consumables for free, users can opt to purchase them to save time and avoid the inconvenience of waiting to collect them.

Non-Consumable Purchases

Such in-app purchases provide users with permanent access to features such as unlocking hidden levels, bonus characters, and cosmetic items. Once purchased, these enhancements remain available to the user indefinitely.

Introduce a subscription

Premium mobile apps are those that require users to pay a fixed fee for a subscription upon download. This revenue model is based on the number of downloads and offers higher user engagement and customer acquisition. 

This model is perfect for those who have a VPN app or other similar services. For instance, VeePN uses a subscription-based model. Additionally, app subscriptions provide reliable and predictable revenue streams for developers

By offering premium subscriptions, app developers can fund ongoing development and maintenance, ensuring the app remains accessible and useful to users for an extended period.

Use affiliate marketing

Numerous major technology companies, such as Google, Apple, and Microsoft, extend affiliate programs to app developers. These programs involve endorsing other mobile apps within an app.

While the commissions for this monetization strategy are typically not substantial, developers have the freedom to choose which apps to promote, enhancing users' association of their app with compatible brands.

Affiliate marketing presents the opportunity to monetize app without resorting to fees for downloads or in-app purchases. Additionally, it enables in-app sales and promotions for products or services. 

However, it comes with certain risks, as affiliates could market the app in a manner that fails to reflect its quality or user experience. Moreover, the recruitment and management of affiliates may prove to be a significant time investment.

Utilize SMS marketing

Although SMS marketing may seem outdated, it can still be a powerful tool when crafted with flair, intelligence, and wit to connect with your audience and entice them with deals on in-app purchases or premium subscriptions.

Utilize SMS marketing

However, obtaining explicit consent from recipients before messaging them is critical. Also, consider the length and timing of your message as nobody wants to read a lengthy and distracting text while eating dinner.

You can easily implement SMS marketing techniques by gathering data through in-app prompts and automating mobile marketing messages.

Launch an email marketing campaign

Although email marketing may not initially appear to be a suitable method for mobile app advertising, it can actually be an efficient way to connect with current downloaders and transform them into paying customers.

However, it's crucial that you have explicit permission from individuals on your email list to use their data

As an app developer, you should carefully consider how you will incorporate this channel into your app monetization strategy. If you're unable to clearly articulate the specifics of your email marketing campaign, you should revisit your approach.

Besides, your users might use a VPN app to browse the web, so you can't be sure that they will be interested in your offer if you target them by their location. Email marketing is an uncomplicated and cost-effective way to promote your business

With a straightforward in-app subscription, you can obtain user email addresses to send a plethora of marketing emails.

Find a sponsor

A sponsorship arrangement is an app monetization model that is often overlooked but can be highly advantageous for publishers. This approach may be particularly suitable if your mobile app has a large user base with active user engagement.

In essence, this monetization model involves partnering with a single company that becomes your app's sole investor and sponsor. The partner company has exclusive access to advertise to your user base. 

They can promote themselves by covering a significant part of your app's interface with their logo, displaying a visible splash screen for app users, or sending push notifications.

When app developers contemplate the idea of monetizing their apps through sponsorship, it's crucial to carefully consider their user base and determine which products or services align best with their brand to amplify user acquisition. 

Build a community of supporters using crowdfunding

In the early stages of creating a free app, crowdfunding can be a resourceful way to gather funds for the project. Utilizing crowdfunding platforms can grant developers access to a broader population of potential users and supporters than they could acquire independently. 

Crowdfunding not only acts as a funding source but also establishes a community of users and supporters who can offer feedback and participate in marketing the app.

Conclusion

While subscription models may prove advantageous for news and entertainment apps, gaming apps tend to benefit more from in-app advertising. To determine the best way to monetize your app, research similar apps in your vertical.

Additionally, know your target audience as this is critical for success. Armed with this knowledge, developers can create a comprehensive strategy to sustain ongoing success.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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