Business

How Do You Make Money From an App? – The Best Monetization Strategies

Aleksandra Rajczyk

Developing an app is a business venture. No one can guarantee that your idea will become the next unicorn, but you can make profit. Making money from apps takes some planning – here’s what you should do. 

Is making apps even profitable nowadays? Yes, and the money train won’t slow down any time soon. Businesses of all sizes need to stay up to date with the latest technology. The importance of mobile apps is quite clear to every modern company. But how do you make money from an app? There is a lot of investment that goes into making an app and expecting a return on investment is a natural thought process. Fortunately, there are multiple ways to make money from just one app. 

Creating an app and making money – what comes first? 

Although “create an app and make money” seems like a get-rich-quick scheme, it couldn’t be more far from the truth. Before you start counting in your head the millions you’re going to earn, take some time for the following steps:

  • Research – truth hurts: your idea might not be as revolutionary as you think it is. Look around on the market to find benchmarks. That doesn’t mean your app won’t see the light of day; analyze the competition and see where your idea differs from the crowd. That’ll be your main selling point. 
  • Solve a problem – your app doesn’t have to be the next best thing since sliced bread, but it does need to provide a solution that’s beneficial to the user. 
  • Come up with a business strategy – every app should be seen as a separate business, not just an extension of an existing one. 

Following a step-by-step guide on how to create an app and make money should always be preceded by doing your homework. 

How much money can you make from an app?

Potentially? Billions. That is not an exaggeration. However, there are very few apps that reached that number. As a matter of fact, most mobile apps end up making no money. Coming up with a fixed number is impossible since it depends on a variety of circumstances. The idea itself isn’t the only problem. You don’t have to be innovative to make money from an app, but you do need to be business-savvy. Chances are you don’t have the next Airbnb or Uber on your hands. Still, that doesn’t mean your idea isn’t worth pursuing. If you want to have a rough estimation of potential profits, the easiest way is to check the yearly revenue of an app that’s a benchmark for your idea. 

Paid apps vs. free apps

Once your app is ready to go, the first thing you need to decide is whether the app is going to be available for free or if you’re going to charge users for downloading.

On one hand, making money from apps doesn’t get any simpler than this: charge money for downloading the app. While paid apps are a good way to make money quickly, it can be limiting. First, there is no way for people to try out your service. This can act as a barrier that stops them from downloading your product. This is even more likely to be the case if your brand is unknown, and you may struggle to convince people to pay for your app.

A slight workaround could be to offer your app to download for free and then offer customers the option to pay a one time fee to unlock the whole app. Although, on both Google Play and the App Store, this counts as an in-app purchase as the user isn’t paying to download the app.

How to make money from apps – monetization strategies

Making money from apps starts with a good idea and a few money-making strategies. Below you’ll find the most popular ones. 

  1. Advertising

The most well-known revenue model for mobile apps. Implementing the ads into the app is very easy to do. You get paid from third parties who want to showcase their products to your users. The revenue is based on the number of clicks, views or downloads via advertisement. 

The downside is quite easy to see: you need to have a lot of users, preferably regulars. The amount of money paid by a single click on an add isn’t astronomical. If you decide to promote downloads, there’s a potential that users will leave your app and choose a direct competitor. 

  1. Subscriptions

Subscriptions can be counted as the most useful t app monetization strategy. The most common technique is to provide a free app trial period followed and then charge users who want to continue using the app with a subscription fee. You can also charge your users if they want to see extra content or use an app-free version of your app. 

Subscriptions are a great way of making money from an app. However, you have to present a unique value the users are willing to pay for. 

  1. In-App Purchases

In-app purchases allow the app owners to sell virtual items that can be used in the app. It’s a strategy that’s widely popular in gaming apps. It can also be a paywall for extra content or new features. 

  1. Freemium Upsell

Freemium upsell is a situation where users download the app for free but have to pay for the additional or premium features. It’s another form of in-app purchase. 

  1. Transaction Fees

The app owners can charge for the transaction fees made by their users. It works well for digital banking apps and marketplaces. 

  1. Sponsorship

If you can find a sponsor with a similar target audience, you’re in luck! You can further promote your app and expand your user base while still making money from an app. Of course, you will have to split the revenue with your sponsor. 

  1. Affiliate marketing

Users can work in your favor. The affiliates carry out performance-based advertising that has a high engagement rate. You provide them with affiliate links and pay per click or download. You can also offer a percentage of a subscription fee if you run a paid app. 

Affiliate marketing presents two major problems: one, you need a lot of affiliates to get the word out about your app, and two – affiliates are humans who make mistakes. Some of them are not something you want to be connected to in any way, shape or form. 

  1. Selling Merchandise

If you run an e-commerce app, this is self-explanatory. However, if your app turns into a strong, recognizable brand, you can make an additional income by selling merchandise to your users. 

Summary

A guide on how to create an app and make money could take 100 pages. However, the basics are simple: offer an app that provides quality. The quality is measured by its usefulness to the user. Once your app is in the making, you have to decide whether it’s going to be free or not. You can choose from 8 popular monetization strategies in order to start making money from apps and to boost your revenue: advertising, subscription, in-app purchases, freemium upsell, transaction fees, sponsorships, and affiliate marketing. Combine a few of them for the best results. Remember about your competition on the market.  By keeping your eyes on the prize, soon you’ll be an expert on how to make money by creating an app!

Learn all about mobile app development from our related articles:

Table of contents

Subscribe for weekly updates


    You may also be interested in...

    Let's bring your project to life

    Request a consultation