How Do Apps Make Money: Strategies to Boost Your Revenue Potential

Millions of apps are launched across the globe every month, yet not all of them succeed in generating revenue. “How Do Apps Make Money?” is a question that often puzzles businesses looking to tap into the massive digital market. Whether it’s a startup or a well-established enterprise, every organization aims to create a profitable app that meets user needs while getting a maximum return on investment.

Monetization isn’t just about throwing ads onto a platform. It’s a strategic process that involves choosing the right revenue model and continuously refining it based on user data and market feedback. Some businesses may opt for in-app purchases and freemium models, while others might succeed through subscription plans or premium downloads. Each approach demands a clear understanding of the target audience and the value the app delivers.

In today’s competitive landscape, robust user engagement and retention are critical for long-term profitability. To stand out in the crowded app marketplace, businesses must incorporate features that resonate with their audience and encourage repeated use. Moreover, gathering user insights and applying iterative improvements ensure that the app remains relevant and compelling.

This blog will help you understand how do apps make money by exploring various monetization strategies, from advertising and in-app purchases to subscription models and partnerships. We will also discuss practical tips on choosing the most effective approach for your business, ensuring both a satisfying user experience and a healthy revenue stream.

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Current Market Statistics on App Monetization You Must Know

Understanding app monetization is crucial in today’s vast mobile app market. With millions of apps on Google Play and the App Store set to lead in revenue, multiple statistics highlight key trends that businesses need to comprehend. Let us look at them in detail below.

• As per the survey for June 2024, there are over 1.68 million apps placed in Google Play store. It is also studied that gaming android apps are most likely to dominate 2025, accounting for over 71% of the total app revenue in Google Play Store. 
• As for the App Store for iOS based applications, the number of apps available on the platform are over 1.54 million recorded in the second quarter of 2024. 
• In the first quarter of 2024, users downloaded a substantial 25.6 billion apps from Google Play, alongside 8.4 billion downloads from the Apple App Store. 
• Coming to app monetization stats, as of March 2024, 7% of apps from the United States monetized through direct purchases, compared to 3% globally. Furthermore, a quarter of U.S. apps generated revenue through advertising.
• By 2029, the revenue generated by the ‘Advertising’ segment is forecasted to lead with 7.23%, while the ‘Paid App’ segment is projected to be the least at 5.6%. 

Looking at the above figures demonstrates that there is tough competition in the marketplace for earning from apps.Under such circumstances, you would definitely want to prevent your business app from failing in the market. This is probably why your priority should be focusing on the right considerations before building your business application.

So, let’s uncover what things you must consider before making any effort into money making apps development.

Things to Consider Before Developing Money Making Apps 

Before you invest into designing and developing your app, it is important to take time out to research and list down a few factors. While you can conduct your own research, it would be best to seek technical guidance from a reliable mobile app development company or industry expert that has the in and out insights on money making app development. 

When looking out for these factors, make sure you include the top four considerations listed below before actually developing your app. 

1. App purpose

Prior to choosing any of the monetization models, you need to understand the type of your application. What and how does your application tackle any issue?

When focusing on how do apps make money, the app purpose plays a pivotal role. Answer these questions to get a detailed understanding of your app purpose. 

• What problem does your app target?
• What mobile apps development service do you need to build a successful app?
• What could be the probable impact of your app monetization on the market? 
• And how will the app be useful in serving the customers and their needs?

When you have a reasonable answer regarding the purpose, you will be able to choose a correct monetization strategy for your application; for instance, subscription models for service and content applications.

2. Target audience

Another factor that helps in determining how can apps make money is the target audience. If you are making a mobile application for the business people, it is important to go with a monetization strategy that does not waste their time. Likewise, when it comes to building an app for kids, it is good to offer a few solutions and features for free. 

To effectively earn an online income from app monetization strategies, you need to examine your target audience prior to starting any plan. Who is the target audience? What do they require? The amount they will pay? To put it simply, your users should know the genuine worth to make purchases.

3. Competitor analysis

Only knowing the answer to the question- how does an app make money is not enough. Performing Competitive analysis for your mobile app idea also contributes to making the decision related to how to make money from an app. The insights aid in getting a hint about what strategies similar applications in the market prefer and what all profits they have earned. This eventually helps with decision making.

The cutthroat competition in the market and the competitor analysis isn’t only for highlights, functionalities, and design of an application. With a proper study and knowledge regarding the competitors, you can without much of a problem discover the monetization business plan for your application. All you need to do is ask yourself certain questions like how competitors are earning? How solid are their models? Is there any loophole that can turn into an opportunity for you? Also, a solid marketing plan for your mobile app development can help you accelerate your marketing and sales.

4. Technologies 

The set of technologies you introduce in your application not solely enhances the user experience and makes it stand out from the competition, but also adds to the earning from mobile apps. 

Example: A traditional business mobile app monetization platform model provides developers with only 70% of the amount paid for a mobile application. Whereas, a blockchain-based application model delivers 85% of the total app profit share.

With this covered, let’s jump directly to finding different models to look into how to earn money from apps.

How do Apps Make Money: Six Mobile App Monetization Models for Businesses to Look Out For

The pricing app strategy you choose for your application also makes a difference to the money making apps.Therefore, it is essential to be familiar with all types of bankable mobile app monetization strategies you can go with. Some of the major ones are discussed below:

1. In-app advertising

While the application is free to download and use, you can still earn money based on the interactions on the advertisements displayed within your application. In-app advertising revenue model is highly considered and found to be profitable. 

This model includes several formats such as Interstitial ads, Banner ads, Video ads, Native ads, Text ads, Native ads, and so on. How much do ads make on apps? The average revenue per ad impression can be as low as $0.10 and as high as $10, depending on the type of ad.

Pros of in-app advertising 

• Generates target audience 
• Faster results 
• Great extension for target audience 

Cons for in-app advertising 

• More shares of competitors 
• Low involvement of audience 

2. In App purchases and freemium model

The foremost monetization strategy that one considers when looking into how to make money of an app without ads is Freemium.

Here, the application is free to use. But, the users would have to pay some amount of money to buy a wide variety of virtual elements from the mobile application. This includes extra lives, blocking ads, premium app content, game currency, and more.

Example: Clash of Clans earned nearly exceeded $1 million per day on purchases.

Pros of in-app purchase

• Wider user bases since users get to try the app before purchasing 
• If planned well, the app gives maximum profits and higher returns

Cons of in-app purchases

• The app within the in-app purchases has to pay the amount the App Store charges as a fee (i.e. 30%).

3. Subscription (Software-as-a-Service) model

Another strategy that comes forward as the answer to how to monetize an app is the subscription model. 

Here, users are asked for a weekly, monthly, or annual fee in return for a particular service provided by the mobile app development company. This type of business and monetization model is often recommended in the case of cloud-based services, audio and video content based apps such as Spotify, Google Music, and Netflix. 

Note: Only 5% of the successful app developers are using subscriptions to get income from an app.

Pros of subscription model 

•  Attracts many free users 
• You can keep free users in the app with limited features even if they cancel the subscription

Cons of subscription model 

• It requires strategy to determine how much content you can offer for free

4. Sponsorship

Sponsorship is yet another method of making an earning from a mobile app. This model is usually incorporated with those applications that already have regular users, and is suitable when connecting with brands from the same market niche.

When discussing in detail around how apps make money via this monetization strategy, there are two deals to go with –

• Equally divide revenue from the mobile app
• Set a monthly sponsorship fee

Example: Weather Channel apps and similar businesses rely on this monetization model to prevail in the market.

Pros of sponsorship model 

• Builds awareness around your business app idea 
• Consolidates your business as an expert
• Exposes your app to the right audience

Cons of sponsorship model 

• Creates controversies if not done right 
• You need strong networking and marketing skills to gain sponsors

5. Crowdfunding

Crowdfunding, an alternate funding model to consider in 2022, is also one of the profitable ways for mobile app monetization. 

Here, you exchange your app idea or publish an MVP version on platforms like KickStarter, CrowdFunder, Indiegogo, and Fundable to raise funds and do the needful in the field of marketing.

Example: In 2017, the Hello Earth game with a famous cat character earned USD 148k via such app monetization strategies.

Pros of crowdfunding model 

• Easiest way to finance your app with no upfront cost 
• You get to test your audience’s reaction 
• Your investors can become your customers in the process 

Cons of crowdfunding model 

• Not an easy process, requires a lot of effort building and pitching your project
• Failed projects may lead to damage of business reputation

6. Affiliate links

This is another variation of sponsorship, however, in place of granting advertising rights solely to one organization, you negotiate with a few interested parties and place their reference links in your application. This is a decent method to increase your income from apps if you lack a wealthy player on the market who is ready to cover your costs.

Now that you are familiar with how do apps make money and what all factors to consider while looking into different monetization strategies, let’s wrap up by discovering how you can choose the best app monetization strategy for your business and getting insights of the future trends in the mobile app market.

Still unsure which revenue model best fits your app? Our experts can understand your unique goals and craft a strategy that drives maximum profits!

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How Can You Choose The Best App Monetization Method For Your App?

Finding the right mix of monetization strategies for your app to make money is a critical piece of the puzzle that decides your business success. But don’t you worry, here’s a perspective to guide you through your decision making process.

1. Creating a funnel leading audience to your monetization model

Once you have an identified target audience and user persona, you can create a sales funnel that translates your traffic into revenue for your app. For instance, for a language learning app, gaming features and mini challenges and daily quizzes can be a huge hit. Once your users get hooked, you can enhance the complexity of these features and engage them monetarily.

2. Choosing platforms that suit your app best

An experienced mobile app development company will suggest an app domain where your target users work best. Having said that, you must keep android app development cost and iOS app development cost into perspective while choosing the appropriate platform.

In most cases, businesses develop money making apps for both the platforms to ensure all the target audience is covered.

3. Using native extensions

If you can extend your application, for instance, adding levels to your gaming app or adding more audio lessons to your learning app, you can use native strategies. This means the basic version of your app can be free and available to all. Further, you can use the in-app purchase or subscription model to provide advanced features.

4. Considering local factors when pricing

When you are finalizing your pricing structure via in-app purchase, subscription or funding, consider local factors that create a huge difference in your app revenue. Factors such as cost of living differences, cost of competing apps and local pricing models of your competitors can impact your app’s monetization model big time.

5. Analyzing statistics to make your model work 

Another huge factor to consider is tracking app metrics and analyzing your user statistics. You need to understand their purchase patterns, average revenue per user, new and returning customers etc. to make strong and sustainable decisions.

Your app monetization strategy in any form will impact the user experience in some way. Since the app monetization strategy is calculated based on the number of active audience, make sure to keep your app’s user experience at the top level. What else?

Paid Apps vs Free Apps vs Subscription Model: What is the Right Choice?

Understanding the distinct characteristics of paid apps, free apps, and subscription models can help you select the most suitable approach based on your specific goals and user base. Let’s look into what you should choose when deciding on a monetization strategy for your app.

Future of Business Mobile App Development and App Monetization

Now that you know how apps make money, you must have gotten familiar with the future for mobile app development. Over the years business mobile apps have seen good money and this will for sure continue in the coming years as well. The gaming apps are making billions every year, however, the generic apps are still earning millions and doing well in the industry.  Augmented Reality, Artificial Intelligence/Machine Learning, and Virtual Reality are the technology trends that every business must implement to their apps to stand ahead in the market.

In conclusion, there are endless possibilities related to how much an app earns when you submit it to stores. You only have to rummage through your options and make the best out of it.

How Can Appinventiv Help You With Mobile App Development?

We hope this blog has helped you understand the answer to the question- how do apps make money? With Appinventiv’s extensive experience in mobile app development, we are well-equipped to help you transform your app idea into a profitable venture. Our comprehensive services cover everything from initial concept to final launch, ensuring that your app not only meets but exceeds user expectations while maximizing revenue generation.

As a leading mobile app development company,  we assist our customers and clients to leverage the latest technologies optimally and provide better ROI for their business. We put disruption in top gear by helping you create exceptional experiences through your business apps. Having delivered 1000+ business apps for every industry vertical, we can shape your vision to reality.

Get in touch with our industry experts today to know more on how we can help your business achieve its desired outcomes.

Frequently Asked Questions About Money Making Apps

Q. How do free apps make money and how much can they earn?

A. Free apps can make a significant amount of money, but the amount varies widely depending on the app’s strategy for monetization. Many free apps earn revenue through advertising, in-app purchases, or subscriptions. For example, an app might display ads to users or offer premium features for a fee. Subscription models, where users pay regularly for continued access to content or services, are also popular. While some free apps may make only a few hundred dollars a month, others, particularly those with a large and active user base, can generate thousands or even millions of dollars. The key to success is engaging users and effectively monetizing that engagement.

Q. What are the most profitable apps businesses can invest in?

A.  If we had to list down three app categories that tend to make the most money for their parent business, it would be – Music app, Gaming app, and Video streaming app. All three of these app categories are such that the engagement level is very high.

Each of these categories draws in users with their high engagement levels, making them attractive for sustained revenue generation. Music apps like Spotify engage users with personalized playlists and podcast features, while gaming apps profit from in-app purchases and ad revenues in games that keep players coming back. Video streaming apps like Netflix capitalize on subscription models that provide users with a wide array of content choices, keeping them engaged for long periods.

These categories attract a large user base and also provide various streams for monetization, making them highly profitable investment options in the app market.

Q. How to choose a winning monetization strategy?

A. Choosing the right monetization strategy for your app involves understanding your target audience, the unique value your app provides, and the market environment. Start by analyzing user behavior and preferences through metrics such as user engagement, retention rates, and conversion rates. Consider whether your app offers a one-time value or ongoing services that could benefit from a subscription model.

Free apps with in-app purchases or ads are good for reaching a wide audience, especially if the app is used often. Paid apps work best for niche markets where users don’t mind paying upfront for unique or high-quality content. It’s also crucial to keep updating and adjusting your strategy based on user feedback and changes in the market to ensure you maximize revenue while still offering a great user experience.