Over 95% of mobile apps fail to generate enough revenue to be profitable. That's a staggering number when you consider how much time, effort, and money goes into creating these digital products. The truth is, having a brilliant app idea isn't enough anymore—you need a solid monetisation strategy from day one.
I've worked with countless clients over the years who've built amazing apps but struggled to make any real money from them. They focused so much on features and design that they forgot the fundamental question: how will this actually pay the bills? It's a mistake that can be incredibly costly, both financially and emotionally.
The best mobile app in the world is worthless if you can't figure out how to monetise it properly
The good news is that there are proven revenue models that work brilliantly for different types of apps. Whether you're building a simple utility app or a complex social platform, there's a pricing strategy that can turn your creation into a sustainable business. This guide will walk you through every major monetisation approach, from traditional paid downloads to sophisticated subscription models, helping you find the perfect fit for your specific app and target audience.
What Are App Revenue Models
After building mobile apps for countless businesses over the years, I've learnt that choosing how your app makes money is just as important as building the app itself. An app revenue model is simply the method you use to generate income from your mobile application—and trust me, there are more options than you might think!
The beauty of app monetisation is that you're not stuck with just one approach. Many successful apps combine multiple revenue streams to maximise their earning potential. Some charge users upfront, others rely on advertising, and plenty make their money through ongoing subscriptions or in-app purchases.
The Main Types of App Revenue Models
Let's break down the most common approaches you'll encounter:
- Paid apps — Users pay once to download your app
- Freemium — Basic features are free, premium features cost extra
- Subscription — Users pay regularly (monthly or yearly) for access
- In-app purchases — Users buy additional content or features within the app
- Advertising — You display ads and earn money from advertisers
- Sponsorship — Companies pay to be featured in your app
Each model has its own advantages and challenges, and what works brilliantly for one app might be completely wrong for another. The key is understanding your users and matching the right model to their behaviour and expectations.
Free Apps That Make Money
The idea of giving away your mobile app for free might seem counterintuitive, but some of the most successful apps in the app stores don't charge users a penny upfront. These free apps generate billions in revenue through clever monetisation strategies that kick in after users have downloaded and started using the app.
Free apps work because they remove the biggest barrier to downloads—cost. When people see a free app, they're much more likely to try it out. Once they're hooked on your app, that's when the real magic happens. You can start generating revenue through various methods without users feeling like they're being forced to pay.
Common Free App Revenue Strategies
- In-app advertising that displays between content
- Premium features locked behind a paywall
- Virtual goods and currency purchases
- Subscription tiers for advanced functionality
- Affiliate marketing and partnerships
- Data insights sold to third parties
The key to success with free apps is finding the right balance. You need enough users to generate meaningful revenue, but you can't annoy them with too many ads or pushy upgrade prompts. It's a delicate dance that requires careful planning and lots of testing.
Start with a completely free version to build your user base, then gradually introduce monetisation features based on user behaviour and feedback.
Paid Apps And Premium Pricing
The paid app model is probably the most straightforward way to monetise your mobile app—you charge users upfront before they can download it. Simple, right? Well, not quite. Getting people to pay for an app before they've even tried it can be surprisingly tricky in today's market.
Back when app stores first launched, paid apps were everywhere. People didn't mind spending a few pounds on something that looked useful. But now? Users have become much more cautious about parting with their money upfront, especially when there are so many free alternatives available.
When Premium Pricing Actually Works
Don't write off paid apps just yet though. There are still situations where this model works brilliantly. Professional tools, productivity apps, and games with strong brand recognition can command premium prices. The key is offering something genuinely valuable that users can't get elsewhere for free.
Your app needs to solve a specific problem really well—better than any free alternative. Think of apps like Procreate or Minecraft; they built such strong reputations that people happily pay the asking price.
Getting Your Pricing Right
Pricing is more art than science, but here's what we've learned over the years:
- Start with competitor research to understand the market
- Consider offering a lite version alongside your premium app
- Test different price points if your platform allows it
- Remember that higher prices can actually increase perceived value
- Factor in platform fees when calculating your revenue
The biggest challenge with paid apps is convincing users to trust you with their money before they've experienced your product. That's why having stellar screenshots, compelling descriptions, and positive reviews becomes absolutely critical for success.
Subscription Models That Work
Subscriptions are everywhere these days—from Netflix to Spotify to that meditation app you forgot you're paying for. The recurring revenue model has become incredibly popular for mobile apps, and for good reason. It provides predictable income that makes business planning much easier.
The key to a successful subscription model is delivering ongoing value. People won't keep paying monthly for something they used once and forgot about. Your app needs to offer fresh content, regular updates, or services that people genuinely use week after week. Think about apps like Headspace with new meditation programmes or Duolingo Plus with advanced learning features.
Getting the Price Right
Most successful app subscriptions fall between £2.99 and £9.99 per month. Going too cheap can make your app seem less valuable; going too expensive puts you in competition with major entertainment subscriptions. Many apps offer both monthly and annual options—the yearly plan typically offers a 20-30% discount to encourage longer commitments.
The best subscription apps solve a problem that users face regularly, not just once
Free trials are almost mandatory with subscription models. Seven days is usually enough for users to see value without giving away too much. Some apps offer freemium versions alongside subscriptions, letting users try basic features before upgrading to premium content or advanced functionality.
In-App Purchases And Freemium
The freemium model has become one of the most popular ways to monetise mobile apps—and for good reason. You give users the basic app for free, then charge them for extra features, content, or services. It's a brilliant way to get people through the door without asking for their credit card details upfront.
I've worked on countless freemium apps over the years, and the ones that succeed all have something in common: they give genuine value in the free version whilst making the paid features feel like natural upgrades rather than ransom demands. Nobody likes feeling tricked into spending money.
Types of In-App Purchases
There are three main types of in-app purchases you can offer:
- Consumable items (coins, lives, power-ups that get used up)
- Non-consumable items (removing ads, unlocking features permanently)
- Subscriptions (premium content, advanced tools, extra storage)
Making Freemium Work
The key is balance. Make the free version too limited and people won't stick around long enough to see the value. Make it too generous and they'll never feel the need to upgrade. Gaming apps often nail this by letting you play for free but offering shortcuts or cosmetic upgrades for money.
Success with freemium isn't about tricking users—it's about creating such a good experience that they want to support your app and unlock even more value.
Advertising Revenue Strategies
Advertising revenue models are brilliant for keeping your mobile app free whilst still making money. You show adverts to your users and get paid by advertisers—simple as that. But don't think you can just slap some banner ads everywhere and call it a day; there's more strategy involved than you might think.
Banner ads are the most common type you'll see. They sit at the top or bottom of your screen and stay there whilst you use the app. Interstitial ads are the full-screen ones that pop up between different sections of your app—like when you finish a level in a game. Video ads are becoming more popular because they pay better, but they need to be done right or users will get annoyed.
Making Ads Work for Your Users
The key to successful advertising revenue is balance. Too many ads and people will delete your app faster than you can say "revenue model". Too few and you won't make enough money to keep the lights on. Native ads—ones that look like they belong in your app—tend to perform better because they don't feel as intrusive.
Start with fewer ads and gradually increase them based on user feedback. It's easier to add more ads than to win back users who've already left.
Your pricing strategy with ads depends on your user numbers. The more people using your app, the more attractive you become to advertisers, and the better rates you can negotiate.
Choosing The Right Model For Your App
After working with hundreds of clients over the years, I can tell you that picking the wrong monetisation model is one of the fastest ways to kill a promising app. The good news? There's no such thing as a perfect model—only the right model for your specific app and audience.
Start by looking at your target users. Are they willing to pay upfront for quality, or do they prefer trying before buying? A productivity app for business professionals might work brilliantly as a paid download, whilst a social gaming app would probably flop with the same approach. Your user research should tell you what your audience expects and how they prefer to spend money.
Key Factors to Consider
- Your app's core function and user experience
- How often people will use your app
- Your target audience's spending habits
- Competition in your app category
- Your business goals and revenue targets
Don't be afraid to test different approaches either. Many successful apps start with one model and evolve over time. Instagram began as a simple photo-sharing app and now generates billions through advertising. The key is staying flexible and listening to your users—they'll tell you what works if you pay attention.
Conclusion
Finding the right revenue model for your mobile app isn't about picking the most popular option—it's about understanding your users, your market, and what makes sense for your specific situation. I've worked with clients who've switched between models multiple times before finding their sweet spot, and that's perfectly normal. What works for a gaming app won't necessarily work for a productivity tool, and what suits a startup might not fit an established business.
The best pricing strategy often combines multiple approaches rather than relying on just one. You might start with a freemium model to build your user base, then introduce premium subscriptions for power users whilst keeping basic advertising revenue ticking along in the background. Many successful apps use this layered approach because it gives them multiple income streams and reduces risk.
Don't forget that your revenue model isn't set in stone. As your app grows and you learn more about your users, you can adapt and evolve your approach. The key is to start with something that feels right for your audience and be prepared to adjust based on real data and user feedback. At the end of the day, the perfect model is the one that keeps your users happy whilst generating sustainable revenue for your business.
