How Do You Show Your App Will Make Money?

Here's a question that comes up in nearly every initial consultation I have—how do we know this app will actually make money? And honestly, its a fair question because I've watched brilliant app ideas fail simply because nobody thought through the financial side before development started. You can have the most beautifully designed app in the world, but if you cant demonstrate its business value to stakeholders or investors, you're going to struggle to get it funded...and if you do get it funded, you might still fail because the monetisation strategy wasnt baked in from day one. I mean, I've been building apps for over nine years now and the number of times I've seen founders come to me with an amazing concept but absolutely no idea how it'll generate revenue? Its a lot. More than it should be, really.

The mobile app market has changed dramatically since I started in this industry. Having a cool idea used to be enough; now you need solid financial projections, realistic user acquisition costs, and a clear path to profitability before anyone takes you seriously. When I work with clients—whether they're bootstrapped startups or Fortune 500 companies—the first thing we do is map out the revenue model. Not as an afterthought, but as a foundation. Because here's the thing: your monetisation strategy affects everything from your user experience design to your technical architecture to your go-to-market plan.

The apps that succeed aren't always the ones with the best features; they're the ones with the clearest understanding of how they'll turn users into sustainable revenue.

This guide will walk you through exactly how to demonstrate your apps financial potential—from choosing the right revenue model to creating projections that actually hold up under scrutiny. I'll share what I've learned from successful launches (and a few expensive failures) across healthcare, fintech, e-commerce and other sectors. Sure, every app is different, but the fundamental principles of app ROI remain consistent. Lets break it down.

Why Revenue Models Matter Before You Build

Here's what happens more often than I'd like to admit—someone comes to me with a detailed wireframe, a gorgeous design concept, and maybe even some technical specs sorted out. We talk through features, user flows, the whole thing. Then I ask how they're planning to make money from it and there's this awkward pause. I've had clients genuinely surprised that we need to discuss this before writing code, which is a bit mad really.

Your revenue model isn't just some business school exercise you tick off after launch; it fundamentally shapes how your app gets built. When I worked on a fitness app for a client who wanted subscription revenue, we had to build in a robust content management system from day one so they could keep adding workout videos and recipes. That infrastructure added about 30% to the development cost but it was non-negotiable because the whole business model relied on giving people a reason to pay monthly. If they'd wanted to monetise through ads instead, we would've built something completely different with different user flows and data collection requirements.

How Your Revenue Model Affects Technical Decisions

The way you plan to make money directly impacts your technical architecture, compliance requirements and even your timeline. A healthcare app I built that sold premium features needed payment processing that met PCI DSS standards—that wasn't optional, it was legally required. An ad-supported news app we developed needed to integrate multiple ad networks and build sophisticated user tracking (with proper consent mechanisms, obviously). These aren't things you can bolt on later without major headaches.

• Subscription models require secure payment processing, account management systems and recurring billing infrastructure
• Freemium apps need feature gating logic built into the core architecture so users hit natural upgrade points
• Ad-supported apps must integrate third-party SDKs that can add weeks to testing and increase app size
• Marketplace or transaction-based models need escrow systems, dispute handling and often multi-currency support
• Data monetisation approaches require sophisticated analytics implementation and strict privacy compliance

The Real Cost of Changing Your Mind Later

I've seen clients try to pivot their revenue model after launch and its expensive. One e-commerce client started with a commission-based marketplace but six months in wanted to switch to subscription fees for sellers. The technical debt from that decision? We basically had to rebuild the entire payment system and modify the database structure. What could've taken two weeks during initial development took nearly three months post-launch, and that's with a relatively simple app architecture.

Your revenue model also affects user experience in ways that aren't always obvious. Apps that rely on in-app purchases need to carefully design their user journey so people understand the value before being asked to pay—that means specific onboarding flows, strategic feature reveals and clear value communication throughout the app. Apps that monetise through user data (ethically, I mean) need transparent privacy controls and clear explanations of what data gets collected and why. These UX considerations need to be baked in from the start, not retrofitted when you realise conversion rates are terrible.

Understanding Different Ways Apps Make Money

Right, so theres about five main ways apps actually generate revenue and I've built apps using every single one of them. Each has its quirks, its advantages, and honestly, its own set of headaches. The trick is matching the right model to your specific app idea—because what works brilliantly for a meditation app will absolutely tank a productivity tool.

The most straightforward is paid downloads where users pay upfront before they even install your app. Sounds simple? It is, but its also the hardest sell these days because people expect to try before they buy. I've seen this work well for professional tools—built a construction management app that charged £15 upfront and it worked because the target users were contractors who understood the value proposition immediately. They weren't messing about with free trials; they needed the tool and were happy to pay.

The Main Revenue Models

• Paid downloads—users pay once to install the app
• In-app purchases—the app is free but users pay for extra features, content, or virtual goods
• Subscriptions—recurring payments (monthly or yearly) for ongoing access
• Advertising—the app is free and you make money from ads shown to users
• Hybrid models—combining multiple approaches like freemium with ads

In-app purchases have become massive, particularly in gaming and content apps. We developed an education app where the core lessons were free but advanced modules cost between £2-5 each. Conversion rate sat around 8% which is actually quite good—the key was making sure the free content was genuinely useful so people trusted that the paid stuff would be worth it. You cant just lock everything behind a paywall and hope for the best.

Which Model Fits Your App?

Subscriptions are my favourite model for apps that provide ongoing value. Built a fitness coaching app that charged £9.99 monthly and the retention after three months was around 60%—not amazing but sustainable. The thing about subscriptions is they require you to continuously deliver value; users will cancel the moment they stop seeing benefits. That means ongoing development costs, fresh content, and active user support. Its not passive income by any stretch.

Advertising works when you've got serious user numbers and high engagement. We're talking hundreds of thousands of active users minimum to make it worthwhile. I worked on a recipe app that monetised through ads and we needed about 250,000 monthly active users before the ad revenue even covered server costs. The math is brutal—CPMs (cost per thousand impressions) typically range from £2-8 depending on your audience demographics. If your users aren't opening the app daily, advertising probably wont work.

The reality? Most successful apps I've built use hybrid models. Free download with in-app purchases and a "remove ads" option for £2.99. Or a freemium model where basic features are free but power users can subscribe for premium functionality. The health tracking app we launched last year does exactly this—free for basic tracking, £4.99 monthly for advanced analytics and personalised insights. About 12% of users convert to paid which generates sustainable revenue while keeping the barrier to entry low. Understanding how to price your app competitively is crucial to making these models work.

Don't pick your revenue model based on what you want to earn—pick it based on what your users will actually pay for and how they prefer to spend money. A B2B productivity app can charge £50 upfront but a consumer social app needs to be free with optional purchases. User expectations matter more than your financial needs.

Creating Realistic Financial Projections

Right, so you've got your revenue model sorted—now comes the bit that makes most people squirm a bit. Financial projections. I've reviewed hundreds of these over the years and honestly? Most are complete fiction. They show hockey stick growth that would make Instagram jealous, with conversion rates plucked from thin air. Don't do that. Your projections need to be grounded in reality, even if that reality isn't as sexy as you'd like it to be.

Here's what I do with clients; we start with actual market data and work backwards. If you're building a fitness app with a freemium model, go look at what percentage of users typically convert to paid (spoiler: its usually around 2-4% for most fitness apps). Then look at your realistic user acquisition numbers. Can you get 1,000 downloads in month one? 5,000? Be honest about what your marketing budget can actually deliver. Analysing download patterns can give you realistic benchmarks for your projections. I worked on a meditation app where the founder projected 50,000 downloads in the first three months with zero marketing spend—that's not optimism, that's fantasy.

Build three scenarios: conservative, moderate, and optimistic. Your conservative projection should assume everything goes wrong but you still survive. Maybe that's half the downloads you hoped for and conversion rates 20% lower than industry average. This is the version that keeps you honest. For a fintech app we built, the conservative model showed profitability in month 18 instead of month 6, and guess what? Reality tracked pretty close to that conservative number. If you're serious about attracting investment, you'll need to master revenue forecasting that resonates with investors. Include your churn rate too—most people conveniently forget that users leave. For subscription apps, assume 5-7% monthly churn until you have data proving otherwise. These projections aren't just numbers on a spreadsheet; they're your roadmap for whether this thing can actually work as a business.

Calculating Your User Acquisition Costs

User acquisition costs—or UAC as people call it—is one of those numbers that can make or break your whole business case. I've seen brilliant app ideas die because the founders didn't work out how much it would actually cost to get people to download and use their app. And here's the thing; its not just about the cost per install anymore. You need to know how much you're spending to get a user who actually sticks around and generates value.

When I worked on a fitness app for a client, we initially budgeted £3 per install based on some industry averages we'd read online. Sounds reasonable? Well, it turned out that only about 15% of those installs actually completed the onboarding process and became active users. So our real acquisition cost wasn't £3—it was closer to £20 per active user. That completely changed the apps revenue model and timeline to profitability. We had to pivot the whole monetisation strategy because the numbers just didn't work with a freemium model anymore.

Breaking Down the Real Costs

Your UAC includes way more than just ad spend. Sure, thats usually the biggest chunk—whether you're running Facebook ads, Apple Search Ads, or Google App campaigns. But you've also got to factor in the cost of creating those ad assets, A/B testing different creatives (which you absolutely should be doing), any influencer partnerships or PR work, and even the time your team spends on app store optimisation. For one e-commerce client, we spent three months tweaking their App Store listing and screenshots; that time has a cost even if its not coming directly out of your ad budget. Choosing the right app store category can significantly impact your organic acquisition costs too.

The apps that succeed aren't necessarily the ones with the lowest acquisition costs—they're the ones that know exactly what those costs are and have built their business model around them

I usually tell clients to calculate UAC in tiers. First, work out your cost per install (CPI). Then calculate your cost per registration or signup. Then—and this is the one that really matters—calculate your cost per paying customer or whatever your key conversion event is. A fintech app we built had a CPI of £4.50, but the cost per user who actually linked their bank account and made a transaction? That was £67. Knowing that number meant we could make informed decisions about lifetime value targets and which acquisition channels were worth investing in long-term.

Channel-Specific Realities

Different acquisition channels have wildly different costs and performance characteristics. Apple Search Ads typically give you high-intent users (they're actively searching for something) but can be pricey in competitive categories—I've seen healthcare apps paying £8-12 per install. Social media ads are cheaper per install but the quality can be hit or miss; you might pay £2-3 per install but get lower retention rates. Organic acquisition through ASO and content marketing has essentially no marginal cost per user, but it takes months to build momentum and requires consistent effort.

One thing people often forget is that UAC isn't static. It changes based on competition, seasonality, platform algorithm updates, and how saturated your target market becomes. We launched an education app right before September when everyone's thinking about back-to-school stuff; our acquisition costs were 40% higher than they were in June. You need to model these fluctuations into your projections or you'll end up burning through your marketing budget way faster than planned.

Showing Proof Your Idea Will Work

Look, anyone can say their app will make money—but proving it? That's where most people stumble. I've sat through countless pitch meetings where founders have brilliant ideas but zero evidence that actual humans will pay for them. And I get it, its hard to prove something will work before you've built it. But there are ways to validate your concept without spending fifty grand on development first.

The simplest proof I always recommend is a landing page test. Set up a basic webpage describing your app, what problem it solves, and include a signup button or pricing information. Then run some targeted ads to your potential users—maybe £500 to £1000 worth—and see what happens. If you're building a fitness app for busy parents, target parents aged 25-40 who've shown interest in health and wellness. Track how many people click through, how many sign up for your waitlist, and most importantly, how much each signup costs you. Proper market research methods can help you design these validation tests effectively. I worked with a fintech client who did this before building anything; they got 400 email signups in two weeks, which told them there was genuine interest before they spent a penny on actual development.

Another method that works well is building a basic prototype or clickable mockup and showing it to real potential users. Not your mates or family—they'll lie to be nice. Find people who fit your target audience and watch them interact with your concept. Do they understand it immediately? Do they see the value? Would they actually pay the price you're suggesting? I've seen apps pivot completely based on these sessions because what founders thought was obvious turned out to confuse everyone. User testing platforms can help here, or you can recruit participants through social media groups relevant to your niche.

If you're targeting businesses rather than consumers, proof looks a bit different. Get letters of intent from potential corporate clients saying they'd purchase your solution at a specific price point. I worked with a healthcare app startup that secured three letters from NHS trusts expressing interest in their patient management system—that validation helped them raise their seed round because investors could see actual demand, not just assumptions. Understanding how B2B apps should be positioned differently is crucial for this type of validation. These letters dont need to be binding contracts, but they show you've done your homework and spoken to real decision-makers who have real budgets.

Competitor analysis also serves as proof, though indirectly. If similar apps in your space are generating revenue, that validates market demand exists. But here's the thing—you need to show why yours will succeed where others have or will capture market share they haven't. Maybe you're targeting an underserved demographic, offering better pricing, or solving a specific pain point competitors ignore. Learning what top apps do differently can reveal opportunities in saturated markets. One e-commerce app I developed competed in a crowded space, but they focused exclusively on sustainable fashion, which carved out a profitable niche despite hundreds of general shopping apps already existing.

What Investors and Stakeholders Actually Want to See

I've sat in dozens of pitch meetings over the years and the difference between presentations that get funding versus ones that dont? Its usually about how well you understand your numbers. Investors dont want to hear vague promises about "going viral" or "disrupting the market"—they want cold, hard data about how your app will generate returns on their investment.

First thing they'll look at is your unit economics. Can you acquire a user for less than theyre worth to you? I worked on a fitness app where the founders initially projected £5 acquisition costs but hadn't factored in their 60% drop-off rate after the trial period; when we recalculated the real cost per paying customer it jumped to £18, which completely changed their funding requirements. Stakeholders need to see youve thought through these details because it shows you understand the actual mechanics of your business model.

Your revenue model needs to be defensible too. Why subscription over freemium? Why these specific price points? I've watched founders fumble this question more times than I can count. You need competitive analysis showing what similar apps charge, data on your target users willingness to pay, and clear reasoning behind your choices. When we pitched a healthcare app to a venture group, they spent 40 minutes drilling into why we chose £9.99 monthly instead of £7.99—you better believe we had research backing that decision.

The Financial Metrics That Actually Matter

Beyond revenue, investors want to see customer lifetime value (LTV), churn rate, monthly recurring revenue growth, and your path to profitability. Not just the numbers themselves but the assumptions behind them. Why do you think churn will be 5% monthly? What happens if its 8%? The best presentations I've been part of included sensitivity analysis showing how the business performs under different scenarios; it demonstrates youve stress-tested your model and aren't just hoping for the best. Remember too that certain features will impact your development budget—expensive app features need to be justified in terms of revenue potential.

Create a one-page financial summary that shows your key metrics at a glance—CAC, LTV, LTV:CAC ratio, burn rate, and months to break even. Investors will spend 90% of their time on this single page so make sure every number tells a story about why your app is a solid investment.

Traction Speaks Louder Than Projections

You know what beats every projection? Actual users. Even if you havent launched yet, showing validation through beta testing, pre-registrations, or a waiting list makes your case infinitely stronger. We launched a fintech app with 2,000 people on the waiting list before writing a single line of production code—that list did more to secure funding than our 47-slide deck ever could. If you can show real people are willing to give you their email address (or better yet, their payment details) you've moved from theory to evidence, and thats what gets cheques signed.

Common Mistakes That Kill Your Business Case

I've seen dozens of business cases fall apart at the pitch stage, and its almost always the same mistakes. The biggest one? Showing hockey stick growth projections that have no basis in reality. You know the ones—those charts that show 10 users in month one, then somehow jump to 100,000 by month twelve. I worked with a fintech startup once that projected they'd capture 5% of their market within the first year. Sounds reasonable until you realise that would require them to outperform apps backed by major banks with marketing budgets fifty times larger. Their business case got torn apart in the first investor meeting.

Another killer mistake is ignoring the competition entirely. I mean, saying "we have no direct competitors" in your business case is basically admitting you haven't done your research. When we built a healthcare appointment booking app, we didn't pretend other booking systems didn't exist—we showed exactly how ours would be different and why users would switch. That honesty built credibility. Also, many people underestimate user acquisition costs by massive amounts; they'll budget £2 per install when the actual cost in their category is closer to £8. That single error can destroy your entire financial model before you even launch.

What Actually Kills Business Cases

• Hockey stick projections with no supporting data or realistic user acquisition strategy
• Ignoring your competition or claiming you don't have any competitors in the market
• Underestimating development costs—most apps cost 30-40% more than initial estimates to get market-ready
• Forgetting ongoing costs like server hosting, payment processing fees, and customer support infrastructure
• Not accounting for platform fees (Apple and Google take 15-30% of in-app purchases)
• Showing revenue from day one when realistically it takes months to generate meaningful income
• Missing the cash flow gap—that period where you're spending on marketing but haven't recouped the costs yet

The business cases that succeed are the ones that show you've thought through the ugly bits. Sure, present your best case scenario, but also show what happens if growth is slower or acquisition costs are higher. That kind of realistic thinking is what gets taken seriously. Features that seem simple can add significant costs—real-time features and push notifications are common examples that catch people off guard in budget planning.

Building a Timeline for Profitability

Most founders I work with ask me "when will we break even?" within the first few meetings. Its a fair question—everyone wants to know when their investment starts paying off. But here's the thing: profitability timelines vary wildly depending on your monetisation model, and anyone who gives you a single answer is probably guessing.

I've seen subscription apps reach profitability in 8-12 months when they nail their onboarding and retention strategy. One healthcare app we built charged £9.99 monthly for personalised health tracking; they hit break-even at month 11 because their churn rate stayed below 5%. App loading times and performance play a huge role in retention—poor performance kills profitability timelines faster than almost anything else. Freemium apps? That's a different story entirely—you're typically looking at 18-24 months minimum because you need massive scale before conversion rates start moving the needle.

The apps that fail aren't usually the ones with longer timelines; they're the ones that didn't plan for how long their runway needed to be

When I help clients map out their timeline, we always start with user acquisition costs and work backwards. If your CAC is £8 and your average user generates £3 in month one, you need to understand exactly when that cumulative revenue crosses the acquisition cost line. For a fintech app we developed, this happened at month 4—but only because they had strong transaction frequency built into the core experience.

The biggest mistake? Underestimating how long it takes to optimise your conversion funnels and retention mechanics. Your first three months will be spent learning what actually works, not just executing a plan. I always add a 6-month "learning buffer" to initial projections because that's reality. Sure, its frustrating to tell clients they wont see returns immediately, but setting realistic expectations means they've got enough runway to actually succeed rather than running out of cash at month 10 when they're just starting to figure things out.

Conclusion

Look, showing your app will make money isn't about having perfect projections or foolproof guarantees—its about demonstrating you've done the work. You've researched your market, understood your users deeply, calculated your costs realistically, and built a sensible plan for how revenue will actually flow into your business. I've watched too many brilliant app ideas die because the founder couldn't articulate a clear path to profitability; and honestly, it's one of the most frustrating things to witness because often the underlying concept was solid.

The apps that get funded, the ones that attract serious partners and investors, they all share something in common. They've mapped out their revenue model with specificity—not just "we'll charge £4.99 per month" but "we'll charge £4.99 per month because our target users currently spend £8-12 on competitor solutions and our research shows they'll switch for better UX at a lower price point." See the difference? One is a guess, the other is a business case backed by actual thinking.

Your financial projections will be wrong. Mine always are, everyone's are. But that's not really the point? What matters is showing you understand the levers that drive your business—user acquisition costs, conversion rates, lifetime value, churn. When costs go up or conversions drop (and they will), you'll know which knobs to turn because you've thought through how everything connects. I've built apps that took twice as long to reach profitability as we projected, but we got there because the underlying model was sound and we could adapt as real data came in. That's what you're building towards—a flexible business framework that survives contact with reality.