What Are the Best Monetisation Strategies for Startup Apps?

Here's a sobering reality check: 95% of mobile apps fail to generate meaningful revenue within their first year. That's not because they're badly built or poorly designed—it's because most startup founders treat app monetisation as an afterthought rather than a core business strategy. They build something brilliant, launch it into the world, and then scramble to figure out how to make money from it.

The truth is, successful app monetisation isn't about choosing between freemium models, subscription pricing, or in-app purchases. It's about understanding your users so well that you can create revenue streams that feel natural to them. When we work with startups at Glance, we've noticed that the most successful apps are those where the monetisation strategy was baked into the concept from day one.

The best monetisation strategies don't feel like monetisation strategies to your users—they feel like valuable features they're happy to pay for

This guide will walk you through the proven revenue models that actually work for startup apps. We'll explore everything from freemium approaches to hybrid strategies, backed by real data and case studies. Most importantly, we'll help you understand which pricing strategies align with your specific app idea and target audience. Because getting this right early can mean the difference between building a sustainable business and becoming another statistic.

Understanding App Monetisation Models: The Foundation Every Startup Needs

I've worked with hundreds of startup founders over the years, and there's one conversation that always comes up within the first ten minutes—how exactly are you planning to make money from this app? It might sound like a simple question, but you'd be surprised how many brilliant minds go blank when I ask it. They've spent months perfecting their user interface and mapping out features, but monetisation? That's been pushed to the "we'll figure it out later" pile.

Here's the thing though—waiting until later is a recipe for disaster. Your monetisation model isn't just about making money; it shapes everything from your user experience to your development timeline. If you're planning to use advertising, you need to design screens that can accommodate ads without feeling cluttered. If subscriptions are your thing, you'll need robust user account systems and payment processing.

The Money Models That Actually Work

There are really only a handful of proven ways to monetise mobile apps. You've got freemium models where basic features are free but premium ones cost money. Subscriptions work well for apps people use regularly. In-app purchases let users buy virtual goods or unlock content. Then there's advertising—showing other people's ads to your users.

The secret isn't picking the "best" model—it's picking the right one for your specific app and audience. A meditation app might thrive on subscriptions, whilst a mobile game could make millions from in-app purchases. Getting this choice right from the start will save you headaches later.

The Freemium Model: Why Free Can Actually Make Money

The freemium model might seem backwards at first—give away your app for free and somehow make money from it. But after working with dozens of startups over the years, I can tell you it's one of the most effective app monetisation strategies when done right. The basic idea is simple: you offer a free version of your app with limited features, then charge users to unlock premium functionality.

What makes freemium so powerful is that it removes the biggest barrier to app adoption—price. Users can try your app without any financial commitment, which means you'll get far more downloads than if you charged upfront. The trick is finding the right balance between what you give away for free and what you charge for.

Getting the Balance Right

Your free version needs to be genuinely useful—not just a glorified demo. Users should be able to accomplish real tasks and see clear value. But you also need to create natural upgrade points where users hit limitations that premium features can solve. Here's what typically works well in freemium apps:

• Storage limits (like cloud backup apps)
• Usage restrictions (number of projects, exports per month)
• Advanced features (pro editing tools, detailed analytics)
• Priority support and faster processing
• Ad removal and cleaner interface

Start with a generous free tier to build your user base, then gradually introduce premium features based on what your most engaged users actually want—not what you think they need.

The Numbers Game

Freemium is all about conversion rates. Typically, only 1-5% of free users will upgrade to premium, which means you need significant user volume to generate meaningful revenue. This makes freemium particularly suitable for apps with broad appeal and low distribution costs.

The beauty of this pricing strategy is that it creates a self-selecting customer base. Users who upgrade are already engaged with your app and understand its value, making them more likely to stick around long-term. This leads to higher customer lifetime value compared to other revenue models.

Subscription Revenue: Building Long-Term Relationships That Pay

Subscription models have become the holy grail for many startup apps—and for good reason. They provide predictable, recurring revenue that investors love and can turn your app into a proper business rather than a one-hit wonder. But here's the thing: getting people to pay monthly for your app isn't as simple as slapping a paywall on your content.

The magic happens when you create something people genuinely can't live without. Think about the apps you personally subscribe to—they probably save you time, make you more productive, or provide ongoing value that justifies the monthly cost. Your app needs to do the same.

What Makes Subscriptions Work

Successful subscription apps share common traits that keep users coming back month after month:

• Fresh content or features added regularly
• Personalised experiences that improve over time
• Clear value that users can measure
• Seamless user experience across all devices
• Fair pricing that matches the value delivered

Getting the Timing Right

Don't rush into subscriptions too early. Users need to understand your app's value before they'll commit to paying monthly. Start with a generous free trial—seven days is often too short, but 30 days might be too long. Most successful apps find their sweet spot around 14 days, giving users enough time to integrate your app into their routine without forgetting they're on a trial.

In-App Purchases: Turning Engagement Into Revenue

In-app purchases are like having a shop inside your app—users can buy extra features, characters, or items without leaving the app. I've seen this work brilliantly for games where players buy new levels or power-ups, but it's not just for games anymore. Photo editing apps sell filters, fitness apps offer premium workouts, and even productivity apps let users buy extra storage space.

The beauty of in-app purchases is that they feel natural to users. When someone's enjoying your app and hits a limit or wants something extra, they're already engaged and more likely to spend money. It's much easier to sell to someone who's already having fun than to convince them to pay upfront for something they've never tried.

Making In-App Purchases Work

The key is timing and value. You can't just throw purchase options at users straight away—they need to understand what they're buying and why it's worth it. I always tell my clients to focus on solving problems or enhancing experiences rather than creating artificial barriers.

The best in-app purchases feel like treats, not taxes

What works really well is offering consumable items (like extra lives in games) alongside permanent upgrades (like removing ads forever). This gives users choice and creates multiple revenue opportunities. Remember, not everyone will buy, but those who do often purchase multiple times if the value is there.

Advertising and Sponsorship Models: Making Money Without Charging Users

Here's something that might surprise you—some of the most successful apps I've worked on have never charged their users a single penny. They make their money through advertising and sponsorships, and when done right, this approach can be incredibly profitable. The beauty of ad-based monetisation is that it removes the biggest barrier to app adoption: asking people to pay upfront.

There are several ways to implement advertising in your app. Banner ads are the most common—those small rectangular adverts that appear at the top or bottom of your screen. They're less intrusive but also generate lower revenue per user. Interstitial ads are full-screen advertisements that appear between app activities; they pay more but can annoy users if overused. Then there's native advertising, where ads blend seamlessly into your app's content—these tend to perform best because they don't feel like traditional adverts.

Getting the Balance Right

The tricky part with advertising is finding the sweet spot between revenue generation and user experience. Show too many ads and people will delete your app faster than you can say "banner blindness." Show too few and you won't make enough money to sustain your business. Most successful apps aim for what I call the "barely noticeable" approach—ads are present but don't interfere with the core user experience.

Sponsorship Opportunities

Sponsorships work differently from traditional advertising. Instead of displaying generic ads, you partner with brands that align with your app's purpose. A fitness app might partner with a sports clothing brand, whilst a recipe app could work with kitchen equipment manufacturers. These partnerships often pay better than standard advertising because they're more targeted and valuable to the sponsor.

Hybrid Approaches: Combining Multiple Revenue Streams for Maximum Impact

I've worked with countless startups over the years, and the ones that really succeed with app monetisation don't put all their eggs in one basket. They mix things up. The most successful apps I've helped build use what we call hybrid revenue models—combining different ways to make money rather than relying on just one approach.

Think about Spotify for a moment. They use freemium (free with ads), subscription revenue (Spotify Premium), and even some advertising partnerships. That's three different revenue streams working together. When one dips, the others keep the money flowing in.

Common Hybrid Combinations That Work

From my experience, certain combinations tend to work better than others. The freemium model paired with in-app purchases is particularly effective for gaming apps—users can play for free but pay for extra lives, special characters, or power-ups. Meanwhile, productivity apps often combine subscriptions with one-time purchases for premium features.

• Freemium + In-app purchases (great for games and social apps)
• Subscription + Advertising (works well for content apps)
• One-time purchase + Premium subscriptions (perfect for productivity tools)
• Freemium + Subscription + Advertising (the triple threat approach)

Start with one revenue stream and add others gradually. Don't overwhelm your users with too many ways to spend money from day one—it can feel pushy and drive them away.

Avoiding the Pitfalls

The biggest mistake I see startups make is implementing too many revenue streams too quickly. Users get confused and frustrated when they can't figure out what's free and what costs money. Start simple, get one model working properly, then slowly introduce others based on user behaviour and feedback.

Pricing Strategies That Actually Work: What Real Data Shows About User Behaviour

After years of watching startups struggle with pricing decisions, I can tell you that most founders get this completely wrong. They either price too high and scare users away, or price too low and can't sustain their business. The real secret? Understanding what actual data tells us about how people behave when they see different price points.

Research consistently shows that users have psychological price anchors—specific price ranges they expect for different types of apps. For productivity apps, that sweet spot sits around £2.99 to £4.99. Games can push higher, sometimes reaching £9.99 for premium titles. But here's what's interesting: subscription apps perform best when they offer multiple tiers, with the middle option being the most popular choice.

The Psychology Behind Price Points

Users make purchasing decisions within seconds, not minutes. They're looking for value signals, and your pricing structure is one of the strongest signals you can send. Free trials work brilliantly for subscription models—data shows conversion rates jump by 60% when users can try before they buy.

The best performing apps test their pricing regularly. Start with market research, launch with competitive pricing, then optimise based on your actual user data—not what you think users will pay. Finding the right price point is crucial for maximising your app's revenue potential.

Conclusion

After walking through all these different app monetisation strategies, I hope you can see that there isn't one magic bullet for startup revenue. The freemium model works brilliantly for some apps but falls flat for others; subscription models build amazing long-term relationships when done right but can put users off if implemented poorly; in-app purchases turn engagement into real money but only if your users actually want what you're selling.

What I've learned from working with countless startups is that the most successful apps don't just pick one revenue model and hope for the best—they test, measure, and adapt. Your pricing strategies need to match your users' behaviour, not the other way around. Start simple with one approach, get it working properly, then consider adding others. Many of the apps we've built that generate the most revenue today use hybrid approaches, combining multiple streams once they understood their users properly.

The key is understanding your audience first, then choosing the monetisation strategy that fits naturally with how they want to use your app. Revenue models should feel like a natural part of the user experience, not an afterthought bolted on later. Get that right, and you'll have a much better chance of building something people will actually pay for.