Every day, countless brilliant mobile app ideas wither away before they have the chance to fully blossom.
Wondering, why?
There are several reasons for this (competition, poor tech, poor marketing, etc.), but the biggest reason is a lack of a ‘monetization strategy.’
App monetization is the process of making money from apps. It involves converting your app into a steady revenue source using several tactics.
The eye-opener is that around 99.5% of mobile apps fail to generate sustainable revenue due to poor monetization strategy.
Every app aims to make money. Whether you’re doing it alone (DIY), or hiring a mobile app development company, it takes time, effort, and money to build your app. You, therefore, expect to make some money from your app. Unfortunately, the majority of apps suffer from monetization woes. It comes down to how you generate steady revenue without alienating your users. This challenge is ignored by most developers, and they concentrate on making their app function better, perform faster, and have a better interface. This leads to financial failure later on.
To avoid such risks, you must have a monetization strategy. Your app must have a clear route to profitability – whether you choose for subscription, ads, or a freemium model.
The good part?
There are so many monetization options available out there! You just need to figure out where to start.
And that’s where the blog comes in!
Here are 5 of the best app monetization strategies every app creator must follow in 2025.
Pen them down!
5 App Monetization Strategies 2025
Mobile app monetization strategies comprise different methods to generate revenue. Some of the common approaches are in-app purchases, subscription models, and freemium structures.
Let us discuss the strategies in detail.
1. In-App Advertising
This comprises ads that users see when they use your apps. Video ads, banner ads, or native ads are some type of in-app ads that get displayed inside your app. This is a way of placing ads such that it doesn’t disrupt the user’s experience, but instead improves it. App developers use non-disruptive and relevant ad content that keeps users interested while making money.
Statistics show that in-app purchases account for 48.2% of mobile app earnings. Further, this market is expected to grow to a whopping $280 billion by 2025, which proves their impact. With an SDK, you just add it to your app, and it’ll start targeting ads to your users automatically.
Pros:
- Higher engagement rates – Showing relevant apps helps draw the attention of your users while also motivating them to take action. That leads to higher click-through rates and higher revenue potential.
- Multiple revenue streams – App developers can take advantage of many revenue streams including video ads, banner ads, interstitial ads, and even in-app purchases to be able to optimize income.
- Real-time analytics – They let you see real-time analytics and measure ad performance and user behavior. This data can then be used to further refine your strategies to generate more revenue.
Cons:
- Ad blindness – It’s possible that the more ads are shown, the more likely it is for users to reach what’s known as ‘ad blindness,’ which occurs when users don’t pay attention to ads. If this continues, it can result in lower click-through rates and lower revenue.
- Competitors’ Promotions – The apps of your competitors might be displayed in your ad, making your users click and download it.
- Third-party dependencies – In-app ads rely on ad networks, which means your revenue depends on their policies and performances. Any changes in ad formats, rules, or rates can directly influence your earnings.
2. Freemium Subscriptions
This is one of the most actively used application monetization techniques in the present. Here, the app creators provide a free version of the app and allow in-app purchase options for the premium features.
This approach allows a wide range of users to access the app’s key functionalities for free.
Users who want to enhance their app experience can choose to purchase premium features. This creates a flexible revenue stream for app developers. This app monetization model brings about a balance between providing value to free users and offering attractive, premium features to those who are willing to buy them.
Spotify and YouTube are the best examples of a freemium monetization model. These offer limited access to engage users and entice them with an ad-free experience.
Pros:
- Scalable – Allows apps to scale up as the user grows without hefty expenses on marketing and sales campaigns.
- Pre-purchase trial – Users can make informed decisions to buy the premium version after using the app thoroughly.
- Broader user base – Enables app developers to earn from users who are otherwise not willing to use paid apps.
Cons:
- Hurts User Experience – Annoys users by displaying unwanted and upsell ads, hurting their app experience.
- Limited Conversions – Many users prefer using the free version, which makes converting them into paid subscribers difficult for app creators. This can limit revenue growth.
- High user expectations – The user expects regular updates and new features in both free and premium versions. This increases developmental costs and pressure on the business.
3. Subscription-based Model
It is also known as the premium subscription strategy — where users are willing to pay a certain amount periodically (monthly or annually) for better features, content, or services of an app. This revenue model is the most sustainable for app developers because the users are forced to use the paid app.
Using this strategy, app developers can ensure a steady and reliable income. Users enjoy access to ongoing content and improved app security, benefitting both parties.
Pros:
- Steady Revenue Stream – Developers can expect a consistent revenue flow.
- Ensured Longevity – this model ensures that the app remains usable and accessible for the users.
Cons:
- Expensive – This can be expensive for users, particularly if they aren’t a regular user of the app. This can decline in app traffic.
4. In-App Purchases
This model allows users to purchase services, products, premium features, and content. This is the best model for improving user engagement and satisfaction. That is because users can customize their app experience based on their individual preferences.
The app developers assess users’ behavior and accordingly present them with app features, content, or other enticing items for users to make a purchase. In-app purchases are widely used in various app categories, from gaming to productivity, and contribute to the app’s success.
Types of In-app Purchases
- Consumables: Temporary one-time enhancements such as bonus health, currency, or power-ups.
- Non-consumables: Permanent access such as unlocking hidden levels, bonus characters, or cosmetic items.
- Auto-Renewing Subscriptions: Ongoing premium access.
Pros:
- Flexibility – Allows developers to offer a wide range of features and content for users to buy.
- Convenience – Users can make purchases without having to leave the app (in-app checkout).
- Effectiveness – Considered the second most effective monetization strategy.
Cons:
- May Damage Brand Image – Risk of users not liking the product, and leaving negative reviews and comments.
5. Affiliate Marketing
With affiliate marketing, apps get commissions by selling or promoting external products or services. For this, developers integrate unique affiliate links or codes within the app and if a user buys something via that link, they get a percentage of the total sale.
App monetization solutions that benefit both parties are a huge part of this performance-based model. App developers make money (revenue) by completing successful referrals, while affiliate partners are also exposed to more people and can increase business. This aligns user interest with external offerings and enables a dynamic revenue stream generated from collaborative marketing efforts.
Pros:
- Free For Users – Used to generate revenue from an app without having to charge for downloads or in-app purchases.
- Build brand relationships – Helps promote products of other brands aligned to your niche, promoting brand relationships.
Cons:
- Risks brand trust – Affiliates can promote an app without reflecting on the app’s quality or user experience.
- Time-consuming – This can be time-consuming as affiliates need to be constantly hired and managed.
- High competition – Brands compete for affiliates who can promote their app effectively.
The Final Words
There are plenty of other app monetization strategies as well including Crowdfunding, Sponsorship Ads, Licensing, Email, and SMS marketing. This depends on your individual choice, what the app is for, and who it is targeted to. Do not wait for the perfect plan’ consider these factors and start exploring your options. We hope these 5 monetization strategies will help your app sail smoothly through the tough competition.
