In this post

Congrats, you developed a new app for your business. This will help your company to reach customers and offer a better experience. Besides having your customers interacting with your company anytime and anywhere, you can increase the ROI of your application by monetizing. In this How to Monetize Mobile Apps – The Essential Guide, we, at CodeFuel, will walk you through all you need to know to monetize your apps successfully.

What Is App Monetization?

It is the process of generating revenue from your app. When publishers offer free apps, they generate revenue in other ways.

According to Statista, the amount of advertising spending is growing from $234 billion in 2019 to reach $495 billion by 2024. Mobile in-app advertising revenues reached over $100 billion in 2020.  

Developers need to generate revenue from their apps, but it can be challenging to stay afloat without a solid amount of funding.

How Mobile App Advertising Works

One of the most popular ways to monetize a mobile application is by adding ads to it. Mobile app advertising allows you to make money from an app without actually charging for the app. When a user downloads your app, it will present your user with ads. Every time the ads get viewed or clicked via your app, you get paid a fee.

That works because people prefer not to pay for the apps they download. No matter how cheap the app is, if there is a free alternative that works, chances are the user will prefer it. That’s why, according to Statista, 96.7% of apps in the Google Play Store in January 2021 were free.

How Much Does it Cost to Build an App?

The cost will depend on how complex the application is. Developing an app can go from a few thousand dollars to hundreds of thousands. Highly complex applications, such as banking and finance ones can be the most expensive. Some features, like payment integration and PI use, can easily ramp up the price.

Marketing the application is another cost you should take into account. It is common to spend up to 15% of the budget on marketing.

How much money can you make from an app?

We have seen the number of apps ballooning in the last few years. But, when you look at how much money they actually make, the numbers are not so great. In fact, 90% of apps are free.

From the apps in the App Store and Google Play, not all make money, and there is a big drop from the top-performing apps to the next-in-line.

The top 200 apps on the App store make on average $82.500 a day

Those in the top 800 make $3.500 a day, which is not a bad number. However, choosing the right monetization option for your mobile app is key to getting a nice revenue.

The Mobile Apps Market Stats

From banking to gaming and dating, we use mobile apps for our everyday needs on our smartphones. In recent years, the mobile apps market has increased exponentially. Here are some statistics:

The Mobile Apps Market

From banking to gaming and dating, we use mobile apps for our everyday needs on our smartphones. In recent years, the mobile apps market has increased exponentially. Here are some statistics: 

Number of mobile app downloads worldwide in 2020    218B

Global consumer spending on mobile apps in 2019     $120B

User retention rate of mobile apps worldwide 2019     32%

Apps that are used only once in 2019    25%

Most popular mobile app monetization strategy in 2019    Subscription model

Avg consumer spending on mobile apps in the 3rd quarter 2020   $4.64/user

Number of apps available in the Google Play Store3.04M

Number of apps available in the Apple App Store 1.96

What can we learn from this?

While in recent years advertising was the most popular monetization strategy, by the end of 2019 and 2020, subscription was the most popular app monetization model. Subscription and pay monthly models work for giants like Netflix and Spotify. In the next section, we will look into these points as we explore the different app monetization strategies.

How do you monetize an app?

Companies using app monetization strategies  may choose to get paid according to different pricing models:

  • Cost-per-Click (CPC):  you get paid when a user clicks on the pop-up ad or link to go to the affiliate store.
  • Cost per action (CPA):  you get paid when a user performs an already set action, it can be clicking on the application or making a purchase.
  • Cost per view/impression (CPV):  you get paid based on the number of people that view the ad or video.
  • Cost per install (CPI): you get paid according to the number of people that download the application.

With most apps free to install, developers need to adjust their revenue model to generate cash after the user downloads the app. While coming up with your business model, you need to ensure that your app generates revenue and provides a great user experience. 

How do you get paid? There are two metrics you should know:

  • CPC: Cost per click. It means the amount the advertiser pays for each click on their ads. 
  • CPM: Cost per mille (thousand impressions). With this system, the advertisers set the price they will pay per 1000 ad impressions. As a developer or publisher, you’ll get paid every time a CPM ad is served to your app, and a user views it.

In the Google Play Store, CPM ads and CPC ads compete against each other. Google displays the ads that earn more revenue for you.

7 Top Strategies & Models to Monetize Mobile Apps

When you plan to launch an app, monetization needs to be more than an afterthought. You should plan how your app will make money from the beginning of the project. There are many app monetization strategies applicable according to the type of app and audience. Some companies focus on one approach, while others use a combination of methods. Let’s explore:

1. In-App Advertising

This is the most common monetization model for mobile apps. The term in-app advertising refers to ads when the app is in use. It seems simple, but each application implements in-app advertising in a different way. Like with every monetization strategy, it has pros and cons. On the one hand, it is easy to implement. But on the other side, too many ads can annoy the users.

How does in-app advertising work?

In-app adverts are ads that appear when a person uses the app. It is one of the easiest ways to make money from a mobile app and it only requires the developers to sign the app with an ad network. The ad network then displays relevant ads that show when a user is using the application. Unlike mobile web ads, in-app advertisements appear within a mobile app. They can be banners, video ads, or display ads. Because of the large amount of time people spend on their phones, using their preferred apps, in-app advertising has a higher response among users.

How do you get paid?

  • Per impression (CPV): every time the ad is displayed to the user. According to Google, the ad needs to show for a second or display at least one pixel to count as an impression. Usually the impressions are counted in increments of a thousand.
  • Per click (CPC): every time a user clicks in the ad, you get paid.
  • Per install (CPI): if you display ads for complementary applications, and the user installs the advertised app, you get paid.

What types of ads can you display: most common Ad Formats?

  • Banner Ads: they are usually so small on a mobile screen that they don’t provide a lot of value for the advertiser. You can find these common ads at the top or bottom of the application screen. While they are very popular, the small screen of a phone makes them hard to view. So, banner ads often get a lower conversion on mobile.
  • Native Ads: These types of ads  blend seamlessly into the app enhancing the experience instead of interrupting. Therefore, they have a higher engagement rate. Native ads are designed to appear as part of the app while promoting a product or other application. The advantage of native ads is that they get more engagement than other types of ads.
  • Affiliate Ads: these generate commission from other applications by advertising them through your app.
  • Interstitial: These ads appear at set intervals, during the usage of the application.They are often served at the end of a section or flow on a game. Also, when the app is loading. Often they appear in the form of full-screen pop-ups, these ads appear at specific times. For instance, when a user opens the app or finishes a particular stage. Users can close it in the top corner.
  • In-app video: Videos engage, entertain and provide extra information that doesn’t fit in a static ad. However, sometimes they can disrupt the experience of the app. Gaming apps often use rewards to get the user to watch the video. For instance, users can unlock additional levels or get the game currency.

Pros

It increases the application’s income via click-through-rate
You can measure user engagement via your apps.
Targeted in-app advertising is better for reaching your audience.

Cons

When the ads are not relevant, they can annoy users and hurt your brand.
This model works best if your app has a large base of users.
It can be done in an interruptive way, disturbing the user experience.

2. Freemium – In-App Purchases

This strategy allows the user to download the app for free, but some premium features are behind a paywall. The users can try the app in the basic format, but if they want multiplayer, for example, they need to purchase the premium version. This approach can increase the audience reach and the number of downloads. Gamers can buy accessories for their characters, resources, or premium packages.

2.1. Freemium

Freemium apps usually are free to download but have paid or premium features. Users can access these paid features from inside the app.

Users can try the application for free with basic features, and if they like it, get full access to all features by purchasing a subscription. This method allows application publishers to get new users easily. This strategy is common for educational, wellness, or sports apps that users can top up.

What are the advantages and disadvantages of freemiums?

Pros

No interruption of the user experience with ads.
You can combine this model with the other approaches
It requires low maintenance
It is widely used because it gives users a free taste.

Cons

There can be fluctuations in the income as a number of users may not want to go forward with the premium features.
Since the application is free, they may combine it with other methods to make money.

2.2. In-app purchases

This method enables publishers to earn money by providing special content or features users can buy from within the application. Publishers can then sell virtual items from the app. Gaming companies like Angry Birds or Clash of Clans sell upgrade packages, gaming currency, and additional features.

According to a report, In-app purchase is one of the most profitable methods for app publishers, accounting for almost half of mobile app earnings

Pros

It can generate a high profit even when your application is free.
This model works best for gaming apps.
This can open the way to provide advanced services through your app

Cons

Too many in-app offers can annoy users and get bad reviews.
User expectations are higher when using an app with in-app purchases.
Designing and developing an app with in-app purchases can be more expensive than simple apps.

3. One-time payment

In this model, developers and app publishers charge users for downloading the product. Sometimes publishers combine this method with a free trial or ads. This strategy is not that popular since most users don’t want to pay to download applications. 

You should take into account that in order to get users to pay per download your app needs to offer a high value, something that they cannot get from anywhere. Niche apps with premium features work best for this method.

Pros

Can increase your revenue right away.
You can combine it with a free trial period.
It can work best with apps that offer a high value.

Cons

It may attract fewer users since a paid app has to compete with many free apps in the app store.
Not suitable for all types of apps.

4. Subscription

Subscriptions are very popular as a way to generate app revenue. Many applications choose to go the subscription route since it is a way to have recurring income. This model still lets the user download the app for free. They get access to all the features of the app for a trial period. App publishers can choose to offer the app for free for a limited amount of time and then charge a subscription fee. Once this trial is over, they need to subscribe to keep using the app.

This model is used by Netflix, Amazon Prime, almost all VPNs, and many other categories.Other publishers will offer the app for a subscription right away, but it is best to give some trial period. Subscriptions can be monthly or annually and they allow users to access all the content in the app without restrictions.

Pros

It is a good model for applications that provide recurring services, like health monitoring apps.
Generates a more engaged audience to use the functionality of the app.
It generates a reliable income.

Cons

You need to continuously innovate the app content to keep your users engaged.
If you currently offer your app for a fixed price, changing your payment terms to a monthly charge can annoy users.

5. Crowdfunding

Another way to monetize free apps is via crowdfunding. This method is becoming quickly popular with startups. They can share their projects on platforms like Patreon, Indiegogo, or Kickstarter. There, potential users can collaborate to fund the development and marketing of the application.

There is a caveat, though, in crowdfunding platforms, gaming apps are not very popular. Non-gaming apps raise more funds compared to mobile games.

Let’s check what are the advantages and disadvantages of crowdfunding:

Pros

Gives the project exposure
Access to multiple investors
You can get pre-funding

Cons

The fundraising can take longer than expected.
There are no guarantees that you will raise the money you need.
You need to invest in promoting the project with videos and prototypes before you can ask for any money.

6. Sponsorship

It is not a very common method, but it can bring a nice income. App publishers can look for companies that will sponsor the app. A good example is the Marriot’s credit card sponsoring the Gayot.com mobile application that reviews restaurants. There, the Marriott chain can target the audience of Gayot, people interested in professional restaurant reviews.

Now, let’s take a look at the pros and cons of using sponsorship for your app.

Pros

You can offer advertising space in your app for brands that target the same audience.
Brands can increase their exposure to the app.
There is no disruption of the user experience.

Cons

To get sponsors your brand needs to be strong, with sophisticated ads and users.
It is important to use performance tracking so you can measure success.

7. Referral or Affiliate marketing

Can you apply affiliate marketing for a model application? Sure, this strategy allows the app to deliver value to the end-user with coupons, season deals of other brands. Also, this strategy involves promoting another company’s product or service from within the app.

App publishers can promote affiliate products or services and get paid, since a  commission-based sales method involves reselling services through affiliate programs in the app when a user clicks on the link or installs the promoted app. App publishers often use pop-up ads to carry the affiliate link.

Pros

It is a great way to promote the application or product inside the application.
Referral customers tend to have a higher intent of purchase.

Cons

It can be time-consuming to set up a profitable referral program.
You have to be careful with the referral links you install in your app.
Tracking a referral campaign can be complicated.
You cannot carry multiple referral programs.

More Monetization Strategies We Recommend

Strategies

Upgrade/Pay to Remove Ads
Smart Installers
Bundle Deals
Search Monetization
Pay-to-Download Apps (or Paid Apps)
Merchandise
Transaction fees

Definitions

In this model, ads are served unless the user pays the subscription to remove them. Spotify and YouTube music use this model.
Ensure your users install the app seamlessly by using a smart installer and displaying third-party ads. Keep the offers related to what our app offers to give more value to users.
Combining several utilities or extensions can be a way to give more value to your audience and increase your application’s exposure. Bundles generally attract users to perceive that they are getting a good deal, and they are more likely to buy the app.
A search monetization strategy, such as CodeFuel, earns money by adding search capabilities to your app. Every time a user performs a search from a third-party search box, your app pulls the results from other services, and your app gets paid.
In this model, developers and software publishers simply charge users for downloading the product. Publishers usually combine this model with a freemium trial period or ads. This is one of the least popular strategies because users now don’t want to pay for an app when there are many free others.
You can use your apps as a sales channel for your own goods or services. For example, a restaurant can use an app to sell delivery orders. An online store can use a mobile app to extend its reach, offer deals and special sales.
Your app can be a platform to sell other people’s goods and services. Uber and Airbnb use this model where they get a commission fee for their services.

Difference between Free Apps vs. Paid Apps

Maybe you are not sure if you should offer your app via paid download or launch it for free with other monetization options. Will your choice will depend on your app type and audience, here are some statistics and points to consider:

Free apps are considered more popular

In the Google Play Store, as of March 2021, 96.7% of apps were free.

So, what are the reasons to choose to develop a paid vs a free app?

Paid vs Free Apps

Paid Apps

Has fewer downloads so it should be more targeted.
The user has higher expectations since they are paying for the app.
These apps need to provide very high quality in design, usability and give value. Because of that, the design and development can be more expensive.
The monetization options are limited to the payment options, like monthly or yearly fees.

Free Apps

Provide more exposure because of attracting more users.
They are less expensive to build because most of them don’t offer complex features.
They can use several monetization options and even combine them.

Distribution of Free and Paid Android Apps as of June 2022

Distribution of Free and Paid Android Apps as of June 2022

Source: Statista

Stats and Figures About App Monetization

Here are the top 5 stats and figures you must know about app monetization in 2021.

Why Build a Mobile App?

Consumers demand convenience and simplicity. Companies looking for ways to engage their users are adapting their strategy to reach their users where they are, on their phones.

Here are some mind-blowing statistics on mobile app usage that prove that making an app is a great marketing strategy:

1. There were 218 billion apps downloaded by the end of 2020, according to Statista.

Mobile App Usage Statistics

2. 55% of website traffic worldwide comes from mobile as of the first quarter of 2021.

3. Mobile app revenues can reach $935 billion by 2023.

Mobile App Revenues

A mobile app can give your users a convenient way to use your services. Companies can have several reasons to build a mobile app:

  • To generate revenue
  • To save money 
  • Because of FOMO

Reason to build an app

Source

The main reasons companies would like to build an app are:

  • Increase sales: many apps, for instance, e-commerce apps, can generate direct profits.
  • Improve customer experience: a mobile app can enhance the communication between users and your company, improving customer service and the user experience.
  • Have a competitive advantage: mobile apps can optimize your operations, saving costs.

It is true that building an app enhances the relationship with your customers, but ultimately, the main effect of adding a mobile app to your strategy is to improve your revenue. How do apps improve your ROI? It’s easy to understand, considering your customers are browsing products on their mobiles more than via a computer.

Let’s see the impact of mobile apps on user buying habits:

4. Half of the customers prefer to shop from their mobile phones

By the end of 2021 it is expected that 53% of all e-commerce will be m-commerce.

E-Commerce Vs. M-Commerce

5. App conversions are 3x higher than mobile site conversion rates

According to a report by Criteo, Shopping apps generate conversion rates more than 3 times higher than on the mobile web.

6. The number of smartphone subscriptions worldwide is over 6 billion.

Number of smartphone subscriptions worldwide

7. Mobile app popular business models

Mobile app popular business models

8. The biggest app stores in the world:

Google Play  Apple App Store
2.87 million apps 1.96 million apps

9. Global consumer spending

Google Play  Apple App Store
$1.3 billion $19 billion

10. Average app price

Google Play  Apple App Store
Between $1 and $2 $1.02

Ways to monetize an app: How to Monetize Your Mobile App by Increasing Engagement

1. Search Ads

Search ads can catch your audience’s attention about your app and remind existing users to use your application. These ads appear whenever a user searches similar keywords or categories. Moreover, you can create ads in the Google Ad Network that only appear to users who already have your app.

2. Social Media Ads

Promote your app on social media through ads that link directly from sponsored Facebook posts into your app. You can do this on Facebook and Twitter.

3. Push Notifications

Catch the attention of your audience when they are not using your app. For example, have your app send notifications based on location triggers. Or send your users regular reminders with valuable and relevant content from the app.

4. Recommendation engines

Use your app with a recommendation engine to suggest related products and services that the user may want. The recommendation engine algorithm can determine exactly which offers to promote, and you profit from the clicks and referrals.

5. Promote cross-platform

You can list your application not only in Google Play and Apple Store; there are other directories and app stores outside the US that can also offer revenue. Who knows? Your app might be a success in Europe.

How To Measure App Success

Companies generally measure an app’s success by tracking general performance indicators like the number of mobile downloads, the number of subscriptions, the retention rate, active users, and so on. Yet, the number of downloads is not the only metric to monitor your app’s success. After all, you need to know if your app is generating revenue.

App Monetization Metrics You Should Know (Recap)

Average revenue per user (ARPU) Average amount of money generated per person multiplied by the total customer base
Customer acquisition cost (CAC) The cost of acquiring a customer. Includes labor, advertising, and other costs.
Customer Lifetime Value (CLC) Measures the net profit generated by every customer.
Cost per Mille In this agreement, the publisher charges advertisers a flat rate for every 1000 views of an ad.
Cost per Click (CPC) You get paid when a user clicks or taps on an ad.
Cost per Action (CPA) Only pays the developers if the user makes a purchase.
Cost per View (CPV) This is related to video ads. It pays you every time a user watches most of a video in your app.
Cost per Install (CPI) You get paid every time a user installs an app.

Best Practices To Improve App Monetization

When monetizing our app, there are some tips that can improve the strategies you implement: 

  • Measure user engagement – user engagement rate is one of the best metrics you can use to track your app’s chances of getting monetized. If user engagement is high, it means users are satisfied. Also, the more time the user spends in the app, the more likely they will purchase.
  • Create loyalty with perks and discounts – reward loyal customers with discounts and perks. Some users may not feel comfortable with in-app purchases, but when offered a discount, may convert them.
  • Build a community –  some apps like mobile games thrive with communities. Players are more engaged and tend to make more in-app purchases when belonging to a community. But this practice doesn’t work only with gaming apps, cooking apps.

Tips To Build an App That Makes Money

Building an app and choosing a monetization method doesn’t guarantee that you will make money from it. In fact, many applications in the Play Store don’t make any revenue. Here are some tips to avoid common mistakes when building and promoting an application.

Grow your audience to grow your income

To have success with your app, start by growing your user base. After all, the more users your app has, the more chances your income will grow.

The more people know about your app, the more they want to download and use it. Therefore, promoting your application is critical even before you launch the application. To be successful in promoting your app, there are a few key steps to consider:

Build Community by:

1. Target your audience carefully: invest time and effort in finding who is the audience for your app and what problem your app solves. The more you know your audience, the better you can target and adjust your application to their needs.

2. Release a beta version: this will give you the opportunity to interact with your potential customers and make changes to your app before the launch.

3. Engage social media: use social media to spread the news about your application. Ask questions to your potential users, promote the app, plan a giveaway or perks for sharing the news.

Increase your user engagement.

In our previous article on app monetization, we talked about the importance of enhancing user engagement. Give returning users discounts, freebies, special features, or perks to increase their loyalty.

When promoting your app on social media, use ads that link from sponsored social media posts (like Facebook posts) to your application. Also, don’t forget to promote your application on any platform your potential users may be. This involves listing both in Google Play and Apple Store but also in other app stores in markets like India, Europe, or even China.

Top Companies to Make Money From App Monetization

When you build an application, you want to be where the money is. Therefore, choosing a profitable niche is key. The goal is to choose a market that is established and has longevity, not necessarily trendy markets. Here is our list of the top 5 niches to make the most revenue:

1. Investment /Acorns Invest

Investment /Acorns Invest

Image source

Managing your finances is one of the most common problems humans have. Understanding investments may appear like unintelligible jargon for non-finance professionals. Therefore, investment and financial management apps are very popular in helping people take control of their budgets and investments.

Acorns Invest is a very popular application for beginners. You only need $5 to start investing, fees are low ($3/month  for individuals and $5/month for families). It also features diversified portfolios that include ETFs managed by top investment firms.

2. On-demand Service / Booking.com/

On-demand service

Image source

On-demand service applications are apps that collect several activities into a single app. For instance, instead of booking each hotel on its one application, you have a hotel booking app that provides information on thousands of hotels worldwide. The same happens with other services, such as bill payments, transportation services, or even grocery shopping.

Booking.com for example, has a phone application you can use to securely book stays at over 1,400,000 hotels and holiday properties, with instant confirmation, deals and reviews from real users.

3. Fitness and Health / Nike Training Club

Make money from Fitness and Health related apps

Image source

This is one of the top online business niches, so it is not surprising that the popularity extends to applications. People around the world are increasingly more concerned with health and fitness.

Achievements that were once reserved for professional athletes (like running 5 or 10 miles run) are now possible thanks to apps that train virtually everybody. With the appearance of training wearables, these types of health monitoring apps, that track from the number of steps to the amount of oxygen in the blood, can be on anybody’s wrist.

One of the most popular applications is the Nike Training Club app. It offers access to more than 200 free workouts and specialized training programmes, including yoga, running and bodyweight sessions.

4. Online Shopping / Amazon Shopping

Online shopping

Image source

Online shopping is steadily transforming into mobile shopping. Many users prefer to purchase from their phones, through mobile e-commerce platforms.

Companies are also choosing to invest in mobile sales since they are less expensive than opening a new store. Also, the company can expand its reach through an app that can work globally.

Amazon Shopping has been leading the shopping apps market for the last years, closely followed by Walmart Shopping. The Amazon Shopping app offers app-only benefits and deals with real-time tracking.

5. Gaming / Raid: Shadow Legends

Gaming applications

Image source

Gaming is one of the most popular uses for mobile apps (and phones). Not only for young users anymore, but people of all ages also search in the Play Store for games to play during downtime. There are games for every taste. From people looking for entertainment to gamified educational apps (like Duolingo, the language learning app).

Choosing the best gaming app is a lost battle, as users preferences vary greatly. However, if the number of players is an indication, Shadow Legends is one of the leaders of the role-play-games. It features great 3D graphics and effects to accompany every campaign.

How to avoid common app monetization mistakes

Choose the monetization method before developing the app

If you don’t do so, you may end up having to rewrite the app because the ad format is not available on the chosen platform. If you want to build both Android and iOS versions, take the time and choose the most appropriate monetization methods for each version.

Heed the Stats

Analytics is like gold for app publishers. You can have all the information about how many people are installing your app, who is actually using it, and the demographic details of your actual users. This gives you a clear indication of where to direct your monetization efforts.

Price it right

Sometimes developers are disconnected from market rates and they’ll follow the need to cover costs and make a profit when pricing. This can lead to apps that are too expensive (on in-app purchases or freemium models). The opposite is also true, with apps so low priced that they don’t bring enough income. Take the time to check market rates and how your competitors are monetizing their applications.

What Does the Future Hold for Monetizing and Promoting Apps?

There is no doubt that the global mobile market is growing. According to Allied Market Research, it is expected to grow over $400 billion by 2026. From the report, we can identify the three biggest trends for app monetization for 2021 and beyond:

1. Targeted advertising: personalization is one of the biggest trends of the last years. Relevant ads provide the highest engagement. Therefore, most mobile apps use AI algorithms and services that help them show relevant advertising.

2. Subscription is becoming the new normal. Netflix, Prime Video, and gaming apps are leading the trend with the subscription model and upgrades.

3. Virtual merchandise: In-app purchases of upgrades and packages in mobile games.

How CodeFuel Helps Companies to Monetize their Mobile Apps

CodeFuel is a complete solution that lets you leverage search, ads, shopping, and news to monetize your mobile app & offers a complete solution to monetize applications. By adding user intent search, you can enhance mobile applications and increase revenue.

You can find typical monetization features like working with several ad networks to provide optimal in-app advertising. You can also leverage different types of ads and even receive news on how to maximize your app revenue potential.

Ready to monetize your mobile app & increase your app revenue? Learn more about how CodeFuel can help.

FAQs

  • 1. Should every business have an app?

    Building an app can feel like the ultimate solution for generating revenue and creating a great user experience. While the figures of app revenue may be tempting, not every business is suitable to have an app.

    The golden rule should be: if your app solves a problem for your audience, then build it, if not, don’t.

    There are many apps out there that are attempting to solve problems not relevant to the company’s audience. For an app to be really useful for your users, it needs to meet the needs and give value. If your customers don’t find it practical and useful they won’t use the application for long.

  • 2. How much money can an app make per ad?

    Most app publishers using an advertising model follow the cost-per-click (CPC) model. When a user clicks on an ad, the app publisher gets paid. With in-app advertising, the average revenue per impression per banner is just $0.10. Interstitial ads pay better, at $1-$3. Video ads are the ones that pay most, at $5 to $10 per view.

  • 3. How much money can you make with a free app?

    Free apps can monetize with in-app advertising, getting paid per display, per click, or per install. The range of revenue can go from a few thousand dollars a month to $50,000 or more per day.

  • 4. How do you monetize your mobile app?

    Use the strategies mentioned in this article, like in-app purchases, freemium/premium versions, in-app advertising, and more.

  • 5. How do I monetize my app with ads?

    You can use affiliate ads that allow your app to generate commission from other apps by advertising them in your app. You can also display relevant native ads by using search or shopping ads engines like CodeFuel.

  • 6. How do I monetize apps without ads?

    You can offer premium paid features or a paid version of your app. Subscriptions and app referral programs also allow you to make money without apps.

In-App Purchases Apps
  • In-App Advertising

In-app adverts are ads that appear when a person uses the app. It seems simple, but each application implements in-app advertising in a different way. Like with every monetization strategy, it has pros and cons. On the one hand, it is easy to implement. But on the other side, too many ads can annoy the users. 

How does in-app advertising work? Unlike mobile web ads, in-app advertisements appear within a mobile app. They can be banners, video ads, or display ads. Because of the large amount of time people spend on their phones, using their preferred apps, in-app advertising has a higher response among users. 

What are the most common Ad Formats? 

Banner Ads: they are usually so small on a mobile screen that they don’t provide a lot of value for the advertiser.

Mobile Application Banner Ads
    • Interstitial Ads: they are often served at the end of a section or flow on a game. Also, when the app is loading. 
    • Native Ads: these types of ads integrate seamlessly into the app. Therefore, they have a higher engagement rate. 
    • Affiliate Ads: these generate commission from other applications by advertising them through your app. 
  • Upgrade to Remove Ads

In this model, ads are served unless the user pays the subscription to remove them. Spotify and YouTube music use this model.

Spotify ad-free music
  • Smart Installers

Ensuring your users install the app seamlessly is part of providing a great user experience. You can also earn some revenue by using a smart installer and display third-party ads. Keep the offers related to what our app offers to give more value to users.   

  • Bundle Deals

Combining several utilities or extensions can be a way to give more value to your audience and increase your application’s exposure. Bundles generally attract users to perceive that they are getting a good deal, and they are more likely to buy the app.  

  • Search Monetization

A search monetization strategy, such as CodeFuel, earns money by adding search capabilities to your app. Every time a user performs a search from a third-party search box, your app pulls the results from other services, and your app gets paid. 

  • Pay-to-Download Apps (or Paid Apps)

In this model, developers and software publishers simply charge users for downloading the product. Publishers usually combine this model with a freemium trial period or ads. This is one of the least popular strategies because users now don’t want to pay for an app when there are many free others. 

  • Affiliate marketing

Can you apply affiliate marketing for a model application? Sure, this strategy allows the app to deliver value to the end-user with coupons, season deals of other brands. This commission-based sales method involves reselling services through affiliate programs in the app. 

  • Merchandise

You can use your apps as a sales channel for your own goods or services. For example, a restaurant can use an app to sell delivery orders. An online store can use a mobile app to extend its reach, offer deals and special sales.

Shein App Merchandise
  • Transaction fees

Your app can be a platform to sell other people’s goods and services. Uber and Airbnb use this model where they get a commission fee for their services. 

  • Freemium/ Subscription service

Subscriptions are very popular as a way to generate app revenue. This model still lets the user download the app for free. They get access to all the features of the app for a trial period. Once this trial is over, they need to subscribe to keep using the app. This model is used by Netflix, Amazon Prime, almost all VPNs, and many other categories.

Best Practices to Improve App Monetization

When monetizing our app, there are some tips that can improve the strategies you implement: 

  • Measure user engagement – user engagement rate is one of the best metrics you can use to track your app’s chances of getting monetized. If user engagement is high, it means users are satisfied. Also, the more time the user spends in the app, the more likely they will purchase. 
  • Create loyalty with perks and discounts – reward loyal customers with discounts and perks. Some users may not feel comfortable with in-app purchases, but when offered a discount, may convert them. 
  • Build a community –  some apps like mobile games thrive with communities. Players are more engaged and tend to make more in-app purchases when belonging to a community. But this practice doesn’t work only with gaming apps, cooking apps, 

How to Monetize Your Mobile App by Increasing Engagement

1. Search Ads

Search ads can catch your audience’s attention about your app and remind existing users to use your application. These ads appear whenever a user searches similar keywords or categories. Moreover, you can create ads in the Google Ad Network that only appear to users who already have your app. 

2. Social Media Ads

Promote your app on social media through ads that link directly from sponsored Facebook posts into your app. You can do this on Facebook and Twitter. 

3. Push Notifications

Catch the attention of your audience when they are not using your app. For example, have your app send notifications based on location triggers. Or send your users regular reminders with valuable and relevant content from the app. 

4. Recommendation engines

Use your app with a recommendation engine to suggest related products and services that the user may want. The recommendation engine algorithm can determine exactly which offers to promote, and you profit from the clicks and referrals. 

5. Promote cross-platform 

You can list your application not only in Google Play and Apple Store; there are other directories and app stores outside the US that can also offer revenue. Who knows? Your app might be a success in Europe. 

How to measure app success

Companies generally measure an app’s success by tracking general performance indicators like the number of mobile downloads, the number of subscriptions, the retention rate, active users, and so on. Yet, the number of downloads is not the only metric to monitor your app’s success. After all, you need to know if your app is generating revenue. 

App Monetization Metrics You Should Know

Average revenue per user (ARPU) Average amount of money generated per person multiplied by the total customer base
Customer acquisition cost (CAC) The cost of acquiring a customer. Includes labor, advertising, and other costs. 
Customer Lifetime Value (CLC) Measures the net profit generated by every customer. 
Cost per Mille In this agreement, the publisher charges advertisers a flat rate for every 1000 views of an ad. 
Cost per Click You get paid when a user clicks or taps on an ad. 
Cost per Action Only pays the developers if the user makes a purchase. 
Cost per View This is related to video ads. It pays you every time a user watches most of a video in your app. 
Cost per Install You get paid every time a user installs an app. 

Stats and Figures About App Monetization

Here are the top 5 stats and figures you must know about app monetization in 2022

  • Distribution of free and paid Android apps in the Google Play Store as of January 2021
Statistic: Distribution of free and paid Android apps in the Google Play Store as of March 2021 | Statista
Find more statistics at Statista

Mobile app popular business models

Popular Mobile App Business Model
  • The biggest app stores in the world:

Google Play  Apple App Store
2.87 million apps 1.96 million apps
  • Global consumer spending

Google Play  Apple App Store
$1.3 billion $19 billion

Average app price

Google Play  Apple App Store
Between $1 and $2  $1.02


What can we learn from them?

Free downloading is still the preferred way for users to try an app. Most apps in the app stores are free, which means that developers need to find other monetization options. From them, subscription models are the most successful. Even when you charge for your app, keep it low priced, as most applications are under $5 in the app stores. 

What Does the Future Hold for Monetizing and Promoting Apps?

There is no doubt that the global mobile market is growing. According to Allied Market Research, it is expected to grow over $400 billion by 2026. From the report, we can identify the three biggest trends for app monetization for 2022 and beyond:

  1. Targeted advertising: personalization is one of the biggest trends of the last years. Relevant ads provide the highest engagement. Therefore, most mobile apps use AI algorithms and services that help them show relevant advertising
  2. Subscription is becoming the new normal. Netflix, Prime Video, and gaming apps are leading the trend with the subscription model and upgrades. 
  3. Virtual merchandise: In-app purchases of upgrades and packages in mobile games. 

How CodeFuel Helps Companies to Monetize their Mobile Apps

CodeFuel is a complete solution that lets you leverage search, ads, shopping, and news to monetize your mobile app. By adding user intent search, you can enhance mobile applications and increase revenue. 

Ready to increase your app revenue? Learn more about how CodeFuel can help

FAQs About App Monetization

How do you monetize your mobile app?

Use the strategies mentioned in this article, like in-app purchases, freemium/premium versions, in-app advertising, and more. 

How do I monetize my app with ads?

You can use affiliate ads that allow your app to generate commission from other apps by advertising them in your app. You can also display relevant native ads by using search or shopping ads engines like CodeFuel. 

How do I monetize apps without ads? 

You can offer premium paid features or a paid version of your app. Subscriptions and app referral programs also allow you to make money without apps,