How To Generate Money on Mobile Apps

How To Generate Money on Mobile Apps

Generally speaking, the number of mobile applications is growing rapidly, with approximately 100,000 new mobile applications published every month, and 1 million already accessible. To further exacerbate issues, the competition amongst app creators is more cutthroat than ever before. However, one thing remains unchanged; applications that grow in popularity always generate enormous revenue.


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This competitiveness could suggest that the mobile application market is not a winner-take-all market after all, but there will always be a piece of the pie for some daring souls. So, the question is, how do you make money from your app? How do you ensure that the hours and time you’ve put into an app bear fruition? This article aims to address these questions, from a purely business standpoint. Because in the end, making money is a critical motivation for any app development endeavor.

What Is Mobile App Monetization?

During the first half of 2020, the Global app eco-system yielded an estimated $50 billion from Google’s and Apple’s App Stores. Mind-boggling, right? A large portion of this money went to app creators and developers through monetization.

Monetization is a pivotal part of app development, as it enables app owners to earn an income while fulfilling their users’ needs and furnishing them with a great user experience.

In summary, app monetization is the process of exploiting an application’s user base and converting their actions and engagement into revenue. That’s as basic as it gets. Monetization strategies virtually ensure a return on investment and drive profitability.

Which Mobile Apps Make Money?

In 2020, users downloaded 218 billion mobile apps to their smartphones, a significant boost from 140.7 billion application downloads in 2016. That growth statistic is mainly centered around four specific categories that produce the highest income in the mobile domain.

  1. Entertainment and Digital Services
  2. Education
  3. Finance and Business
  4. Lifestyle

Proven Monetization Strategies to Make Money on Mobile Apps

So, the immediate question is, how do the above categories generate a chunk of their revenue? What strategies do they exploit to ensure profitability for their app ventures? Let’s explore a few strategies, shall we?

In-App Advertising

From a futuristic perspective, advertising will lead the monetization game for many years because an ever-increasing number of advertisers are seeing extraordinary ROI from advertisements. Furthermore, if the 26% increment in mobile ad spending from 2019 to 2020 is any sign to go by, monetization models that constitute in-app advertisement may end up being one of the top picks for new application owners.

That being said, I firmly believe that in-app advertising might be the most straightforward way to make money from your mobile app. Simply create value, make your app free to download, then integrate small ads that show within the app interface, or full ads between the app loading screens.

There are five types of ads you can execute:

  • Banner ads
  • Video ads
  • Native ads
  • Text ads
  • Interstitial ads

In-App Purchases

With this monetization strategy, clients can purchase physical or virtual products inside your application. The only downside is if you have one product to offer, when a user buys it, that is it! It is pretty challenging to scale unless you offer more than one in-app purchase. Regardless, that move still requires continually adding content that your users would be glad to pay for.

Notwithstanding that only 5% of users make in-app purchases within most mobile apps, the income generated from this monetization route can still be 20 times higher than revenue acquired from all the other users. In essence, it can keep you afloat.

There are two main types of in-app purchase models you can execute:

  1. Purchase once, keep forever: An example of this would be a feature that eliminates all ads and pop-ups from the mobile app when bought or paid for.
  2. Repeatable in-app purchases: This approach is ideal for merchandise, features and content that can be exclusively utilized inside the application. For instance, extra ‘lives’ in a video game. Or custom in-app currency that can be spent on premium features.


Also known as ‘memberships’, users choose whether they will pay for your application after a free preliminary trial with the subscription monetization.

Similar to in-app purchases, the memberships provide users exclusive access to extra content, merchandise, and capabilities. In any case, rather than giving them a choice to purchase at whatever point they wish, the membership / subscription model presents “subscription periods“. Essentially, users get to try the application for free and can then choose to subscribe on an annual or monthly basis, thus offering the app creator steady recurring revenue.

The two fundamental ways to implement subscriptions are:

  1. Non-renewing subscriptions: Here, users pay for one membership period, and when this period closes, users are automatically asked to choose whether they need to purchase another subscription.
  2. Automatically renewable subscriptions: Here, users pay for a subscription, and it consequently restores after every membership period concludes.


This monetization approach is not for every type of application. In the event that your application hits more than 10k downloads, you can go for this strategy.

You can approach brands to place their promotions within your application, and in return, you can negotiate a monthly fee. Of course, the caveat is that it’s easier to start with the smaller brands and work your way to more prominent brands as your downloads increase. You can’t simply go to Walmart or Amazon with 10K downloads and expect to command their attention. Your number has to be +100K plus to target the commerce giants.

Referral / Affiliate Marketing

This is a viable way to generate money on your mobile application. You can simply promote other companies’ products through your app. Affiliate networks like Apple Affiliate Partners and Google Display Network can be exploited individually for iOS and Android applications. They essentially function as a medium to allow you to drop the products on your App to earn commissions if they are purchased.


Generally speaking, this is a relatively uncommon approach, but it works. Similar to in-app purchases, with micro-payments users can pay small fees to activate actions. For instance, changing their profile picture or watching exclusive videos. This approach is common with some apps in China, for instance, Tencent (the owners of WeChat), whose revenue from advertising is under 20%, with the rest of their income coming from micro-payments.

Selling of IP And Source Code

In all honesty, this is a rare approach, though some people have seen success with it. On the off chance that you’ve made an app that is truly astonishing, and would prefer not to undergo the hustle of promoting it, you can sell its intellectual property and source code.

White Labelling

Suppose your app has novel usefulness, unique functionality, or one that solves a specific problem. In that case, you can make money from it by reskinning (white-labelling) it for other brands or licensing your code to third parties.

Selling Anonymised Data

In instances where your mobile app has accumulated a large number of active users, you can cash in on them ethically. This is by collecting anonymized information on their behavior, traits and actions, and then selling it to third parties like advertisers and analytics companies.

For example, advertisers can exploit anonymised data to optimise the advertisements towards specific geographical locations or groups of people like middle aged men who desire to lose weight and are more inclined towards fitness products. Essentially, the more dynamic the users an application has, the more exact, pertinent and significant that information will be for analytics purposes.

Free Apps Vs Paid Apps

So, before employing any of the above strategies, one should ask themselves, should I make my app free or paid for. As you contemplate on this, remember:

  1. 92% of the applications on the Apple App Store are free.
  2. With free applications, you may get fundamentally more downloads, yet users could be less engaged.

All things considered, paid apps are a terrific method to get more faithful clients. In practice, if they are willing to make the first purchase just for installation, they might be more inclined to utilize, and in turn, make additional purchases.

With paid apps, you generate money upfront for user admittance to the app. Hence lifetime value and user retention won’t have an immediate impact on you. Obviously, paid applications need to offer significant benefit to somebody to compel them to spend. While $0.99 might seem like little, there are numerous free applications out there, and getting someone to surrender their cash is not easy.

A good compromise would be the freemium approach. Freemium is a blend of ‘free’ + ‘premium’. Essentially, users download an application free of charge. However, they can uncover a greater amount of its capabilities by paying for them. If they choose to. Take, for example, subscriptions/memberships offered in music and video applications.