You can build a mobile app in a weekend now. No joke. There are templates, SDKs, AI code assistants, drag-and-drop editors – the whole toolkit. But here’s the thing most people don’t realize until later: launching the app is the easy part. Making money from it? This is where things start to get murky. And the numbers prove it.
According to Business of Apps, over 95% of mobile apps are free, but only about 4% of users ever purchase those apps. On top of that, 80% of apps fail to become financially viable within their first year of launch.
And it’s not because you didn’t build something useful. Plenty of great mobile apps just never figure out how to bring in consistent revenue. They launch. They get some downloads. Maybe even a bit of buzz. But the money? It doesn’t come. Or if it does, it trickles in, not enough to cover costs, let alone scale.
Part of the problem is timing. Most developers or business owners wait too long to think about monetization. Others jump the gun and force it in too early. Or worse, they pick a revenue model because it worked for someone else, forgetting that their app, their users, and their value proposition are probably different.
This guide is not going to sell you a magic formula. Because there isn’t one, what it will do is walk through the decisions that matter when you’re trying to make money from your app, decisions rooted in real user behavior, product fit, and long-term value.
If you’re looking to avoid the traps most app owners fall into or you’re just figuring out where to begin, this is a good place to start.
Why Most Mobile Apps Fail to Generate Revenue
There’s no shortage of mobile apps out there. Browse any app store and you’ll see hundreds of alternatives for just about anything from meditation to grocery lists to AI selfie editors. But dig a little deeper and you’ll notice something else: most of them aren’t making money. Not real money, at least.
So, what’s going wrong?
Monetization is treated as an afterthought
A lot of teams focus entirely on building and launching. And that’s fair, as getting something functional and polished out into the world takes real effort. But then what? If you haven’t thought about how you’ll earn revenue until after launch, you are already playing catch-up. Tacking on monetization later often feels forced, and users can tell.
The wrong model is forced onto the wrong product
Not every app should be a subscription. Not every audience will tolerate ads. But because certain models worked for big names such as Duolingo, Tinder, and Calm, smaller developers assume they’ll work for them too. They rarely stop to ask: Does this model fit what our users want and how they use our app?
User behavior is misunderstood
Downloads ≠ revenue. Some mobile apps get tens of thousands of installs, but if users open the app once and never come back, monetization is a non-starter. Success isn’t just about traffic, but it’s about retention, engagement, and timing. You need to understand where users find value and what they would pay for.
Too many friction points
Sometimes, the monetization is there, but it’s clunky. The pricing feels arbitrary. There are too many pop-ups. Or the paywall hits way too early. Any of those can make users drop off, especially if there are free alternatives one tap away.
Focus is skewed toward growth, not sustainability
There’s a lot of hype around user acquisition, like paid campaigns, influencer pushes, and viral loops. And while growth is important, it’s not the endgame. Without a revenue strategy that scales with that growth, you’re just collecting installs, not building a business.
We have some reasons for the failure of mobile apps covered in our article: 4 reasons why mobile apps fail
Key Factors That Influence Your Revenue Strategy
Before picking a monetization model, it’s important to understand what drives value in your app and how users interact with it. The following five factors will guide how you structure your revenue strategy, from pricing to what features you decide to gate behind a paywall.
Type of App
Your app’s core function shapes what kind of monetization will feel natural to users.
Every app solves a different kind of problem or provides a different kind of experience. That alone influences what people expect to pay for and how they expect to pay. A game might thrive on small in-app purchases and rewarded video ads, while a meditation app will lean more into subscription models that promise ongoing value.
For example:
- Gaming apps tend to succeed with in-app currency, character unlocks, or level upgrades.
- Fitness or health apps often offer freemium tiers, with progress tracking and coaching locked behind a monthly plan.
- Utility apps (like file converters or scanner tools) may perform better with one-time purchases because they’re often used for a specific task.
Your monetization should match the app’s category and how people are used to engaging with apps in that space.
Target Audience
Understanding your user base is crucial, not just who they are, but how they behave.
A monetization strategy that works brilliantly for one audience could flop for another. If your users are professionals, they may expect and accept monthly pricing, especially if the tool helps them do their job better. But if your audience is younger or in a price-sensitive region, they may resist even the smallest payment unless they see immediate, tangible value.
Think about:
- Geography: Are your users in high-income countries or emerging markets?
- Device preference: Are they Android-first users or iOS-heavy?
- Payment habits: Do they already pay for digital services, or is this a new behavior?
It’s not just about affordability. It’s also about perceived value, trust in online payments, and cultural expectations around pricing.
Usage Frequency and Habits
How often users open your app can determine the kind of revenue model that will work best.
Apps that become part of someone’s daily or weekly routine-like habit trackers, news readers, or language-learning apps, are strong candidates for recurring subscriptions. Why? Because users are consistently coming back and getting ongoing value.
On the other hand, apps that are used occasionally, say, once a month or just a few times a year, need a more lightweight approach. Charging a one-time fee or offering feature-based upgrades might work better there.
Look into your analytics:
- Are users opening the app daily?
- Do sessions last longer over time?
- Is there a drop-off after the first use?
These patterns should shape whether you go with subscriptions, freemium, or something else.
Depth of Engagement
Frequency tells you when users are engaging. Depth tells you how much they care.
If people are using only one or two basic features and then leaving, they’re probably not ready to pay, or the value isn’t clear enough. But if they’re diving into settings, customizing the experience, completing onboarding steps, and exploring advanced tools, that’s a strong signal. It means they’re invested.
Apps with deep engagement can justify more premium experiences. Think about:
- Unlocking extra tools or analytics
- Removing friction (like ads or limits)
- Introducing collaborative or team-based features
When users are actively engaged, they’re more likely to convert and stay converted.
Core Value Proposition
If you’re not clear on the real value your app offers, no monetization model will work.
You might think your app is about saving time, but your users may be showing up for convenience or peace of mind. You might think it’s all about features, but maybe your audience is paying for access, status, or even aesthetics.
Clarifying the true value your app delivers helps you figure out what people are willing to pay for and how to price around it.
Here’s how it plays out:
- If your app helps users accomplish a goal (learning, productivity, fitness), tiered subscriptions can work.
- Whether it offers exclusive access (content, community, tools), gated paywalls or memberships makes sense.
- Does it provide on-demand convenience (utility or task-based apps), one-time purchases or credits may be the better route.
Without a strong, clearly communicated value proposition, even the most sophisticated pricing strategy will fall flat.
Popular Revenue Models for Mobile Apps
Ask anyone building an app what their monetization plan is, and you’ll get a mix of answers. Some will say ads. Others will mention subscriptions or in-app purchases. A few might just shrug and say, “We’ll figure it out later.” And honestly? That last one is usually the red flag.
Here’s the thing: there’s no perfect model. What worked for one app might crash and burn for another. It depends on what you’ve built, who it’s for, how they use it, and how often. Still, there are a handful of revenue strategies that show up again and again in successful apps, and understanding how they work in practice is the real starting point.
Let’s talk through them.
Advertisements
If your app is free and gets a lot of traffic, ads probably seem like the obvious route. And sure, it can work, especially if you are in entertainment, casual gaming, or content-heavy apps. But here’s what people don’t talk about enough: ads come with a cost. No financial experience. Banner ads are mostly ignored. Full-screen interstitials? Annoying if they pop up too often. Rewarded videos? Surprisingly tolerable… if done right.
You’ll make money off impressions, clicks, or views. But unless you have serious user numbers, it won’t be much. And if the ads mess with the flow of your app, your reviews will tank. So use ads, sure. Just don’t lean on them too hard unless you’re ready to scale big.
Freemium
Freemium is not just a pricing model; it’s a psychological play. You give people something for free, they try it, and if it clicks, they are more likely to pay for more. It’s used in everything from productivity apps to music players to design tools.
The key is finding the right balance. Too generous, and users never upgrade. Too restrictive, and they bounce before they see the value. The smartest freemium apps draw a clear line between “useful” and “indispensable”. You let them taste it, then sell them the full meal.
One warning: converting free users into paying customers is harder than it looks. You will need to track behavior, test pricing, and constantly tweak what features sit behind the paywall.
Subscriptions
If your app provides continuous value, think fitness, finance, journaling, and education subscriptions are worth considering. The appeal? Predictable income. Monthly or yearly payments that let you plan.
But it cuts both ways. Users expect consistent updates, fresh content, maybe even some personalization. If your app goes stale, they cancel. Fast.
Also, pricing matters here. Go too high and scare people off. Go too low and you undercut yourself. Many apps offer a trial period, then push for an annual plan with a slight discount. That sweet spot enough to feel worth it, but not enough to hurt is where retention lives.
In-App Purchases
Not every user wants a subscription. Sometimes they just want to unlock one thing. A new feature. A toolkit. A design pack. Power-ups. Extra lives. Whatever fits.
This is where in-app purchases shine, especially for gaming, creative tools, and even some utilities. They give users a choice. You’re not locking them into a plan. You’re offering little upgrades that make the experience better.
But, and this is a big one, you need to be careful not to frustrate your users. Don’t create problems in the free version just so you can sell the solution. That’s a guaranteed way to lose trust.
Paid Apps
Remember when you just… paid for an app? No subscriptions. No in-app buys. Just a one-time fee and you’re in.
That model still works, but only in specific cases. Usually, it’s utility-based apps document scanners, sleep sounds, offline maps, stuff people use repeatedly but don’t need constant updates from.
The upside? Simple. No surprise charges. No pressure to deliver weekly content drops. The downside? Harder to convince users to pay upfront unless they already know the value. So unless you have a strong brand, killer reviews, or a reputation that speaks for itself, this one’s tough to scale.
Sponsorships
If your app serves a niche, loyal audience, this is worth exploring. Let’s say you run a cycling tracker app with tens of thousands of daily active users. A sports brand might pay to sponsor your weekly challenges or run a branded leaderboard. It’s native, it’s relevant, and it doesn’t interrupt the experience.
But this model only works when you have two things: a clear audience segment and solid engagement data. Brands don’t just want reach, they want to know your users actually show up and stick around.
Hybrids
The best apps often don’t stick to just one model. They combine them a free app with ads, but a subscription that removes them. Or freemium with optional in-app purchases. Or even content sponsorships layered into a tool-based subscription app.
It can work beautifully… or it can feel like a mess. If you go this route, keep it clean. Don’t introduce too many pay points or complicate things with five tiers. Users should always know what they’re getting and what it costs.
User-Centric Monetization Strategy
Here’s the truth: people don’t mind paying. They just don’t want to feel tricked into it. Most of the time, app developers get that part wrong. They build the product, maybe even do a pretty good job. Then somewhere near the end, they start thinking, “Okay, where can we drop in the pricing?” So they hide a paywall behind the third click or slap a “Pro” badge on a button that used to be free.
And what happens? Users leave. Or worse, they stay, but never pay, because now they don’t trust you.
Let the user lead and listen to what they’re not saying
Users won’t tell you, “Hey, I would have paid for that feature if you introduced it 10 minutes later.” But they will show it. They’ll stop using the app. Or they’ll keep using it, but only the free parts. Or maybe they just uninstall it without giving feedback. Either way, the signal is clear: the monetization felt off. Either too soon. Or too aggressive. Or too confusing. The best time to ask users to pay? Right after they’ve felt the app’s impact. Not when they open it. Not mid-onboarding. Wait until they’ve had a small win. Something they’ll want more of.
It’s not about pricing. It’s about timing, tone, and trust.
You could charge $2. You could charge $20. If the ask feels fair, and the value feels real, people will pay. But the second, it feels manipulative? You’ve lost them. Maybe not today. But soon. And probably for good. Have you ever used an app that suddenly says, “Upgrade now to access your data”? That’s not clever. That’s just bad design pretending to be a business model.
Show, don’t sell
A feature list isn’t enough. People don’t look at a list and get excited. They look at what the app did for them, what it helped them accomplish, fix, avoid, and improve, and they think, “Okay, this is worth it.” So instead of pushing users toward pricing plans, pull them toward outcomes. Make the trial useful. Nudge them toward little wins. Help them feel progress. If you do that, you won’t have to “convince” them to upgrade. They’ll want to.
Don’t turn pricing into a puzzle
The more users have to think about what’s included and what’s not, the less likely they are to pay. Just be clear. Keep your plans simple. If you have a free tier, show what’s limited. If something’s included only in the Pro plan, say that upfront. Don’t hide the price until checkout. Don’t bury a cancellation policy behind three links. That stuff erodes trust, and it shows up in your churn rate, not just your reviews.
Make canceling painless
You know what makes people come back? Feeling like they’re in control. Let users pause, downgrade, cancel whatever. No drama. No friction. The moment you try to trap them, they’re gone for good. Funny enough, when users feel like they can cancel anytime, they often don’t. That’s what trust does.
You’re not selling software. You’re selling belief.
At the end of the day, people don’t pay for apps. They pay for what they think the app will do for them. Less stress. More time. Better health. Progress. Control. Whatever it is, that’s what you’re monetizing. If your app helps them feel that, and if your pricing doesn’t make them feel cheated, they’ll pay. Maybe not right away. But when the time is right, they will.
How to Test and Validate Your Revenue Model
So you’ve picked a monetization strategy. Maybe it’s freemium, maybe you’re charging up front, maybe you’re mixing in some ads or subscriptions. Now comes the part most people skip: testing whether it works.
Because here’s the thing: what sounds good on paper rarely survives contact with real users. You have to validate it. You have to tweak it. And yes, you have to be willing to admit when your original plan just isn’t landing.
Let’s walk through how to do that without guessing, and without burning through your entire user base in the process.
A/B Testing Price Points
You can’t just pick a price and hope for the best. And no, looking at what your competitors charge isn’t enough. You need real user behavior to tell you what works.
That’s where A/B testing comes in.
- Show one group of users a $4.99 upgrade.
- Show another group $6.99.
- Maybe even try $3.49 with fewer features.
Then compare what happens. Not just who buys but who stays, who upgrades later, who churns.
And here’s something people miss: the “winner” isn’t always the one that gets the most purchases. Sometimes, a higher price with fewer conversions brings in more total revenue and attracts higher-intent users who are less likely to cancel. It’s not just about conversion rate, it’s about the quality of customers too.
Just make sure you’re testing long enough to get meaningful data. Don’t panic after two days and declare a winner. Let the numbers breathe.
Analyzing Churn and Retention
One-time payments are great, but if you’re running a subscription model, this is the game. Are people staying? Are they canceling after the trial? Are they disappearing after two weeks?
Your revenue model might look good in the first 7 days, but if half your users bail before Day 30, something’s broken. Either you’re charging too soon, delivering too little, or setting the wrong expectations.
Track:
- When users cancel
- How long do they stay before that
- What they used inside the app
Sometimes, you’ll see patterns. Users who skip onboarding are way more likely to churn. Or people who hit one key feature on Day 2 stick around for months. That’s gold. You use that to guide everything, messaging, pricing, and UX.
LTV (Lifetime Value) and CAC (Customer Acquisition Cost)
If you only look at revenue per user, you’re not seeing the full picture. What matters is how much each user brings in over time and how much it costs you to get them.
- LTV = what you earn from a user across their full lifecycle.
- CAC = what you spend (ads, influencers, content, etc.) to acquire that user.
If your CAC is higher than your LTV? You’re in trouble. It means you’re spending more to get customers than they’re worth. That might be okay in the short term (during a growth push), but it’s not sustainable.
So test your revenue model against your acquisition strategy. Sometimes you don’t need a new monetization method you just need cheaper traffic, better onboarding, or a more focused user base.
Tools to Use: Firebase, RevenueCat, Mixpanel, etc.
Good news: you don’t need to build all your analytics from scratch. There are lots of them, and they make this process way less painful.
Here’s what’s worth looking at:
- Firebase (by Google): Great for tracking user behavior, retention, funnels, and events. If you’re just starting out, this gives you a ton of insight with minimal setup.
- RevenueCat: If you’re running subscriptions or IAPs, this is a lifesaver. It handles billing logic, receipts, churn metrics, everything Apple and Google make unnecessarily complicated.
- Mixpanel: More advanced product analytics. You can set up custom funnels, cohort analysis, and behavioral tracking across your app’s lifecycle.
- Amplitude: Similar to Mixpanel, but some teams prefer its UI and flexibility. Great for digging into what drives conversion and retention.
Don’t just install these tools and forget about them. Check the dashboards. Set up alerts. Talk to your team about what the numbers mean. You’re not just tracking data, you’re listening to what your users are telling you without saying a word.
Common Monetization Mistakes to Avoid
So here’s where things usually start to go sideways. You’ve got the app, you’ve picked a revenue model, and maybe you’ve even started testing it. But then you make one small mistake, and suddenly, your users are gone. Poof.
Let’s talk about the stuff that kills app monetization before it ever has a chance to work. The stuff that’s easy to overlook. Or worse, the stuff that feels clever in the moment but backfires almost every time.
Charging Too Early
Big one. Way too many apps throw a paywall in someone’s face before they’ve even figured out what the app does. You open it, tap around for five seconds, and boom, “Start your free trial now!” Slow down. You haven’t earned the user’s trust yet. They don’t even know if your app’s any good. Ask for money after you’ve helped them do something useful. That first win? That’s when they’re ready to listen.
Giving Away Too Much
The flip side. You’re trying to be generous, so you make 90% of your features free. But now no one upgrades. Because… why would they?
This happens a lot in freemium apps. The developer wants to build goodwill, but ends up removing the incentive to pay. If your free tier does the job, users won’t even look at the paid plan.
You need helpful friction, enough value to hook them, but not so much that they never need more.
Burying the Value in a Maze
Some apps have good premium features. Really useful stuff. But users never find it. Or they find it too late. Or it’s hidden behind five clicks and confusing language like “Advanced Toolkit Upgrade Option Plus.”
No one has time for that.
If you’re offering something worth paying for, surface it. Make it obvious. Make it feel natural. “Hey, want to unlock this? Here’s what it does. Here’s what it costs.” That’s it.
Forgetting to Nurture Free Users
Not everyone will pay right away. That doesn’t mean they’re useless. Some of your best customers start as free users who stick around, get value, and upgrade later. But if your app ignores free users with no guidance, no updates, no engagement, then they’re gone. And they’re not coming back.
Send helpful nudges. Show off what’s possible. Make them feel included. Then, when they’re ready, make upgrading feel like a choice, not an obligation.
Hiding Prices Like It’s a Game
There’s this weird idea that hiding your pricing until the very last second will increase conversions. Maybe that worked ten years ago. Now it just feels shady.
People want to know what they’re getting into. Upfront. Don’t make them tap five times and enter their email just to see what your app costs. Be direct. Be clear. It builds trust.
Using Ads Like a Sledgehammer
Ads are fine. Overused ads are not. Especially if they interrupt key moments in the app. No one wants to watch a 30-second video right after they hit a goal or unlock something cool.
You can run ads without ruining the experience. Rewarded videos, for example, are a solid compromise. “Watch this, get a bonus.” Feels optional. Feels fair. That’s what you want.
Treating Monetization Like a Feature You Tacked On
If your pricing, paywalls, and upgrade paths feel like they were added at the last second… users can tell. It feels clunky. Forced. Like an afterthought.
Monetization isn’t just about making money; it’s about shaping how people move through your app. It should feel like part of the product. Aligned with the value. Integrated into the journey.
Build it in, not around.
The takeaway? Most monetization mistakes don’t come from greed. They come from guessing. Or rushing. Or copying someone else’s strategy without asking why it works for them.
So don’t be clever. Be clear. Be honest. And make sure your revenue model respects the one thing users care about most, their time.
Thinking of building an app that brings in money?
Don’t wait to figure out revenue after launch. If your app’s going to make money, that needs to be part of the plan from the start, with how it’s built, how it’s designed, the whole thing. For this, talk to our team. Whether you’re starting fresh or reworking something that’s already live, we’ll help you go beyond just “getting it to work.” We’re talking about apps that people use, enjoy, and pay for. From day one.
So yes, bring us your idea and we will help shape it into something that works, not just in theory, but out there in the real world, with real users and real revenue behind it.
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