Setting up an app monetization strategy requires expertise, time, and effort. A significant amount of apps fail when it comes to reaching a desirable revenue level. Developer Economics research shows that 64% of Android developers and 50% of iOS developers earn less than $500 per app per month whereas 24% of developers don’t make any revenue at all. Half of all app revenue belongs to 2% of app developers.

Alex Austin noticed in his article Mobile App Developers are Suffering that in the harsh app ecosystem, monetization is heavily skewed toward the few top apps.

Monetization success mostly depends on making the right choice of monetization strategy that will play along with your app’s vertical and content type. There is an accepted belief that app developers should stick to models that are defined as best-suited for their app type:

It is better not to follow common guidelines blindly. Before making an app monetization model decision, app owner should determine their main starting points:

Targeted audience

Unique value and features the app offers

Particular features or app content that users are willingly to pay for

Time needed to engage new users

Competitors’ monetization strategies

App monetization trends

Last year’s app monetization trends show that banner advertising was the most popular model. 50.3% of mobile developers implemented interstitial ads into their apps and 40.8% implemented standard banners. The second most popular monetization model was in-app purchases with 49.7% of developers using it.

Though things change quickly. Freemium monetization models become more common as developers adapt it to all verticals. App developers are becoming more concerned with how ad formats influence user experience, especially after all that buzz around the launch of Apple’s recent ad blocking feature. The following are some key trends worth noticing:

In two years more than 94% of downloads will be for free apps, according to Gartner forecasts. An AppAnnie study says revenue from paid apps will continue to greatly decline. Looks like the paid model will remain successful for a very small number of apps. In-app purchase usage increases by 56% year after year. Freemium apps grow at a rate of 200% year after year. Advertising is still one of the most utilized forms of monetization. 49% of publishers use advertising in their apps in 2015.

The right monetization strategy for your app

The good news is that developers have a vast choice of monetization options from well-tried banner ads to paywalls and freemium models. ComboApp has helped many app owners find the best-suited monetization strategy and continues to share guidelines on how to make the right choice.

Here are the Top 3 App Monetization Models from ComboApp:

Choose Advertising and Freemium if your app is targeted to a general audience and you don’t have enough expertise to set up more complicated monetization schemes. These two models are the most universal, appeal to a wide user base, and can provide stable revenue streams.

Advertising

With advertising monetization, the main secret lies in achieving balance between user experience and revenue goals. Standard banners and interstitials will generate more revenue, but they will also distract users. Native-looking ads are more user-friendly, less disruptive, and can be blended into an app’s content.

2. Freemium

This model works well in high-volume markets where a large amount of users can be acquired. Users are attracted by an app’s features, functionality, or content and will then pay for additional tools or premium features. The main advantage of Freemium is that it can be adapted to any vertical and align with any user base. App owners can sell additional time, content, an ad-free version, upgrades, etc.

3. Subscription

Subscription is ideal for apps that focus on providing services. When users get hooked on content or features, they will become a source of recurring revenue for an app owner. The app should continuously provide value for users to continue their subscription. It’s important to determine the right time and place for setting up a paid limit inside of an app (i.e. what part of the app’s content/feature should remain free and attract potential users?). The subscription model is based on loyalty and engagement and requires expertise in user acquisition.

All apps are different. What works well for a competitor may not necessarily bring revenue to your app. Don’t stick with one monetization model, try to combine them and test new options. An intelligent approach to app marketing, user acquisition, and PR practices can help achieve results in your app monetization strategy.