5 Proven Ways to Make Maximize Money from Your App

The country has been embracing the potential of AI technology to solve local problems and develop solutions for different sectors. The riBuilding a mobile app is a significant investment of time and money. While many businesses focus on developing an innovative product and gaining users, having a solid monetization strategy is key to generating ROI from your app.

Without a plan to make money from your product, your business will not be sustainable or scalable in the long run. There are multiple compelling reasons why a monetization strategy for your app is crucial. Firstly, it creates revenue to offset development costs. The cost of building and maintaining an app can be significant. Monetization allows the business to recover some of these costs and potentially generate a profit. 

Secondly, it keeps the app funded for continued improvements. Ongoing revenue streams enable you to dedicate resources to continuously enhancing the user experience, fixing bugs, improving performance, and releasing new features.

Thirdly, it makes the app a viable business asset. An app that generates significant revenue and income has greater value as a business. This can attract investors, allow you to expand into new products, and support your company's growth. Fourthly, it leads to financial independence and stability. By relying less on outside funding and becoming self-sustaining, your app business gains more control over its destiny and freedom from outside influence.

Lastly, it boosts your credibility with users and partners. An app with a smart monetization model is viewed as more professional, reliable, and stable. This can increase user trust and willingness to pay, as well as partner confidence.

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Mobile apps have become integral to our daily routine, offering convenience and entertainment. In the fourth quarter of 2022, the total value of global consumer spending on mobile apps was almost 70 billion U.S. dollars, highlighting the significant role that mobile apps play in the digital economy.

As of the third quarter of 2022, consumers spent an average of 4.86 U.S. dollars on mobile apps per smartphone, which underlines the high demand for these digital solutions.In 2023, the importance of apps to consumers will remain indisputable. According to research from data.ai, the global app market is demonstrating remarkable resilience despite economic challenges.

Mobile consumers are expected to spend an astounding $34.1 billion in app stores in Q1 2023, marking the highest quarterly spending on record. In Q1 2023, consumers downloaded 38.4 billion apps, second only to Q3 2022’s 38.7 billion. iOS saw the biggest spike, with estimated installs growing 12% YoY to approximately 9.2 billion. Google Play installs grew 1% YoY to 29.2 billion. India and Brazil were the largest markets by downloads, while Turkey, Russia, and Iraq saw significant upward movement on Google Play.

On iOS, China and the US were the top markets, with the US, Brazil, and Japan experiencing the most quarterly growth. The most downloaded categories on iOS in Q1 2023 were games, utilities, and photo and video. Meanwhile, games, health and fitness, and travel had the most growth in absolute downloads quarter over quarter.

The categories with the highest percentage growth quarter over quarter were Health & Fitness, Navigation, and Catalogs, with rises of 17%, 15%, and 12%, respectively. Google Play users downloaded a lot of games, tools, and entertainment apps in Q1 2023. However, the categories with the most absolute growth were productivity, books and reference, and education, which saw quarterly growth of 12%, 10%, and 9%, respectively. 

Looking forward, mobile app spending is forecast to reach 161 billion U.S. dollars and 72 billion U.S. dollars on the Apple App Store and the Google Play Store by 2026, respectively. While both platforms have started applying some changes to their app store policies in 2021, like lowering commission fees for small publishers generating less than 1 million U.S. dollars in yearly revenues, companies like Microsoft are looking to capitalize on the pain points consumers currently experience.

It is reported that the tech company is looking to create its own mobile gaming store to rival the duopoly that Apple and Google have in the mobile gaming market and leverage the regulations to their advantage in doing so.

A hybrid monetization strategy combines multiple app monetization models to generate diverse revenue streams from your app users. The most successful apps use a hybrid monetization strategy because it tempts high-value users with in-app purchases while providing an opportunity for others to improve their app experience by watching and engaging with creative ad content.

In other words, it's an approach that incorporates both advertising and non-advertising revenue streams to support an app’s growth. All with the overall aim of maximizing lifetime value (LTV) from your consumers by combining the right number of monetization models. 

A hybrid monetization strategy is important for the following reasons: Apps that rely on in-app purchases or paid downloads alone are falling behind and missing out on major revenue. According to an AppsFlyer study, only 7.1% of iOS users make at least one in-app purchase per month, and only 4.6% of Android users do. And because paid apps tend to get fewer downloads, the revenue they generate can be limited.

To counteract these limitations, in-app ads can maximize the revenue-generating potential of non-paying and paying users alike. More specifically, Pangle’s data shows that ads typically increase mobile app revenue by 10–30%. To this point, both developers and advertisers are recognizing the value of in-app ads, as 89% of mobile developers already use in-app ads as of December 2019.

As such, advertisers are expected to pour more than $240 billion into ad spending in 2020, a 26% uptick from 2019.There are various ways to incorporate ads into your monetization strategy, regardless of which one you employ. For example, freemium apps can be combined with ads as many users will never purchase the premium features, but they can still generate revenue.

Rewarded video ads are an especially effective way to monetize non-paying users of freemium apps. With this format, users can choose to watch ads to unlock premium features or just a trial of a premium feature if maintaining in-app purchase volume is important. Alternatively, freemium apps can also simply include ads of any type within the free features.

As for the subscription model, it is usually adopted by video and music streaming apps, news apps, and some utility apps. Some developers believe that ads have no place in subscription-based apps, but subscriptions and advertising can indeed coexist, so long as the ads are shown to the right user groups (hence the importance of target group research).

For subscription-based apps that provide some free content, user behavior data and A/B testing can help you identify user groups that usually consume the free content only. Afterward, you can incorporate ads into the free content and show them to said user groups. Another option where hybrid monetization can take place is with paid downloads.

Simply put, if you rely solely on a pay-to-download model, your users stop generating revenue soon after they purchase your app. Over time, a relatively inexpensive app without in-app ads will likely earn less revenue than a free app containing in-app ads.

To maintain revenue gains in the long term, combine your paid app into a free app and carefully implement ads, or keep it as a paid app and incorporate ads as a way to increase your revenue streams.

With in-app advertising, mobile app owners provide an option for their app users to use the app for free in return for displaying ads inside the app. The premise of this monetization model is that a certain percentage of the app's user base views the ad, clicks on it, and purchases a product or service from a third party. App owners who place other apps’ ads inside their apps, so-called app publishers, are rewarded for either delivering mobile traffic (aka CPM business model), generating clicks (aka CPC business model), app installs (aka CPI business model), and ultimately generating purchases or other actions (aka CPA business model) taken by mobile app users inside their apps. 

Positives to this revenue stream include mobile users getting to use the app for free with no limitations, and, in some cases, as a bonus. They may be introduced to a new app, a product, or a service that they need. Because of the overall volume and in many cases, the low relevancy of mobile ads, mobile app users have developed ad blindness or downright ad hatred that degrades their mobile experience. This is a possible negative with regard to in-app ads. Implementing targeted ads within your app can generate revenue. Consider using platforms like Google AdMob or Facebook Audience Network to display relevant ads to your users. Optimize the ad placements and formats to ensure a balance between user experience and ad revenue. 

Today, in-app ads have become more sophisticated; many offer users a dynamic and relevant experience. There are a lot of different kinds of in-app ad formats you can experiment with to see what integrates best with your app. The first type being banner ads which are image-based ads that take up space either at the top or bottom of a screen. They are like small digital billboards. Also known as display ads, they are a traditional form of online advertising that remains common in the mobile ecosystem. The second type are interstitial ads. These are full-screen ads that pop up during transitions such as between levels in a game and cover the entire interface of the app. They can be very effective and engaging, but also annoying if used improperly. The third type are video based ads which play before, during, or after streaming video content, and can be generally entertaining and less obtrusive to the app user. Developers can earn significant revenue by incorporating in-app video ads into their monetization strategy. The fourth type are offerwall ads which offer users multiple rewards or incentives in exchange for a specific action, such as watching a video, downloading an app, or making a purchase. Since they are initiated by the user, they aren’t as disruptive to the experience as traditional ads. Other types of ads include playable ads, native ads and rewarded video ads which are similar to video ads but with an incentive. 

Using the right combination of in-app ad formats and getting them in the hands of the right users will maximize their impact. By taking the time to refine and optimize your monetization strategy, you will be able to develop more ways to earn money, high-value, long-term engagement, and better user experience.

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Offer users the option to make in-app purchases for additional features, premium content, virtual goods, or subscription-based services. Provide compelling value to encourage users to spend on these extras, and regularly update and expand your offerings to maintain user engagement.

Today, the freemium model dominates the landscape of app monetization strategies of popular mobile apps. Offer a free version of your app with limited features and functionality, and provide a premium version with additional benefits at a cost. This approach allows users to experience the app's value before deciding to upgrade, increasing the chances of conversions.

The freemium model is based on the principle of providing the app’s copy for free with a limited basic set of functions. All additional, more advanced features can be purchased inside the app for a small fee, depending on the company’s value-added propositions (when it comes to purchasing apps’ annual subscriptions).

The appeal of this strategy lies in its ability to introduce the app to a broad audience, let people explore the app, apply it to solving their problems or meeting their needs, and then decide whether they invest money in purchasing its advanced capabilities or not.This strategy facilitates the increase of the app’s brand awareness and helps it be connected with mobile app users who otherwise wouldn’t consider trying it.

On the flip side lies the danger of a company behind the app actually failing to convert enough people using the app for free into paying customers and therefore ensuring the app’s sustainability. 
The advantage of this monetization strategy is that app brands can quickly distribute the app to a wide audience.

Allow them to experience the app, decide whether it works for them or not, and also purchase additional features inside the app with a single tap. The disadvantage lies in its difficulty to predict the behavior of the app’s users and know their needs in advance, there is always a danger of the app becoming unsustainable due to failing to acquire enough users who have purchased additional features.