What is App Monetization? 4 Efficient Ways to Monetize your Free Mobile App

So finally, now you have completed the development process of your own mobile app for your business. Customers worldwide can now interact with you like never before, and the data you are collecting from your app will create new ways to market your brand. But there is something still missing that you can do to make your app benefit even more than before – App Monetization. Yes, you are thinking absolutely right that your app can be something much more than a tool. And earn an additional profit on top of the money you invested in developing the app. 

Curious, aren’t you? 

Perfect, by reading this post, you will learn the four most effective ways to monetize your app and turn it into a great profit-generating machine. 

What is App Monetization? 

Just in one – app monetization can be explained in a way that it is a process of converting your app users into revenue. When app publishers offer free apps, then they look for other ways to generate revenue. Developers have to look at a number of ways to generate revenue, but it can be challenging to stay afloat without substantial funding. Most of the apps on famous platforms are free to install; then, the revenue model is adjusted according to strategies that best suit those specific kinds of apps. 

Why is App Monetization Important? 

App monetization is essential because it has become more common to find various apps of particular interest totally free of cost. However, just keep in mind two important facts: 

  • App generating profitable revenue
  • Users and user experience kept relatively intact. 

User experience is a crucial element in app monetization models, as only happy users will be willing to pay as they enjoy the app. At times, lowering the user experience at a free of cost package causes some users to be turned off. However, monetization is directly related to the number of active users. 

Stats of Mobile App Market and App Monetization

From baking to gaming and chatting, we use mobile apps to meet our everyday needs. Resultantly, the mobile app market has grown exponentially. Here are some statistics: 

Number of mobile app downloads in 2022 – 196 Billion

Global Consumer Spending on Mobile Apps in 2022 – $64.9 Billion

Apps that are used only once in 2022 – 25%

Most Popular Mobile App Monetization Strategy in 2022
Advertising based Monetization strategy

Average Consumer spending on mobile apps in second quarter 2022 – 5.31 USD / user

Number of Apps available on Google PlayStore – 3.48 Million Apps

Number of Apps Available on Apple App Store – 2.22 Million Apps

How Does the Most Popular Mobile App Monetization Strategy Work? 

The most commonly used app monetization strategy is advertising. It lets you make money from your app without actually charging for the app. In this strategy, when a user downloads your app, it will be presented with several ads within the application. Every time the user views or clicks these ads through your app, you get paid a fee. This way of monetizing your app is most successful because people don’t prefer to pay for the apps they install from Google Play Store or App Store. No matter how low cost the app charges, if there is a free alternative that functions the same, people will prefer it. It is the primary reason, according to Statista, 96.7% of apps on the Google Play Store are free in January 2022. 

But, the question here is if the users are not paying money, how do you get paid? So, there are two metrics you should know: 

  • CPC (Cost per click): The amount that advertisers will pay for each click on their ads via your app. 
  • CPM (Cost per mille): In this monetization system, the advertiser will set a price they will pay per 1000 ad impressions. From this model, you will get paid every time the ads are viewed. 

4 Ways to Monetize Free Mobile Applications

While planning the app development and launch, monetization needs to be more than any other priority. When you plan to build an app for your business, you should also plan how your app will make money from the start of the project. There are many app monetization strategies widely being used according to the type of app and target audience. Some mobile app businesses focus on one method, while some prefer implementing more than one monetization methodology. 

1. In-App Purchases – Freemium:

This type of order in the application is what is called the model “freemium.” Downloading the application is free, but once downloaded, the user can make purchases within the application to access further services. As for income generation from mobile applications, this is the method through which higher revenues are generated. If you look at the top 20 most downloaded applications, all of them are free and use in-app purchases to generate their income.

Examples of freemium models:
  • Acquiring the “Pro” version of the application is the classic strategy to attract more users, i.e., “try it first before you buy it.” In this model, a free version of the app that is only available with several features is given to the users with an option to pay for the full version of the application. The examples are the ones that say: Unlock Extra features of the application or the ones that allow the use of the application after a trial period and disable ads within the application.
  • Purchase of virtual goods: This model consists of purchasing goods within the application. It is very common in games like Clash of Clans, where you can make purchases of virtual money, life, weapons, etc., allowing the user to progress faster in the game.
  • Content: To acquire additional content such as a song, a video, a story, a game level, etc., offered by the application.
  • Subscriptions: Common in content applications such as books or magazines. The user buys the application for free by accessing some of the content, with the option to pay a subscription to have the ability to access all content. An example of this model is the Spotify subscription. It lets you use the free mobile application, but you get online and offline content if you subscribe to offers.


  • Having a free mobile app will attract more users at the start. 
  • The app will be successful till it does not deny users from accessing the critical features or content. 
  • It can give you great profit as in-app purchases are entirely digital things and don’t require any storage or maintenance of physical warehouses. 
  • As users desire something unique and new each time they use the app, so can introduce new features to boost loyalty.
  • You can easily use this app monetization strategy with others. 

2. Mobile Advertising:

As with web pages, applications can generate revenue by incorporating ads within the application. The key to this model lies in capturing the largest possible number of users. The main drawback is that advertising is always uncomfortable when using the application, and if it is too aggressive, it may even cause the user to discontinue the use.


  • It gives an opportunity to an app to collect data about behavior, location, and user interests. 
  • If your app displays the right ads to the right audience, you can earn good money. 
  • Good choice of monetization for e-commerce, entertainment, news, and gaming apps. 
  • You can display three different kinds of ads: third-party, incentivized, and native. 
  • Apps should be compatible with existing advertising plugins.

3. Sales Of A Service / Product: 

The application is a tool to provide a service or sell products. Some examples of this model are:

  • Uber: From this application, you can request and pay for a car-sharing service. The current valuation of Uber is above 66 billion dollars.
  • Doctors on Demand: This application allows us to get a consultation from a licensed physician through a video conference in exchange for money for 15 minutes.
  • Amazon: You can use the Amazon app to buy almost anything that is available on amazon.com

Note that if the application is to be used for the purchase of goods or services. You can not use the mechanism of purchases in Apple applications. You need to use other means of online payment like PayPal or Authorized.net.


  • Online selling allows you to reach more people anytime and anywhere. 
  • Allows users to browse their inventory and order accordingly. 
  • The endless aisle where shoppers can never leave empty-handed

4. User Acquisition:

The classic example of this business model is WhatsApp. Facebook has acquired it for 19 billion dollars. The main value of Whatsapp is that over 1 billion users generate more than 18 billion transactions a day. Therefore, developing a free application and acquiring a large number of users increases the application’s value. Later, the users can monetize it by selling the application itself, advertising, or other methods.


  • One-time profit on selling the whole application. 
  • Free applications have a huge number of users. 
  • Acquisition company to grow exponentially by acquiring top free apps. 

Top App Monetization Companies

Here are some famous useful resources you can use to monetize your app: 

  • myTracker – Multi-platform Analytics and Attribution
  • Tenjin – iOS 14-proof advertising analytics
  • inMobi – Driving Real Connections
  • Smartlink – Gives access to thousands of exclusive offers with one link

Bottom Line

With so many app monetization ways, it is important to remember that each approach comes with its pockets filled with pros and cons. However, before trying out these tactics, it is recommended to analyze competitors to do better at the starting point. You might have got the answer to the questions in your mind about how much you make from mobile and what are other ways to generate revenue from free mobile applications. So, it’s time to start your mobile app development plan with Clustox. Why Clustox to build your next successful mobile app? Well, Clustox is a leading software development company with experts experienced in the latest technologies of app development. Thus, if you still have any doubts or confusion regarding creating an app that makes a handsome amount of money, get in touch with us. Our tech consultants will revert to you at first priority and discuss such apps that will help your business grow. 

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