How You’re Going To Make Money From Your App

Your app needs to make money, otherwise it simply becomes a very expensive and potentially time-consuming hobby… I’m pretty sure you’re reading this because you’re looking to create a serious income.

There are several ways to make money from mobile apps.

Each monetisation strategy suits a different type of application. Whichever one you choose and how you implement it is going to have a major impact on whether your app is successful or not.

Pay Per Download

This is the simplest and most commonly used strategy of making money with apps by mobile app developers all over the world is the Pay Per Download Strategy. Where the user will simply download the application and pay through the app store. The app store collects a cut (normally 30%).

This has always been a popular way to monetise your application however it really depends on the model and sometimes a free demo (light & full version) wouldn’t go astray as people are getting more and more sceptical.

Most paid apps range between $0.99 – $2.99 but can go up as high as the developer wants. Just be careful not to price yourself out of the market. $0.99 is a pretty good price that you normally won’t hear any complaints about. Unless of course the application offers no value that the users complain that they had to pay for it at all. Fair point…

The best thing to do is to have a look at your nearest 5 competitors and price yourself accordingly.


I’m talking about banner-ads. You know those really annoying banners advertising something you couldn’t care less about that sometimes appear at the top or the bottom of certain free apps? You know the ones that you accidentally click that take you to some website that has nothing to do with what you were doing? Yeah those ones!

Banner-ads have a reputation for being really annoying. Though they can create a reasonable income for the developer if implemented right, they can also stain your brand if used incorrectly.

Personally I would never use banner-ads in one of my apps, apart from if I’m trying to drive people to buy the full version of the app (see light & full version). But a quick search on Google will present you with plenty of reasons why you should use them. I personally think that banner-ads cheapens the look of your app.

Again, not all monetisation strategies work for all applications.

An example of good use of banner ads is when the ads represent one of your products. Like if you were to cross promote another one of your apps. Providing that the two apps are similar, of course.

Ads pay per impression and per click:

$X = impressions x 1000 |  $X = 1 x click | X-value varies from category to category.

You can source the ads from an agency like Admob (Google) or iAds (Apple) which is a free service.  And just like the Pay Per Download model, they’ll take a 30% cut. The banner ads need to be inserted into the plan along the way so make certain your inform your developer.

Light & Free Version

Historically the light version would be a dumbed down version of the complete app. Now, it’s normally the same application but with banner-ads. It’s designed this way so that the smartphone app developer makes money from the application whether the user pays for it or not. And the users get frustrated with the ads but love the value of the app itself that they have no choice but to pay for the full version!

Not a bad move right? Is that maybe why Angry Birds use this model in their games more than any other? *HINT*HINT*


If you liked the last three then this one is really gonna tickle your fancy!

Freemium is where your users buy something within your mobile application using real money! It’s not a good model for selling your own product as the App Store will still collect their 30% cut. But that has never stopped anyone from selling virtual coins!

“Whoah there Logan, did you say VIRTUAL COINS?!”

Ok, let me explain. In an application, you can sell tokens, coins, pretend gold, etc. that the user pays for with real money from their bank.

“Ok, so what do they use the tokens for?”

Anything you want! To give you an example:

Slotomania is an app that lets users buy pretend money in a virtual casino. They would then sit on a virtual slot machine in their mobile phone and gamble this money away with the full understanding that once their money has been transacted into the app, there is no way they can EVER claim that money back. Even if they win! It has been transacted with the full intention of being gambled with.

“Yes alright but that’s just stupid.” I couldn’t agree more. And the crazy thing is that Slotomania sat as ‘Number 1’ on the ‘Top 100’ chart for the ‘Top Grossing’ apps on the Apple App Store for 6 months in a row! There is no argument that this app made several million dollars in the charts.

“Oh so that’s why Rovio has begun implementing the Freemium model in their recent releases?” …yes, that’s exactly why.

But why does that affect my app so much?

Your selected monetisation strategy, or combination of strategies, have to be selected carefully because if implemented too obviously it can really annoy people. And the wrong monetisation model for the wrong kind of app is a recipe for disaster. This is all part of your marketing strategy which paints the bigger picture.

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Logan Merrick is the co-founder and Director of Buzinga, as well as one of Australia's most recognised entrepreneurs, keynote speakers, investors and mentors. His writing on startups, technology and mobile marketing has been featured in The Australian, Business Insider, Startup Smart, Smart Company, and more.