What is a Monetization Strategy? How to Choose Best Monetization Models for Application?

Every organization is now including an application to its infrastructure for accelerating productivity and revenue.

And every enterprise utilizes a different application monetization strategy for having a recurring income. However, not each approach is suitable for every industry.

Here, the questions arise what these strategies are, how a company earns through them, and what will be the best for you.

Let’s read further about different app monetization models to get all the answers.

Discovering What is Monetization Strategy for Apps

Monetization strategy refers to approaches that a company can implement to earn revenue from their business application.

It can comprise integrating a new feature in-app by partnering with another brand, providing additional features to users, earning commissions from orders, etc.

There are various application monetization models available that are helpful for every industry, leading them to earn a high return on investment.

Displaying ads, freemium software, paid apps, and data monetization are some effective strategies that most companies can carry out.

Let’s expand the Monetization Models for Application

To have a clear insight into the application monetization strategy for your business, you must understand its different models.

 icon-angle-right Display Ads of Third-Parties

Displaying ads across different sections of an application is the most common and popular way of earning high revenue.

There are a lot of organizations that are ready to pay a hefty amount to other companies to show their ad to a vast audience. It helps them reach out to more people and enhance their customer base.

You can showcase different types of ads on your application, such as:

  • Banner Ads
  • Video Ads
  • Text Ads
  • Native Ads
  • Rewarded Ads

You can provide the option to choose between these ads and charge a different fee for every kind of Ad.

For instance, to display a Banner Ad, you can charge $500, and for showing a text Ad, you can ask for $150.

Likewise, you can set up your fee range according to business requirements and market trends.

 icon-angle-right Offer Subscription-based features

Subscriptions are highly in trend, and most companies are upgrading their business strategies to adapt them for application monetization.

You must have seen subscription mechanisms on many apps, such as Netflix, Amazon Prime, and Grammarly.

Under the subscription model, the user has to pay a fixed amount to utilize the resources for some time, and after that, they have to renew it by paying again. It can be a recurring revenue stream for you.

In addition, you can provide different subscription-based models to users, such as:

  • Monthly Subscription
  • Quarterly Subscription
  • Annual Subscription

The user will have the leverage to select a precise model according to comfort. It will increase customer satisfaction, as you represent the user as the primary body to pick out any model.

Besides this, there is a non-renewal subscription approach, in which customers have to pay only once, and they can use all the services for a lifetime without paying any renewal fee.

 icon-angle-right Freemium Apps

Freemium applications have been in trend for recent years only.

These types of applications get divided into two categories, one if the free version, and the other is the premium version.

Every user has the same features and access controls in the free version. However, the user has the advantage of unlocking advanced functionalities by paying an extra charge.

The most common example of it can be Canva.

For instance, Canva is free to access, download and install and every user has permission to use freely available templates. Although, if customers want to utilize the premium graphics, they have to pay additional charges to unlock them.

Some more common examples of the Freemium model are:

  • Unacademy – An educational platform that allows students with premium access to communicate with professors directly.
  • Zomato – A food delivery app, enabling premium users to have extra discounts and free dishes.

You can also implement this model for your application and start the monetization process.

But, always provide all the essential features freely to every user and charge only for advanced mechanisms.

 icon-angle-right Paid Applications

This is one of the simplest ways to start monetizing your application.

You must have seen various mobile applications on Play Store and App Store, for which you have to pay an amount to download them.

Most trending games are available as paid, and companies earn high revenue. For various organizations, it is the primary source of income.

Paid App Market Earning Graphs

According to surveys, the paid app market is earning an average of USD30 to 33 Billion in recent years.

You can also publish your paid applications on online repositories and increase your market capital.

 icon-angle-right Affiliate Marketing Offerings

Adapting the affiliate marketing model can significantly increase the userbase and overall company market capital.

Through affiliate strategies, your current customers will help to onboard new users, and by providing some additional facilities to them, you can effortlessly engage and retain them.

Following are some of the ways through which you can monetize application:

  • You can offer extra discounts on products for every customer onboarding through an affiliate link or referral code.
  • You can provide cashbacks on your next purchase for downloads through personalized links.
  • By providing access to premium features to customers with high affiliate scores, you can increase the satisfaction and productivity rate simultaneously.

Once you implement these approaches, your customers will increase, app downloads a more significant number of times, and the probability of getting ad contracts will be higher.

Affiliate marketing is always a win-win situation for both customers and organizations. You have to decide on an authentic affiliation approach, and your app will begin earning automatically.

 icon-angle-right Data Monetization Strategy

Using customer data and legally providing it to third parties is common to optimize revenue.

You don’t share personal information in this model, such as name, email address, house address, and banking details. Instead, share their connection provider, network type, IP address, and device information.

It helps the other companies to improve their services, and in return, you have an additional stream for monetization.

For instance, if you are a food delivery company, collect user data to analyze which dish people order the most in a particular area. From this data, you can have an insight into the people living there, whether there are more vegetarian people or non-vegetarian people.

And, also you can have an overview of the population living in that particular area.

You can share this data with a marketing company, and they can display relevant hoardings at that place. Also, you can start business consultation services and help people create a reliable and profitable firm according to people’s requirements.

Data Monetization Trends

As per statistics, Data Monetization is becoming a popular approach, and you will see a rapid increase in its growth in the coming years.

 icon-angle-right Brand Partnerships and Sponsorships

Brand collaborations are becoming a new way to engage more people utilizing your applications.

Most organizations consider it to provide an experience to new users and convert them into their potential customers.

For instance, If you have an eCommerce application, you can partner with a bank or a digital payment company, providing online wallets to customers to execute transactions directly from the bank.

Further, you can offer discounts to your customers if they make payments through your bank or digital payment partner.

As a result, your sales will increase, the partner will pay you for listing their service in your app, and both of you will gain profit.

Moreover, your user satisfaction will increase as you provide more payment gateways to customers.

 icon-angle-right In-App Purchase Model

Many of us consider the in-app purchase model to sell subscriptions and premium memberships to users, but it is pretty different.

It refers to selling physical or digital products to customers while navigating through applications.

A prevalent example of it can be a mobile game known as Clash of Clans, PUBG, GTA, COD, and many more.

Such games have a store displaying game currency and other assets, which a person can utilize after buying them with actual money. Many game companies use this application monetization model to increase their revenue.

In addition, you can sell custom brand T-shirts, stationery, mugs, etc., leading to creating some extra income stream and brand awareness.

 icon-angle-right White Labelling the Software

White labeling refers to creating a software solution that other enterprises can also use for their business.

By allowing other companies to utilize your app’s source code, you can craft a reliable income source.

For example, you have an eCommerce application, which a company can quickly customize according to their requirements. You can sell the app with some restrictions and earn from it.

Furthermore, you can consider WordPress as its most common and popular example.

Many firms pay a reasonable amount to WordPress to utilize the source code of different website and app templates and tailor them according to their need.

If you have such an app, which can aid other institutions in establishing their online presence, then it is one of the best ways of application monetization.

 icon-angle-right Vendor and Transaction Commissions

You must have seen different vendors across eCommerce, Food, and grocery delivery apps.

Whenever a vendor receives an order, the app-owning company gets its share.

For example, vendors are utilizing your food delivery app to receive orders. When a restaurant confirms the order and the customer will pay, you will receive a percentage of the total bill.

According to the agreement, it can be 2%, 5%, 10%, or any other variable.

Additionally, you can set charges for fast delivery and sign an agreement with the payment gateway vendor for having commission per transaction.

Concluding Up: Which Monetization Strategy should you select?

To implement a monetization strategy for your business application, you must go through every model and evaluate its operations.

Showcasing ads, offering subscriptions, freemium apps, and brand partnerships are strategies that every business can consider.

However, for picking out any other methodology, you must verify your app features, services, and business requirements. If it aligns completely, then you should go for it.

About the Author!

Jemin Desai is a Technical Product Manager and tech-savvy at Positiwise Software, Application Modernization Company. He has more than 20 years of experience for implementing the latest technologies in designing top-notch products for multiple clients. He can do all with perfection, from market research to feasibility analysis and aligning the project with accurate methodology. By turning his writing hobby into a passion, he’s been providing scholarly articles to various audiences.

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