How Much Money Can Apps Make From Ads

The mobile app market steadily grows each year – in 2020, the number of app downloads worldwide rose to 218 billion. This also means that mobile app revenue has increased as well. In 2020, mobile app revenue was 143 billion, which shows steady annual growth.

mobile application monetization — global mobile app revenue

Source: Statista

Whether you want to provide an additional source of income to your company or directly monetize your idea, developing a mobile application is a great solution. However, for your app launch to be successful, you need to have a mobile app monetization strategy in mind.

How much money can you make from an app? In this article, we aim to answer this exact question, along with reviewing mobile app monetization models and offering tips on how to select the right one for your business.

How Much Money Do Apps Make?

The question of how much money can an app make is not as simple as it might seem. First, the disparity in revenue between the most popular application and an average one is giant. For example, the top-200 applications generate revenue at a rate of around $82,000 per day. However, if you expand the range to top-800 apps, the average daily revenue will drop to $3,000.

If you want to learn how much money apps make, you also need to consider the application categories. For example, mobile games are expected to earn over 3 times more than all the other apps combined. However, the number of game applications on the market is large as well, accounting for 13.72% of applications on the Google Play Store.

Another factor you need to consider while evaluating how to monetize an app idea is what marketplace to focus on. Statistics show that, at least when it comes to subscription applications, Apple App Store generates significantly more income than the Google Play Store ($4.5 billion against $1.4 billion in 2020).

money you can earn from an app — App Store vs. Google Play revenue

So, how much money can you make from developing an app? The only way to find an answer is to research the market, define the mobile app monetization principles you intend to follow, the platform you plan to focus on, and your advertising strategy. Considering all these factors, you'll be able to make an informed decision on whether it is worth it for your business to launch an application.

7 Main Types of Mobile App Monetization Models

Freemium Model

Freemium is one of the most popular mobile application monetization models, with 54% of developers reportedly using it. The main idea behind it is that the application is available to users for free, but they would have to pay to use certain in-app features.

The model has a long list of pros. First, it allows to quickly accumulate a large user base with free users. And the more users the app has, the more of them might eventually decide to switch to premium status. Furthermore, it is easy to combine with other monetization models, like showing free users in-app advertisements.

However, if the selling point of your app's premium features is not strong enough, the freemium model will work against you. Your user base will keep growing, but your profit will not. You would have to spend funds on support without getting any money back. So, you will have to carefully consider the balance between features before applying this model.

Among the apps that have gained great success using the freemium monetization model is Spotify. The way it applies the model is that it requires payment to get rid of ads and acquire the ability to shuffle the whole playlist.

In-App Advertisement Formats

Advertisements can be used as a separate monetization model and in combination with other models to increase mobile app revenue. For a model to be successful, ads should be relevant to the user and not disrupt the app operations too much. Usually, they are chosen to be relevant to the user base as a whole or by a third-party service that analyzes the user's behavior online.

There are multiple in-app advertisement formats you can choose from. Among the most popular are:

Interstitial ads – an advertisement that appears at a certain time during the application use. It covers the device's whole screen and requires a specific action from the user to either dismiss it or follow through. This type of ad can feel frustrating to the user, so you need to carefully plan when and how often does it appear on the screen;
Banner ads cover either a top or a bottom of the screen and are present the whole time the app is used. Users report banners to be inconvenient, as they cover a part of the screen that could have a functional use. That's why this type of advertisement is used less often than others;
Native ads – an advertisement that has a look and feel of something that belongs on the app screen. These ads don't disrupt the user experience, but they can be challenging to implement. Some of the best examples of native ads include Facebook and Reddit advertisement that looks like user-generated content;
Rich media – high-quality interactive banners. These ads usually look more creative and unique than simple banners, with interactive elements, QR codes, social media integration, etc. They often require more resources but have a higher conversion rate.

How Much Money Can an App Make [7 App Monetization Models]

Among the most popular free apps that are monetized with the help of in-app advertisements are well-known social media platforms, like Facebook, Twitter, Instagram, and others. It is worth mentioning that any type of in-app advertisement can be frustrating to a user, however, if done right, it might even be a welcome sight. For example, it can be combined with other models to offer bonuses or limited access to premium features for an ad view.

In-App Purchases

This monetization model refers to purchasing physical or virtual goods inside a free application. Users can buy special features, visual augmentations of the app design, exclusive content, merchandise, etc. It is a popular model for mobile games, where you can often purchase extra lives or in-game currency.

Using in-app purchases, you have a direct metric of the success of your application. Furthermore, you can easily raise profitability and attract more customers by having promotional campaigns and sales. You can also increase the time users spend in the app by providing paid features for specific in-app actions.

However, before applying this model, you should be aware of a particular caveat – Google Play Store and Apple App Store take a cut from every in-app transaction from every app they host. Google Play takes a 15% cut before the app developers have earned $1 million from their app. After that, the cut rises to 30%. Apple App Store focuses on yearly earnings – if they are less than $1 million, the cut is 15%, if more – 30%. If you try to avoid paying the commission by redirecting the user to another service, your app will most likely get banned from the platform.

As we've mentioned, this model is often successfully used by mobile games. From titans like PUBG to indie darlings like Among Us and Clash Royal, the games are full of in-app goods, from skins to power-ups and boosts.

Pay-Per-Download

In this model, the user must pay a one-time fee to use the application. Usually, this model is not combined with other monetization methods, as it turns the customers off. This is one of the oldest monetization models, and while it is still suitable for certain types of apps, it is used less often than others.

The pay-per-download method works the best for apps that are hard to find an equivalent for. If users need the tool you can provide and have no other alternative, they will pay you for a download. However, users nowadays are a lot more apprehensive about paying for an application they had no chance to test out, so you need to provide them with a good reason to do so.

To gain a user base and persuade people that your application is worth the price, set up a trial period for potential customers to test out the features of your app. You might also need to conduct a complex promotional campaign to attract more users.

While the model may be harder to implement, multiple successful apps from various categories have managed to make it work. This includes games like Minecraft and The Room, music players like PowerAMP, educational apps like Wolfram Alpha, and many more.

Subscription Model

This monetization model is the most popular on the mobile app market, with 56% of developers employing it. The basic premise of it is that the user gets a free application and a variety of additional features they can pay to use for a limited time (usually a month).

The biggest benefit of a subscription model for the developers is that they get a more or less steady source of income on a regular basis. This allows for creating a more detailed plan on the application support, rolling out new features, or, if the funds are insufficient, scaling the app down.

The downsides of this model are similar to the downsides of the freemium model. To generate income and be able to grow, you need to strike a certain balance between the features available for free and the features you need to pay for.

The subscription model is effectively used with content-generating platforms and applications that provide certain services. This includes Netflix, YouTube, Tinder, Bumble, and ESPN. However, it can be implemented into other app types as well. There are even subscription-based mobile games, like World of Tanks Blitz.

Data Monetization

If you want to monetize your app while keeping it free for users without impacting the user experience, this monetization method is for you. This model is based on sharing first-party non-personal user data with an interested monetization partner.

Developers often collect functional app data for their purposes: to analyze and improve the application, figure out the interests of their user base, create a targeted advertisement, etc. Why not sell the same data to a trustworthy partner?

To apply this model properly, you need to inform your users of the data you gather and plan to use. You should also provide a clear and straightforward way for users to opt-out of sharing their data. It is also your responsibility to guarantee the privacy and security of this information.

The data monetization method is usually used in conjunction with other monetization methods to increase the amount of money you can make from an app. The data companies share usually consists of device type and specifications, country of origin, etc. The companies they share it with include advertisers, research facilities, and others.

Recently, Apple launched several important privacy features you must be mindful of when applying this method. Among them is a requirement to acquire the users' permission before tracking their data across apps owned by other companies. In addition, Google plans to enroll the same policy as well.

Affiliate Marketing and Transactional Fees

Using affiliate marketing for app monetization is based on cooperation with another business. If they are interested in the target audience you're working with, they can pay you to promote their product through your application.

What's great about this monetization method is that everybody wins from it. An affiliate gets a platform to work with, users get a product they might be interested in, often for a lower price, and you get funds to continue to develop your application.

The downside of it is that affiliate offers are often very specific. Furthermore, there are many successful applications on the market that will compete with you for them. So, you would need to be lucky and fast if you want to implement this method successfully.

Affiliate offers work in several ways. Some will pay for users just using your app; some will share a part of each transaction completed; others will determine the action needed to be done by a user otherwise. All in all, it's up to you to decide whether the offer suits you.

How to Choose the Right Mobile Monetization Model for Your App

As we've mentioned, the answer to how much money you can make off an app depends on several parameters. The next question you should ask is how to pick a monetization model that will bring you the most profit?

Here are some of the tips that might help you answer that question:

Define what problem your app solves and consider the specifics of your application. Some monetization methods are less suitable for certain app types: for example, the pay-per-download model does not work well with content-generating platforms, and you obviously shouldn't force in-app purchases if your app has nothing to sell. So, you need to determine which monetization models will synergize with your application in terms of both functionality and design;
Consider your competitors. Competitor research is a very helpful tool in this instance. Researching similar applications, you will see which monetization models work well and which are better to be avoided. Furthermore, look for what's missing on the market, as that will mark an opportunity you can use to your advantage;
Analyze your target users – your monetization efforts will never be successful if they are not suitable for your particular target audience. The more you know about them, especially about what they are willing to pay for, the better you'll be able to build your strategy.

If you're still unsure which model is the most suitable for your project, we at NIX United are ready to help you. With over 26 years of experience in mobile development and over 3,000 complete projects, we have enough expertise to determine the best course of action for your application.

Examples of Real Money Making Apps: Become One of Them

How much money can you make creating an app? Let's review some of the most successful applications you should strive towards.

In April 2021, the top 10 most profitable Android applications on Google Play Store were from the gaming category. Coin Master generated the most income by a large margin.

money you can make from an android app — top 10 applications

When it comes to iOS, the situation is a bit more diverse. Besides the gaming application, you can spot Tinder in third place and Disney+ in tenth. However, mobile games are clearly the most promising category for maximizing the amount of money you can make from an iPhone app.

money you can make from an iphone app — top 10 applications

Consider NIX United Your Trusted Partner

NIX United is a software engineering company that develops custom solutions for various purposes. We support the development process from end to end, delivering high-quality products at an optimal cost.

When it comes to mobile app development, we offer responsive solutions built for a platform of your choice, as well as help you set up user acquisition and revenue channels and increase customer retention. Some great examples of the projects we've been working on are:

Alienware Arena App

Alienware Corporation is a famous computer hardware company that has reached out to us for Android and iOS app development for their platform. By building a high-functioning application with an attractive UI and integration with major social media and gaming-related platforms, we've managed to attract more users and noticeably increase their engagement with the platform.

Taxi App for Drivers

This time, our task was to improve the user experience of a Taxi app and improve the motivation program for the drivers. To overcome the first challenge, we integrated a map with real-time data on drivers' and users' locations. For the second one, we developed a second, separate app that would record the track on the video to provide an opportunity to improve the quality of the route.

All in all, with the help of our years of experience and talented engineers' team, you'll be able to realize your idea and make it profitable. Contact NIX United to share and discuss your ideas and business tasks.

Final Thoughts

Monetizing an application can be a challenging task. Even if you've spent a long time perfecting your app, it will not be successful unless you can generate income from it. There are several ways to get money from your user base, yet you need to choose the right one that suits your project the most.

If you're struggling to choose the monetization model even after this article, we're at Nix United are ready to help you. With decades of experience and thousands of projects completed, we're confident we can help you with your app as well.

FAQ

How much money can an app make?

The amount of revenue your app can generate depends on the app category, the platform you post your application on, the monetization model you choose, your advertising campaign, etc. Read our article to see how apps worldwide make money.

What are popular and most profitable niches where applications are widely used?

Mobile games are the most profitable application category. Among the other commercially successful mobile app niches are investments, traveling, fitness & healthcare.

How to choose the right mobile app monetization strategy

To pick the best mobile app monetization strategy, you need to consider what suits your app's functionality and design, which strategies are used by your direct competitors, and which strategies might have the most effect on your target audience.