How to Monetize Your B2C Mobile App: Core Strategies

Finding a way to monetize your B2C mobile app is quite challenging. There’s fierce competition in the app marketplace, with over 2.4 million apps available on Google Play Store alone at the start of this year. And yet, the median monthly revenue for an app after 12 months is just under $50. 

To succeed in this saturated market, you need to develop a well-thought-out strategy for monetizing your app. But before diving into the different monetization strategies, there are a few key things to consider. 

How to Monetize Your B2C Mobile App: Things to Consider before Choosing Your Strategy

Monetizing your B2C mobile app requires a good understanding of your target audience, the type of product you are offering and the specifics of your industry:

Get a Good Understanding of Your Target Audience 

To select the right monetization strategy, you first need to think about who your users are. How old are they? Where are they from? What are their needs and pain points? 

Different types of users have different preferences when it comes to monetization approaches. For example, generational nuances could play a decisive role: younger people may prefer in-app purchases while older users may prefer a subscription model. 

Think about the Type of App You are Offering 

Next, think about what works best with the type of app you are offering. Is it a game, a social network, a news app, or something else? What’s the potential for user growth? 

That will give you a hint on what strategy to use. High engagement apps usually work better with ads, while niche products with dedicated users could take better advantage of in-app purchases, for example. 

Do a Thorough Market Analysis 

Take a look at what your competitors are doing. Research the ways apps similar to yours are monetizing. This will give you good insights into what you should potentially do. Also, make sure to stay informed on the latest trends in app monetization and whether users are shifting from one model to another. 

The Different Mobile App Monetization Strategies and How to Choose the Right One 

There are so many B2C app monetization strategies that it’s quite easy to get lost. To help you decide on the best strategy for your app, we will go through the 7 major monetization approaches in detail, explain their advantages and disadvantages and give you real-life success stories to take inspiration from. 

Paid Apps

A paid app is a mobile application that users have to purchase upfront before downloading and installing it on their device. Unlike free apps, which are available at no cost and often monetize through other strategies like in-app purchases or ads, paid apps require a one-time payment to access their features and content.

The majority of apps require no payment to download. As of March 2024, 95.1% of all iOS apps and 96.9% of all apps on Google Play were available for free. So, if you decide to go for a paid app monetization strategy, you must have a very good reasoning behind your decision. 

It’s essential that you are offering unique and high-quality content that provides real value to your users. Already having a loyal customer base is also a big plus. Last but not least, your marketing should be top quality. 

Here are the advantages and disadvantages of the paid app monetization strategy: 

Pros:

• Immediate Revenue: Users pay upfront to download the app, which generates immediate income without relying on in-app purchases or advertisements.
• Ad-Free User Experience: Without advertisements, the app can offer a cleaner, more enjoyable user experience without interruptions.
• Loyal User Base: Users who are willing to pay for an app are often more committed and engaged, leading to higher retention rates.
• Stable Revenue Model: The revenue from downloads provides a stable and straightforward income, which can allow you to better plan and invest in app development and updates.
• Better Feedback and Reviews: Paying Users  are usually more loyal and likely to provide constructive feedback and positive reviews.

Cons:

• Lower Download Rates: Users may be hesitant to pay upfront for an app without trying it first, resulting in fewer downloads compared to free apps.
• Higher User Expectations: Paying users often have higher expectations for performance, features, and support, which can be challenging to meet. 
• Limited Monetization Opportunities: Relying solely on the download fee limits additional revenue streams that you’d have with in-app purchases, subscriptions, or ads.
• Intense Market Competition: Competing against free apps that offer similar features can take time, as many users prefer to try free options before considering paid alternatives.
• Expensive Marketing: To convince users to pay upfront, you need stellar marketing, which can be costly and time-consuming. 

Success Story: Minecraft 

Why it works: The paid app monetization strategy works for Minecraft because the game offers a unique and highly engaging experience that justifies its upfront cost. Minecraft also has a strong brand reputation and a massive, loyal fan base. In addition, the game provides extensive content and features without the need for ads, ensuring a great UX experience. Minecraft's success on other platforms, combined with positive word-of-mouth and high user satisfaction, encourages mobile users to invest in the app, making the one-time purchase worthwhile for them. 

In-App Advertising

In-app advertising is a monetization strategy where mobile applications display ads to generate revenue. Unlike paid apps that require users to make a one-time purchase to access the app, in-app advertising allows users to download and use the app for free, with revenue generated through the display of ads within the app. 

This model is widely used due to its ability to reach a broad audience without an initial cost barrier. It’s a popular choice for developers looking to monetize free apps and provide a steady income stream. In 2024, approximately 36% of mobile apps generate revenue through in-app advertising.

Here are the advantages and disadvantages of this strategy:

Pros:

• Broad User Base: Without the initial pay barrier, free apps with in-app advertising attract a large number of downloads.
• Continuous Revenue Stream: Ads can provide ongoing revenue as long as users continue to engage with the app, unlike one-time payments.
• Multiple Ad Formats: You can choose from various ad formats such as banners, video ads, or native ads. This allows you to select what would work best for your solution and users. 
• Data-Driven Insights: You can track ad interactions to gain valuable data on user behavior and use it to optimize both the app and the ad user experience. 

Cons:

• User Experience Impact: If you don’t plan your ads carefully, they can disrupt the user experience, which in turn could lead to customer dissatisfaction and lower retention rates.
• Ad Blockers: Some users install ad blockers, which can reduce the effectiveness and revenue potential of in-app advertising. To avoid that problem, implement scripts that detect ad blockers. 
• Revenue Variability: Ad revenue can be inconsistent, depending on user engagement, ad click-through rates, and fill rates from ad networks.
• Ad Management: You must put continuous effort to ensure the apps are relevant and non-intrusive.

Success Story: Instagram

Why it works: Instagram monetizes through ads (usually sponsored posts or stories) that appear on the user’s feed. The app’s advanced targeting ensures that the sponsored content aligns with the users’ interests, keeping the ads engaging and minimally intrusive. The combination between good user experience and a large and well-targeted user base makes Instagram an appealing platform for advertising. 

In-App Purchases (Freemium)

In-app purchases are a monetization strategy in which users can download and use the app for free but can purchase certain features, content, or virtual goods within the app. This freemium model allows app developers to attract a large user base by offering the core experience for free while generating revenue from users willing to pay for additional features.

As of 2024, in-app purchases are one of the most common monetization models, especially for mobile games and utility apps. Here are some stats from 2024:

• In-app purchases are one of the most common monetization models, with about 50% of non-gaming apps and 79% of gaming apps using them.
• These purchases contribute significantly to revenue, accounting for 48.2% of mobile app earnings, compared to 14% from ads and 37.8% from paid downloads.
• And while about 48% of apps use some form of in-app purchases, only around 5% of users typically make those purchases.

Here are the advantages and disadvantages of the in-app purchases monetization strategy:

Pros:

1. Large User Base: Offering the app for free attracts more downloads, increasing the potential pool of paying customers.
2. High Revenue Potential: Users can make multiple purchases over time, leading to higher lifetime value per user compared to one-time payments.
3. Flexibility: You can offer a range of purchase options, from small virtual goods to big upgrades.
4. Enhanced User Engagement: In-app purchases can enhance the user experience by providing additional content or features, encouraging longer app use.
5. Low Entry Barrier: Users can try the app without any upfront cost, reducing the barrier to entry and increasing the likelihood of adoption.

Cons:

1. Development Complexity: Implementing and managing in-app purchases requires additional development effort and ongoing maintenance.
2. User Frustration: Some users may feel pressured or frustrated by the constant prompts to make purchases, which could lead to negative reviews.
3. Revenue Dependency: Revenue depends on a small percentage of users (remember that only 5% of users make purchases), making it less predictable.
4. Competition: The freemium model is quite popular, which means you will face intense competition and find it challenging to stand out.
5. Regulatory Issues: In-app purchases are subject to various regulations and policies, which can vary by region and platform, adding complexity to compliance.

Success Story: Candy Crush Saga

Why it works: Candy Crush Saga effectively uses the freemium model with in-app purchases by offering engaging and addictive gameplay for free while providing optional purchases that enhance the experience. Players can buy extra lives, boosters, and moves to progress faster through levels. The game's compelling design and regular updates keep players engaged and willing to spend money on these enhancements. King, the developer, also employs strategic pricing and limited-time offers to encourage purchases. This approach has made Candy Crush Saga one of the highest-grossing mobile games globally, which shows the potential of in-app purchases in a well-executed freemium model.

Partnerships/ Incentivised Advertising

Incentivized advertising involves offering users rewards or bonuses in exchange for engaging with ads, such as watching a video or completing a survey. This strategy can increase user engagement with ads while providing a better user experience by offering tangible benefits that increase user satisfaction. Partnerships with other brands or apps can also enhance this model by providing more attractive rewards.

Here are the advantages and disadvantages of this strategy:

Pros:

• Better User Engagement: Users are more likely to engage with ads if they receive rewards, and this leads to higher ad interaction rates.
• Improved User Experience: Offering rewards for ad interactions can make the advertising experience more positive and less intrusive for your users.
• Additional Revenue Stream: This model can generate additional revenue through higher ad engagement and potential partnerships with brands.
• User Retention: Rewards and bonuses can increase user retention by providing ongoing incentives to use the app.
• Attractive to Advertisers: The high engagement rates of this monetization strategy make the app more appealing to advertisers, and this might bring you better ad deals and higher revenue.

Cons:

• Complex Implementation: Setting up and managing incentivized advertising can be complex and requires continuous management. This includes everything from technical implementation to partnership management and ongoing optimization of the strategy. 
• Potential for Abuse: Some users may try to game the system to receive rewards without genuine engagement, reducing the effectiveness of the ads.
• Balancing Act: If you don’t balance the number of incentivized ads and content right, it may overwhelm users and detract from the core app experience.

Success Story: Smule: Sings Songs & Make Music

Why it works: Smule: Sing Songs & Make Music effectively uses incentivized advertising by offering users rewards such as virtual gifts, in-app currency, and access to premium features for engaging with ads. This model encourages users to interact with ads in exchange for enhancing their singing and social experiences on the platform. The app also partners with various music and entertainment brands to provide exclusive content and promotions, further incentivizing user engagement. This strategy not only boosts ad interaction rates but also enhances user retention and satisfaction.

Subscription 

The subscription monetization strategy involves offering users access to premium features, content, or services on a recurring payment basis, typically monthly or annually, or a choice between the two. This model is increasingly popular among apps that provide continuous value, such as streaming services, productivity tools, and content platforms.

Here are the advantages and disadvantages of this strategy:

Pros:

• Predictable Revenue Stream: Subscriptions provide a steady and predictable income, which will help you plan your financials and investments.
• Higher Lifetime Value: Subscriptions can increase a customer's lifetime value, as users often continue to pay for the service over an extended period.
• Enhanced User Engagement: Subscriptions can lead to higher user engagement and retention, as users are more likely to use a service they are paying for consistently.
• Continuous Improvement: Recurring revenue allows for ongoing updates and improvements to the app, which can keep users satisfied and bring down churn.
• Premium Experience: Subscriptions often offer an ad-free experience and exclusive content, improving overall user experience and satisfaction. 

Cons:

• Acquisition Barrier: The requirement to pay regularly can deter potential users from signing up, reducing the overall user base.
• High User Expectations: Subscribers typically have higher expectations for performance, content updates, and customer support, which can be challenging to meet all the time. 
• Market Saturation: With many apps adopting the subscription model, competition is fierce, making it challenging to stand out and attract subscribers.
• Management Complexity: Managing subscriptions involves handling recurring payments, dealing with billing issues, and maintaining compliance with various regulations, adding to operational complexity.

Success Story: Headspace

Why it works: Headspace, a meditation and mindfulness app, has successfully implemented the subscription model by offering a range of guided meditation sessions, mindfulness exercises, and sleep aids. Users can access basic features for free but must subscribe to unlock the full library and advanced features. Headspace continually adds new content, ensuring ongoing value for subscribers. The app's user-friendly interface, high-quality content, and proven benefits have helped it build a loyal subscriber base, driving consistent revenue growth and user satisfaction.

Blended Model 

The blended model strategy combines two or more monetization methods within a single app to maximize revenue potential. This can include a mix of subscriptions, in-app purchases, advertisements, and more. By diversifying revenue streams, apps can serve the needs of a wider audience and not depend on a single source of income.

Here are the advantages and disadvantages of this strategy:

Pros:

• Multiple Revenue Streams: Diversifying income sources can lead to higher overall revenue and reduce reliance on any one method.
• Increased User Base: Offering free features with ads and premium features through subscriptions or in-app purchases can attract both non-paying and paying users.
• Flexibility: The blended model allows for adjustments based on user behavior and market trends, optimizing revenue strategies over time.
• User Choice: Users can choose how they want to engage with the app, which increases their satisfaction rates.
• Higher Engagement: Providing various ways to interact with the app can keep users engaged and increase retention rates.

Cons:

• Complex Implementation: Managing multiple monetization methods can be technically challenging and require more resources.
• You Have to Balance Carefully: Ensuring that free users are not overwhelmed by ads while providing enough value to justify premium subscriptions can be difficult.
• Higher Expectations: Users may have high expectations for premium features and support, which can be challenging to meet all the time.
• Operational Complexity: Handling different revenue streams adds to the complexity of your operations. 

Success Story: Spotify

Why it works: Spotify successfully employs the blended model strategy by offering a free tier supported by ads and a premium tier with additional features for subscribers. Free users can access a vast library of music with occasional ads, while premium users enjoy an ad-free experience, offline listening, and higher audio quality. This model allows Spotify to attract a large user base, monetize free users through advertising, and convert a significant portion of them into paying subscribers. By continuously adding value through personalized playlists, exclusive content, and social features, Spotify maintains high engagement and loyalty among its users, driving consistent revenue growth from both ads and subscriptions.

How to Monetize Your B2C Mobile App: Final Thoughts 

Monetizing a B2C mobile app requires a strategic approach, as you will have to deal with fierce competition and the varying preferences of users. To choose the right monetization strategy, you should have a good understanding of your target audience, the type of app you offer, and the recent market trends. 

Each method—whether it's paid apps, in-app advertising, in-app purchases, incentivized advertising, subscriptions, m-Commerce, or a blended model—has its own set of advantages and disadvantages. By analyzing successful examples and tailoring these strategies to fit your app's unique value proposition and user base, you can enhance your chances of generating sustainable revenue and achieving long-term success in the competitive app marketplace.

CTA: Our experts at Magora will help you build a bespoke mobile app tailored to your specific needs. We specialize in developing customized solutions and ensure that every aspect of the model is aligned with your users’ preferences and operational goals. 

From concept to completion, our team will guide you through every phase of development, ensuring your project is on the right track and tailored to your specific requirements. We offer comprehensive support in building innovative, high-performance apps that enhance your operational efficiency and deliver superior user experiences.

Let us help you transform your vision into reality. Contact us today to learn more about our bespoke mobile app development services and how we can help you achieve your business objectives.

Alex Galaktionov

Director of Operations and Business Development

A seasoned technology expert and agile advocate, Alex brings over a decade of transformative expertise in the IT sector