Source: https://www.youtube.com/watch?v=VVxuvIkyngc Channel: Steven Cravotta (steven.builds)

In this video, I’m going to be walking you through every major way to monetize a mobile app. And I’m going to give you my honest take on each method. Monetizing an app in this day and age is not just about slapping on ads or charging an upfront fee of 2.99.Thatusedtoworkinlike2011,butthegamehaschanged.Now,youneedarealstrategy,onethatactuallyoptimizesthelifetimevalueofeachuser,printscash,anddoesn′tdriveusersaway.Dependingonthetypeofappyouwanttobuild,yourmonetizationstrategyshouldalignwiththetypeofappyou′retryingtobuild.I′vebuiltmultiplemobileapps,includingsomegamesthatweremonetizedstrictlythroughin−appads.Also,aquitvapingappthatwasmonetizedthroughsubscriptions,whichhit2.99. That used to work in like 2011, but the game has changed. Now, you need a real strategy, one that actually optimizes the lifetime value of each user, prints cash, and doesn't drive users away. Depending on the type of app you want to build, your monetization strategy should align with the type of app you're trying to build. I've built multiple mobile apps, including some games that were monetized strictly through in-app ads. Also, a quit vaping app that was monetized through subscriptions, which hit44,000 per month, a monthly recurring revenue before I sold it to a larger mobile app studio. And now I’m currently building Posted, which has just crossed 600,000intotalrevenue.Andlook,I′vetriedeverymajormonetizationmodeloutthere.Subscriptions,ads,inapppurchases,affiliatemarketing.Somewereabsolutegoldmines,andothers,well,theywerecompleteduds.Inthisvideo,I′mgoingtobreakdowneverymajormonetizationmodel,showyourealappsthatarecrushingitwiththosemodels,andwalkyouthroughtheexactprosandconsofeachone.So,bytheendofthisvideo,you′llknowexactlywhichmonetizationstrategyisrightforyourapp,andmoreimportantly,howtoimplementitwithoutburningcashortime.AndmakesureyoustickarounduntiltheendbecauseI′llrevealwhatmonetizationstrategyIwoulduseifIhadtostartalloveragainfromscratchandwhymostpeoplegetitcompletelywrong.Let′sjumpintoit.So,boom.Herewehaveit.Thecompletemobileappmonetizationguide.We′regoingtobewalkingthrougheachoneofthedifferentmethodsthatyoucanusetomonetizeyourmobileapp.Andasalways,ifyouwantthisentiredocumentandtheexamplesofappsthatareusingeachoneofthesemethods,thedownloadwillbeinthedescription.Youcandownloadthisdocumentforfree.Gocheckitout.Okay,solet′sstartoutwithprobablythemostoutdatedmethod,whichisthesimpleone−timepurchase,akaapaidapp.Youprobablyremembertheseappsifyouwereontheappstoreinlike2008,2009,whereyouhadtopayupfrontbeforeevendownloadingtheapp.Someappsstilldothis.Youknow,thesearemostpopularforforappsthathavephysicalproductsincludedlikescalesorthisbabymonitorthatwe′regoingtogoover.So,unlessyouhaveaverystrongbrandorphysicalproduct,Iwouldnotrecommendthismethodatall.Here′sanotheronethat′sprettyinteresting.TheShadowRocketapp,whichisdoing70K.Itisaproxyutility,right?So,peopleareusingthis.They′rewillingtopayforit.There′sclearlysomeusecasethatsomecompanyispromotingoutthere.WealsohavetheCloudBabyMonitor,whichisdoing9Kamonth.Thismobileapppairsnicelywithaphysicalproduct.AndthenwehaveFLStudio.Forallmymusicproducers,musicloversoutthere,youknowthisone.They′redoing600,000 in total revenue. And look, I've tried every major monetization model out there. Subscriptions, ads, inapp purchases, affiliate marketing. Some were absolute gold mines, and others, well, they were complete duds. In this video, I'm going to break down every major monetization model, show you real apps that are crushing it with those models, and walk you through the exact pros and cons of each one. So, by the end of this video, you'll know exactly which monetization strategy is right for your app, and more importantly, how to implement it without burning cash or time. And make sure you stick around until the end because I'll reveal what monetization strategy I would use if I had to start all over again from scratch and why most people get it completely wrong. Let's jump into it. So, boom. Here we have it. The complete mobile app monetization guide. We're going to be walking through each one of the different methods that you can use to monetize your mobile app. And as always, if you want this entire document and the examples of apps that are using each one of these methods, the download will be in the description. You can download this document for free. Go check it out. Okay, so let's start out with probably the most outdated method, which is the simple one-time purchase, aka a paid app. You probably remember these apps if you were on the app store in like 2008, 2009, where you had to pay upfront before even downloading the app. Some apps still do this. You know, these are most popular for for apps that have physical products included like scales or this baby monitor that we're going to go over. So, unless you have a very strong brand or physical product, I would not recommend this method at all. Here's another one that's pretty interesting. The Shadow Rocket app, which is doing 70K. It is a proxy utility, right? So, people are using this. They're willing to pay for it. There's clearly some use case that some company is promoting out there. We also have the Cloud Baby Monitor, which is doing 9K a month. This mobile app pairs nicely with a physical product. And then we have FL Studio. For all my music producers, music lovers out there, you know this one. They're doing90,000 a month. Again, they have a very, very strong brand and people are already familiar with the product. So, the upfront one-time purchase makes sense for all of these, but again, I wouldn’t recommend this. Moving on, we have subscriptionbased, the SAS model. This is the exact model that I use to scale Puff Count, my quit vaping app, to 45,000permonth,anditisthestandardrightnowinmobileapps.So,basically,thewaythistypicallygoes,theseappswillbefreetodownload.Theywilloffersomesortoffreetrial,andthenonceyouconvertfromthefreetrial,itwillmoveintoamonthlyorannualplan.So,somebigexampleshereareMyFitnessPal,whichisdoing45,000 per month, and it is the standard right now in mobile apps. So, basically, the way this typically goes, these apps will be free to download. They will offer some sort of free trial, and then once you convert from the free trial, it will move into a monthly or annual plan. So, some big examples here are My Fitness Pal, which is doing14 million per month. And by the way, if you click on these links and check out these videos, you can see all of the inapp purchases that these companies are testing. So, we can see that My Fitness Pal has a monthly, uh, yearly, different variations of each one of these. So, this is telling us that My Fitness Pallet is AB testing all of these different prices. They have a 1999 monthly, they have a 80annual,a80 annual, a50 annual, a 100annual,a100 annual, a9 monthly. They have AB tested all of these different prices. To be honest with you, they’re probably showing different prices based on your location. So, if I download this app from the US, I’m probably seeing a different price as someone downloading from South America. This is the go-to model right now because you can build real enterprise value. You’re building recurring revenue. So, you know, let’s say My Fitness Pal gets zero downloads next month. They’re still going to retain a lot of this recurring revenue, this 14millioninrecurringrevenue.Tobehonest,somepeoplejustsimplydon′tcanceltheirsubscriptionsontheirmobileapps.So,allthebiggestappsintheworldaredoingthisrightnow.Here′sanotherexample.Flowthatisdoing14 million in recurring revenue. To be honest, some people just simply don't cancel their subscriptions on their mobile apps. So, all the biggest apps in the world are doing this right now. Here's another example. Flow that is doing10 million per month. And we can check out their pricing here. They have a 60annual,a60 annual, a12 monthly, a 2weekly.TheyareABtestingabsolutelyallthesepricesatalltimes.Andagain,probablyshowingdifferentpricesbasedonwhereyoudownloadtheappfrom.Next,wehavejustinapppurchases.Andtheseappsarefree,buttheyofferin−apppurchasesorupgradesfordigitalgoodslikecoins,power−ups,filtersforphotoapps,etc.Andtheseareverycommoninthegamingspace,thephotoandvideospace,andinproductivityapps.So,wehaveacoupleexampleshere.Alotofthesedonotneedanintroductionatall.WehaveClashofClansdoing2 weekly. They are AB testing absolutely all these prices at all times. And again, probably showing different prices based on where you download the app from. Next, we have just inapp purchases. And these apps are free, but they offer in-app purchases or upgrades for digital goods like coins, power-ups, filters for photo apps, etc. And these are very common in the gaming space, the photo and video space, and in productivity apps. So, we have a couple examples here. A lot of these do not need an introduction at all. We have Clash of Clans doing9 million per month, and we can check out their inapp purchases down here, right? So, they’re charging anywhere from 29 all the way to 240perindividualinapppurchaseintheirmobileapp.Theysellgems,Ithink.IrememberfromwhenIplayedthiswhenIwas12yearsold.Uh,andthenwehaveCandyCrush,whichisdoingastaggering240 per individual inapp purchase in their mobile app. They sell gems, I think. I remember from when I played this when I was 12 years old. Uh, and then we have Candy Crush, which is doing a staggering62 million per month in revenue all through inapp purchases. And here we can see them. All of these are one-time purchases. Their most expensive one being 8,theircheapestonebeing8, their cheapest one being1. from 1to1 to8 one-time purchases, they do 62millionpermonth.Insane.Andthenfinally,forinapppurchases,wehavethisapp,Forest,whichisafocusandproductivityapp.Theyhaveonetimepurchasesrangingfrom99centsallthewayto62 million per month. Insane. And then finally, for inapp purchases, we have this app, Forest, which is a focus and productivity app. They have onetime purchases ranging from 99 cents all the way to22. You can purchase these things oneoff, and they’re doing 100,000inrevenue.Thenextmethodthatwehaveisadvertising.Withadvertising,youearnthroughtheimpressions,clicks,oractionswithinyourapp.Ifyou′veeverdownloadedagameandyouseethebanneradsorrewardedvideoads,that′swhatthisis.TheyusenetworkslikeADMMob,AppLin,IronSource,etc.Andmoreoftenthannot,they′reactuallyusingallofthose.Theyusewhatiscalledawaterfallmethod.So,theywillhavealloftheseadnetworksontheirapp.Andthere′sareal−timebidding.So,anytimesomeone′susingtheappandanadisrequested,allofthesenetworkswillbidandthemostprofitableorthehighestpayingonewillbeshowntothatuser.It′scalledthewaterfallmethod.Andthismonetizationmodelisbestforappswithhighdailyactiveusersbecauseinorderforthismethodtobeprofitable,youneedyouruserstobecomingtoyourappmultipletimeseverysingledayandspendingalotalotoftimeonit.ThisisthemonetizationmethodthatIuseformyearlygameslikeGridandWordle.Thisabsolutelycrushedbecausemyuserswereontheappforalongperiodoftimeandtheykeptcomingbackmultipletimesperday.SomegreatexamplesofthisareHelixJumpandagainallthesearegames.BrainTest,InShot.Alloftheseappsyoucanseeareprimarilymonetizingthroughadsbecausetheyhaveatonofdownloads.WecanseeonSensorTowerthattheyhaveatonofdownloadsbutalmostnorevenue.1milliondownloads,only50Kinrevenue.AndInShot,thiscompanyactuallyhasatonofadsoratonofappsthataremonetizingthroughads.ThisisaChinesecompany.Butagain,iftheyhaveatonofdownloadsandnorevenue,SensorTowerisonlytrackingtheinapppurchaseorsubscriptiondata.andthey′renotreallytrackingtheadrevenuethatwell.So,weknowthatthesetypesofappsaremostlikelymonetizingthroughin−appads.Andagain,you′llseelaterinthevideo,alotofthesegamesareactuallymonetizingthroughacombinationofthesedifferentmethods.So,stickarounduntiltheendbecauseI′mgoingtoshowyoutheappsthatarereally,reallycrushingitareusingacombinationofallthesedifferentmonetizationstrategies.Okay.Next,wehaveanotverypopularmethod,butaneffectiveoneforsomeapps,whichisaffiliateorreferralrevenue.Andtoearnmoneythisway,theseappsarerecommendingothertoolsandotherproductsoutsideoftheapp.SomeexampleswehavehereareHopperorLTK.Hopperisatravelcompaniontoolanditwillshowyouthebestflights,hotels,andcars.Andasyoucansee,they′vegotten200,000downloadslastmonth,butonly5Kinrevenue.AndsowhatHopperisbasicallydoingisthey′reattractingusersinbyshowingthemthebestflights,hotels,cars,rentals,etc.andthey′redirectingtheuserstothoseotherwebsiteslikeDeltaforexample,anairlineandtheyaregettingaffiliaterevenueeverytimeoneofHopper′susersbooksaflightorrentsacarorrentsahoteltheyareearningapercentageofthatuser′stotalspendandthatishowthey′remonetizing.AlsosimilarlyLTKagainyouknowfortheladsoutthereifyou′veseengirlshaveanLTKlinkintheirbiotheyareearningaffiliateincomebasedonwhetherornotsomeonebuysthatpieceofclothing.So,wecancheckoutLTKhere.So,LTKisessentiallyafashionapp.CreatorscanputtheseLTKlinksintheirbioandthenyoucanshopbasedonwhatthatcreatorlikesorhas.Andagain,ifyoupurchasesomething,bothLTKandthecreatorwillearnaffiliateincome.So,theywillearnapercentageofwhateveryouspendpurchasingthisfashionitem.So,again,affiliateorreferralrevenue.Thisworksifyouhaveatonofuserscomingintotheappallthetimeandusingitquitefrequently.Next,wehavedatalicensing.Thisisprobablythemostcomplicatedwayandthemostdangerouslegallywaytomonetizeyourusers.Youcansellyourusersdataorinsightstoresearchersorthird−party.Andjustkeepinmindthatyoumustfollowstrictstrictlawstodoso.Butwaysactuallyisaveryverypopularapp.It′samapuhnavigationapp.They′vebeendownloadedthreemilliontimeslastmonth.Theydon′tmakeanymoneyoffinapppurchases.Theydohaveadsontheapp,butamajorityoftheirmoneyismadesellingdatatothegovernment.Sotheyareactuallysellingthisanonymizeddatatothegovernment,cityplannersandadvertisers.Sotheyaremostlikelysellingtheirdatatoagainthegovernment,cityplanners,whateveritmaybe,butalsorestaurantsandshopsthatpeoplearegoingtothattheysearchforonWays.Rakutinalsodoessomethingsimilar.Theyareacashbackanddealsapp.Andagain,theymakenomoneyoffinapppurchases.Andwhattheyaredoingistheyaresellingpurchasedata.Soanyconsumerwhopurchasescertainitemsinacertainniche,theyownthatdata.Theyunderstandwhatthepurchasingpatternsofthatuserare.Andtheycansellthattootherstores,otheradvertisers,theywillsellthatdata.AndsamewithRocketMoney.RocketMoneyactuallyconnectstoyourbankandtheyunderstandagainyourpurchasebehavior,yourspendingpower,etc.Theywillalsosellthatdataandyourfinancialinsightstootherfirmsandfintechcompanies.So,ifyou′veeverusedRocketMoney,thenmorelikelythannot,peoplearehittingyouupaboutloansorotherstufflikethat.They′resellingallofyourdata.Andfinally,movingtosomeofthemostprofitableappsinthestore.Theyareusingacombinationofdifferentmonetizationmethods.AndthisiswhatIwouldrecommendyoudoisuseacombinationofallthesedifferentmethods.Right?Forexample,wehaveTinder.EverybodyknowsTinder.They′redoing100,000 in revenue. The next method that we have is advertising. With advertising, you earn through the impressions, clicks, or actions within your app. If you've ever downloaded a game and you see the banner ads or rewarded video ads, that's what this is. They use networks like ADM Mob, AppLin, Iron Source, etc. And more often than not, they're actually using all of those. They use what is called a waterfall method. So, they will have all of these ad networks on their app. And there's a real-time bidding. So, anytime someone's using the app and an ad is requested, all of these networks will bid and the most profitable or the highest paying one will be shown to that user. It's called the waterfall method. And this monetization model is best for apps with high daily active users because in order for this method to be profitable, you need your users to be coming to your app multiple times every single day and spending a lot a lot of time on it. This is the monetization method that I use for my early games like Grid and Wordle. This absolutely crushed because my users were on the app for a long period of time and they kept coming back multiple times per day. Some great examples of this are Helix Jump and again all these are games. Brain Test, InShot. All of these apps you can see are primarily monetizing through ads because they have a ton of downloads. We can see on Sensor Tower that they have a ton of downloads but almost no revenue. 1 million downloads, only 50K in revenue. And InShot, this company actually has a ton of ads or a ton of apps that are monetizing through ads. This is a Chinese company. But again, if they have a ton of downloads and no revenue, Sensor Tower is only tracking the inapp purchase or subscription data. and they're not really tracking the ad revenue that well. So, we know that these types of apps are most likely monetizing through in-app ads. And again, you'll see later in the video, a lot of these games are actually monetizing through a combination of these different methods. So, stick around until the end because I'm going to show you the apps that are really, really crushing it are using a combination of all these different monetization strategies. Okay. Next, we have a not very popular method, but an effective one for some apps, which is affiliate or referral revenue. And to earn money this way, these apps are recommending other tools and other products outside of the app. Some examples we have here are Hopper or LTK. Hopper is a travel companion tool and it will show you the best flights, hotels, and cars. And as you can see, they've gotten 200,000 downloads last month, but only 5K in revenue. And so what Hopper is basically doing is they're attracting users in by showing them the best flights, hotels, cars, rentals, etc. and they're directing the users to those other websites like Delta for example, an airline and they are getting affiliate revenue every time one of Hopper's users books a flight or rents a car or rents a hotel they are earning a percentage of that user's total spend and that is how they're monetizing. Also similarly LTK again you know for the lads out there if you've seen girls have an LTK link in their bio they are earning affiliate income based on whether or not someone buys that piece of clothing. So, we can check out LTK here. So, LTK is essentially a fashion app. Creators can put these LTK links in their bio and then you can shop based on what that creator likes or has. And again, if you purchase something, both LTK and the creator will earn affiliate income. So, they will earn a percentage of whatever you spend purchasing this fashion item. So, again, affiliate or referral revenue. This works if you have a ton of users coming into the app all the time and using it quite frequently. Next, we have data licensing. This is probably the most complicated way and the most dangerous legally way to monetize your users. You can sell your users data or insights to researchers or third-party. And just keep in mind that you must follow strict strict laws to do so. But ways actually is a very very popular app. It's a map uh navigation app. They've been downloaded three million times last month. They don't make any money off inapp purchases. They do have ads on the app, but a majority of their money is made selling data to the government. So they are actually selling this anonymized data to the government, city planners and advertisers. So they are most likely selling their data to again the government, city planners, whatever it may be, but also restaurants and shops that people are going to that they search for on Ways. Rakutin also does something similar. They are a cashback and deals app. And again, they make no money off inapp purchases. And what they are doing is they are selling purchase data. So any consumer who purchases certain items in a certain niche, they own that data. They understand what the purchasing patterns of that user are. And they can sell that to other stores, other advertisers, they will sell that data. And same with Rocket Money. Rocket Money actually connects to your bank and they understand again your purchase behavior, your spending power, etc. They will also sell that data and your financial insights to other firms and fintech companies. So, if you've ever used Rocket Money, then more likely than not, people are hitting you up about loans or other stuff like that. They're selling all of your data. And finally, moving to some of the most profitable apps in the store. They are using a combination of different monetization methods. And this is what I would recommend you do is use a combination of all these different methods. Right? For example, we have Tinder. Everybody knows Tinder. They're doing80 million per month. And they have multiple different ways that they monetize. So, of course, they have their subscription, which is Tinder Plus, gold, and platinum tiers. But they also offer inapp purchases like boost, super likes, and other profile enhancements, but they also do advertising. So, if you haven’t purchased the subscription for Tinder, they will show you ads every couple of swipes. So, they’re monetizing through three different methods. And Sensor Tower shows that they’re making 80millionamonth,butthisislikelymuch,much,muchhigherduetoadvertisingandanydatathattheymaysellaswell.Andthen,ofcourse,wehaveTikTok.TikTokisactuallymaking80 million a month, but this is likely much, much, much higher due to advertising and any data that they may sell as well. And then, of course, we have Tik Tok. Tik Tok is actually making144 million per month just off of their app. They have inapp purchases where users can buy coins and gift them to live streams. You know, like that Pinky Pinky doll, whatever her name is, where she’s doing the live streams and saying, “So good, so good. Wow.” People who buy gifts to send to her. Tik Tok is making money off all that stuff. Uh they also have advertising, of course. You see ads in the feed all the time, and they have their creative marketplace that they earn a percentage of revenue from. We also have Pixart, which is doing 6millionamonth.Theyhavesubscriptions,theyhaveinapppurchases,andtheyalsodoadvertising,muchlikeTinder.WehaveDuolingo,whoisdoing6 million a month. They have subscriptions, they have inapp purchases, and they also do advertising, much like Tinder. We have Duolingo, who is doing40 million per month, and they have a combination of one-time in-app purchases. They also have their subscription model, and they do advertising as well, ads in between lessons for free users. And then, of course, one that is very close to my heart, we have Wordle, which is a puzzle game that has inapp purchases and they also offer advertising as well. So, there you have it. all of the different monetization strategies and methods that you can choose from in your mobile app. Again, I would recommend you do a combination of these if you can. And if you are serious about the mobile app game and you want to learn how I build, scale, and then eventually exit mobile apps, I’ve dropped a full guide, a full 50-minute video breaking down my exact process on how I find ideas, build the apps, scale them, and then exit them. And as always, if you have any questions or you want to hit me up personally, you can DM me on stephven.builds on Instagram. I’ll always get back to you there. Hope you enjoyed. Hope you got some value. And I’ll see you in the next one.