Monetization Models BORNFIGHT Ebook PDF

Bornfight Ebook
App Monetization Models
Mobile App
Monetization Strategy
Business
models for
mobile app
monetization
Quickstart guide to app monetization
strategies and choosing the right business
model for your custom mobile application.
01 TABLE OF CONTENTS Business models for mobile app monetization
TABLE OF CONTENTS
3
4.6 eCommerce apps
01 Introduction to 4.7 White labeling
mobile app 4.8 Data licencing
monetization 4.9 Sponsorships
4.10 Indirect monetization
1.1 What is mobile app monetization
60
8
05 Hybrid models of
02 Current mobile app monetization
ecosystem
5.1 In-app advertising + in-app
2.1 So how much money is in purchases
mobile apps 5.2 In-app advertising + subscription
5.3 eCommerce app + data
12 licencing
5.4 Subscription + in-app purchases
03 Do you need a 5.5 In-app advertising + data
monetization licencing
67
strategy
06 The future of
3.1 Tips for creating a monetization
strategy
monetization
6.1 Increased ad spending
18
6.2 Google and Apple doubling
down on subscriptions
04 10 most effective
6.3 Continued rise of rewarded
app monetization video ads
models 6.4 Machine Learning and
Artificial Intelligence
4.1 Premium apps
4.2 In-app advertising
73
4.3 Freemium apps
07 Final thoughts
4.4 In-app purchases
4.5 Subscriptions
01 Introduction to mobile app monetization Business models for mobile app monetization
01
Introduction to
mobile app
monetization
Overview and key aspects of app
monetization that will be covered in
this ebook.
www.bornfight.com 3
01
Introduction to mobile
app monetization
With the continuous and exponential growth of the mobile app ecosystem, as well as more
opportunities to create and publish mobile applications, many businesses and entrepreneurs
want to get in on the action and try to achieve success on the app markets. But that growth
and opportunities come with an asterisk - more players and more applications in the app
space mean that building a great mobile application is no longer enough to achieve success.
That is only one of the necessary steps you need to take.
The other necessary step is to define a relevant monetization

model for your mobile application - a detailed strategy that will
enable your application to grow and bring income to your business.
In this ebook, we’ll primarily focus on explaining the pros and cons of the most used
monetization models, so you get a clear picture of the entire app monetization space and
could easily choose the one (or a couple, but more on that in chapter 5) that fits your
application type the best. In addition to monetization models, this ebook will cover the
process of creating a monetization strategy, as well as a variety of trends that will be shaping
the monetization ecosystem in the next couple of years.
www.bornfight.com 4
This ebook will tell you more about:
The current state of mobile applications
Trends affecting the mobile app monetization
10 most profitable monetization models
Connecting two or more models into a hybrid monetization model
Tips for defining a monetization strategy
Topics and aspects covered in this ebook can be especially

beneficial to:
1 Entrepreneurs willing to create and launch their first mobile application
2 Product managers in charge of overseeing the process of app development
3 Business owners and company managers who want to upgrade business processes
through mobile applications
Want to learn more about the process of developing mobile

applications? Visit our website and take a look at our ebook about
Product Discovery Workshops!
Before we dig any deeper, let’s explain mobile app

monetization!
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1.1
What is mobile app

monetization
Whether you’re running a large international enterprise with thousands of employees and
clients, or you’re a solo developer looking to build your first app, you need to understand how
to generate money from your mobile application in a way that would be most beneficial for
your business, but also your users.
Understanding how to monetize your mobile application is a

crucial aspecthow
Understanding of to
app development,
monetize as it will
your mobile application is a help you earn
revenue whileofyou’re
crucial aspect satisfying
app development, your
as it will helpusers needs
you earn revenue and
providing them
while you’re with
satisfying a users
your great user
needs andexperience.
providing them with
a great user experience.
So, what exactly is app monetization? The short answer would be the process of leveraging
an application’s user base and converting their actions and engagement into a stream of
revenue. A more detailed answer would be that monetization is a specific framework that
defines the exact ways in which a mobile application drives revenue and generates return on
investment (ROI) - a framework that enables you to answer these questions:
1 What source of income am I pursuing with the application?
2 What value will I be providing and at what price?
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Mobile app monetization is a way for you to earn income from your mobile application - it
enables you to take luck and chance out of the picture, and take control of the aspects that
affect the success of your application on the market.

crucial aspect
In an ideal world,ofyouapp
coulddevelopment, as it will
create a mobile application, help
launch it you earn
revenue while you’re
and immediately satisfying
start earning your
money. Since usersapp
the current needs and
providing
ecosystemthemisn’t anwith a great
ideal world, user
you need experience.
a monetization strategy
to take care of the money aspect.
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02 Current mobile app ecosystem Business models for mobile app monetization
02
Current mobile
app ecosystem
Mobile app monetization by the

numbers - key stats, current state
and future forecasts.
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02
Current mobile app

ecosystem
With over 3.5 billion smartphone users across the world, saying that the mobile industry is
thriving is quite an understatement. Couple that with 1.2 billion tablet users, and that
statement becomes an even bigger understatement. The bottom line is - the entire mobile
industry is rapidly increasing, and that growth is not showing any signs of slowing down.
5
users in billions
4
Smartphone
3,8
3 3,5
3,2
2,7 2,9
2 2,5
2016. 2017 2018 2019* 2020* 2021*
1,50
Tablet users in
1,25 1,28
1,19 1,23 1,26
1,00 1,1 1,14
billions
1
0,75 0,86
0,50 0,66
0,25
2013 2014 2015 2016 2017 2018 2019* 2020* 2021*

crucial aspect
The number of app
of mobile development,
users assoitiswill
keeps increasing, and helpofyou earn
the usage
revenue while
mobile apps. you’re
More satisfying
app usage means more your users
revenue for appneeds
owners.and
providing
If you wantthem
a piecewith
of thata great- you
revenue user experience.
need an app and a right
monetization strategy!
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2.1
So how much money is in

mobile apps
A lot, and it keeps on growing. According to the latest State of Mobile report by App Annie,
annual worldwide downloads have grown 45% since 2016 and 6% year over year. And that
growth has boosted all other categories - from consumer spend and ad spend to average
IPO valuation for mobile companies.
204B $204B 3.7 Hrs 825% 60%
Worldwide Worldwide Per day spent Higher avg Higher per user
downloads App Store in mobile by the IPO valuation for engagement by
in 2019 Consumer Spend average user mobile companies Gen Z vs older
in 2019 in 2019 in 2019 demos in 2019
On the money side of things, 2020 is set to be mobile’s biggest year ever, and advertising will
put a lot of fuel on that fire. Some forecasts are saying that the global ad spend on mobile will
reach 240 billion USD, with the overall revenue from mobile application coming just shy of
600 billion USD.
1200
Revenue in billion
1000
935,2
U.S. dollars
800 808,7
693
600
581,9
400 461,7
356,2
200 285,3
218,2
97,7 152
2014 2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023*
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If the forecasts are true, worldwide revenue from mobile

applications
If the forecastsis
areset toworldwide
true, be justrevenue
shy of 1 trillion
from mobile USD by 2023 -
which means
applications it will
is set to be double
just shy of 1in justUSD
trillion 4 years.
by 2023 -
which means it will double in just 4 years.
As we’ll mention in some of the following sections of this ebook, mobile advertising will be
spearheading the monetization game in the following years because more and more
advertisers are seeing great ROI from mobile ads, and that ultimately incites them to invest
even more into that platform. And if the 26% year over year increase in mobile ad spending
from 2019 to 2020 is any indication, monetization models that contain in-app ads might prove
to be one of the top picks for new app owners.
Global Mobile Ad Spend
oY
%Y
+26
$240B
$190B
2019 2020F
Now that we briefly covered the current state of mobile, let’s

tackle the main topic of this ebook - monetization models.
03 Do you need a monetization strategy Business models for mobile app monetization
03
Do you need a
monetization
strategy
Trying to monetize without a
monetization strategy is like flying
blind through a storm.
03
Do you need a
monetization strategy
The short answer to this question is - yes, you absolutely need

an app monetization strategy.
There are a multitude of reasons why defining a monetization strategy, doing user research,
defining goals and choosing the right model for a mobile application before even starting any
actual development on said application starts is a good idea - from the ability to create a
more streamlined production roadmap for your app and structuring a detailed promotion
plan, all the way to maximizing the chance of succeeding on the market by focusing on a
specific approach.
But, the most important reason for defining a monetization strategy

is UNDERSTANDING USERS AND CHANGES IN USER BEHAVIOR
By understanding what makes your users tick, understanding what they want, what incites
them to engage with your application and, ultimately, what would make them spend money
on or in your application, you can take out the guessing game completely out of the picture
and put all your focus on polishing the elements that provide your users with a better
experience.
If the forecasts
Remember, are are
your users true, worldwide
the ones revenue
that are directly from mobile
or indirectly
applications
(depending onistheset to be just
monetization shy
model) of 1 trillion
generating USDbyby 2023 -
you revenue
which
usingmeans it will
your app, so double
it’s only in satisfying
logical that just 4 years.
their needs is one
of your top priorities.
Here’s the deal, thousands of mobile applications are published on Apple’s App Store and
Google’s Play Store every single day, but only a tiny percentage of them ever become
popular, and an even tinier percentage brings any revenue to their owners. Why? Because
they’re published with the ‘we’ll figure it out on-the-fly’ mentality in mind - they don’t have a
strategy, and are basically offered to the mercy of some random element of chance hoping
they’ll be discovered and go viral. That is not the way to approach creating and launching a
mobile app.
If the forecasts are true, worldwide revenue from mobile

Mobile app development can be expensive. That is why you want
applications is set to be just shy of 1 trillion USD by 2023 -
to have as much control over as many elements that could affect
which means it will double in just 4 years.
your success on the market as you can.
Now, we’ll assume that you’re reading this ebook because you’re planning on creating your
own mobile application and don’t want some random element to decide if your application
will succeed or fail, so we’ll give you a couple of tips for creating a mobile app monetization
strategy.
3.1
Tips for creating a

monetization strategy
Tip #01: consider the type of mobile app you want to create
Some monetization models only work with specific types of

applications, so you need to keep that in mind while you’re defining
your strategy.
Tip #02: understand your target persona
If you want your product to be successful on the market, you need to

know who is it for, how those customers will use it, what will make
them buy it and what do they want to get out of it.
Tip #03: answers the question: ‘why would anyone buy my app’
If your app is to be successful, it needs to provide users with

something original, valuable or better than what the competition is
currently offering - define that.
Tip #04: define what else would your users be willing to pay for
To make the income you earn grow together with your application’s
user base, you need to define specific elements within the app that
could be monetized.
Tip #05: see what your competition is doing
Explore their product, their business strategies, the way they do sales,
how they speak to customers - try to define what they are doing good
and what they are doing bad.
Tip #06: provide value to your users
A line between providing value while maximizing revenue and being

named a cash grab is thin - make sure you’re always on the right side of
that line because user trust is difficult to get back.
Tip #07: define your goals with the app
By defining specific goals you want to achieve with your mobile

application, you’ll always have a guide that will keep you on the right
track and help you make decisions.
Tip #08: be in it for the long run
Establishing a relationship with users is a process that takes time, but

users’ engagement with the application is directly connected to
revenue, so it’s well worth it.
Tip #09: don’t sacrifice user experience
When choosing the right monetization model, great user experience

should be one of your top priorities - great user experience means
users will be more likely to spend money.
Tip #10: keep your eye on monetization trends
Google and Apple are major players in the app space, and their
action can have a big effect on the entire app ecosystem, so you
should follow what they’re up to.
Tip #11: don’t try to reinvent the wheel
The app market is filled with examples of apps successfully using

various monetization models and strategies - use those insights to
your advantage.
Tip #12: test, get feedback, iterate, repeat
Just because you defined a monetization strategy that fits your app
and your users, that doesn’t mean you’re done with it.
Keep developing and upgrading it based on your users’ behavior.
04 10 most effective app monetization models Business models for mobile app monetization
04
10 most effective
app monetization
models
If you’re looking for a way to
monetize your app, these are the
models you want to explore.
04
10 most effective app

monetization models
In this ebook, we’ll cover 10 of the most popular, effective and profitable models you can take
advantage of and implement into your business strategy to make money from your apps.
Premium apps Subscriptions
In-app advertising White labeling
Freemium apps Data licencing
In-app purchases Sponsorships
eCommerce apps Indirect monetization
4.1
Premium apps
An older, limited model that can

still be a top pick for certain types
of applications.
4.1
Monetization model that

has a hard time keeping up
This monetization model is pretty straightforward - if people

want to use your app they must first purchase it from the app
store. Once they pay for your application, they get complete
access to all of its features.
When the app markets just started, this was the only available monetization model. Today,
successfully using this model can be quite difficult as the competition from free apps is
extremely high and newer monetization models are proving to be more user-friendly, as well
as more lucrative for businesses.
With such a monetization model, mobile applications need to be several levels above the
rest if they want to have any chance of inciting users to buy them. They need to offer top-
notch features and have maximum ratings on stores, as well as a sea of positive reviews.
If you want to take advantage of the premium app model, you should first take a deep dive
into your competitors and analyze them. To determine if this is a good monetization model for
your app, ask yourself these questions:
1 Is your app superior to free alternatives?
2 Why would users choose your app over a free one?
While this model connects your revenue directly to the

number of downloads, it is far from being the most profitable
monetization model, so it’s not a surprise that less than 5%
of all apps available on stores are paid apps.
Pros of the model
Revenue is earned upfront with every new download
Exact monetary value of each user is known from the start
People who paid for the app are usually very engaged users
App UI and UX are usually better than in apps using other models
Cons of the model
Extremely high competition from free apps
Only a small number of users is willing to for an app before trying it
Convincing users to buy an app takes a lot of promotion and effort
Gathering users is very difficult due to cost barrier
Paying users have extremely high expectations
Both App Store and Play Store take a 30% of the revenue from every purchase
Can’t be blended with other models
App needs to be maintained for all existing users, although they aren’t providing any more
revenue
IDEAL USAGE
This monetization model is ideal for top of the line B2B apps that provide clear business values,
as well as apps with unique features and niche audiences looking for very specific solutions.
Pro monetization tip

Users are rarely ready to buy an application they haven’t had a
chance to try out first, so consider providing them with a lite
version that has an implemented free trial period. After they’ve
had some time to really test out the app and its features, users
will have a much larger incentive to buy the app.
APP SPOTLIGHT - THREEMA
Threema is one of the world’s most popular messengers

that puts focus on security and privacy. It is available for iOS
and Android devices, and can be found among the most
used and profitable premium apps. Threema can be used
completely anonymously as it allows users to make end-to-
end encrypted voice calls, and offers every feature one
would expect from a state-of-the-art instant messenger.
4.2
In-app advertising
A monetization gold mine that

keeps rapidly growing and is
accessible to everyone.
4.2
Most popular choice for

any and all types of apps
In-app advertising is a monetization model in which app

owners earn revenue for showing third-party ads within their
mobile applications. Without this model, a lot of apps
wouldn’t even exist.
This is one of the most popular revenue models because it can be used in almost any
application. Mobile apps that use this monetization model are usually completely free for
users, and app owners focus on earning their revenue from advertisers. And with global
spending on mobile advertising being forecasted to reach $280 billion in 2022, a lot of app
owners want to get a piece of that pie.
If you plan on implementing this monetization model into your mobile application, make sure
that the ads being shown within your application are relevant and tailored to fit your user
base. Ads that are intrusive, irrelevant to your users or just plain bad can cause harm to your
app engagement rate and user retention.
In-app advertising model is universal, as it can be used on

almost all types of mobile apps and it works for as long as an
application has active users.
Pros of the model
Great choice for all types of applications
Gaining users is easier because the app is free
Ads can generate a fair amount of revenue
Very effective if advertising is moderate, relevant and targeted
Multiple ad formats allow for better customization
Implementing ads into apps is easy
Blends extremely well with other monetization models
Cons of the model
To generate a larger amount of revenue, application needs a very high number of users
Users can easily get annoyed by ads
Ads can lead to decreased user experience
Isn’t very effective on niche applications
Irrelevant ads can lead to poor ROI
Large number of ads can incite users to leave the app
IDEAL USAGE
This monetization model is ideal for all types of free apps that have a potential to be used
frequently and for long periods of time.

Although it may sound like a good idea to put as many ads as you
can into your application, the truth is that you always have to put
user experience first. If a specific ad type or ad frequency within
the app has a negative effect on user experience, users will be
less likely to use the app.
APP SPOTLIGHT - INSTAGRAM
With more than 500 million daily active users, Instagram is

one of the largest and most popular social networking
services. The app enables its users to connect with friends,
share what they’re up to, or see what's new from others all
over the world by allowing them to upload photos and
videos, which can be edited with filters. Instagram is
completely free to use and available on all major platforms.
4.3
Freemium apps
The original hybrid model that

maximizes revenue from both free
and paying users.
4.3
Best of both worlds, for

users and for you
The word “freemium” is a combination of the words “free”

and “premium”, and it perfectly explains what this
monetization model exactly is - free meaning users have
access to the basic functionality and premium including
additional features, goods, content and options not
available in the free version.
Freemium is one of the more complex app monetization models as it consists of two equally
important aspects. A large portion of the app’s functionalities are completely free to use (and
the app itself is free to download), but if users want to unlock additional features and options,
they need to pay for them.
This model is extremely popular among mobile app owners as its ability to attract users is
very high due to app’s free features, but it also strongly incentivizes users to pay in order to
enhance their experience. One of the key benefits of this model is that users have the
opportunity to try the app before they pay for anything, but on the other hand, it can be very
difficult to strike a balance between offering too many or too few free features.
Driving revenue from an application that’s using the freemium model revolves around user
engagement, and providing an engaging experience to every single user - freemium apps
are effective because they build trust by providing value and quality without actually requiring
users to spend money.
Freemium as a monetization model is directly connected to

2 main buying options:
1 In-app purchases
‘Buy once, keep forever’ for features, goods and content that can’t expire or be spent
Repeatable at user’s own wish for spendable goods like in-game coins and items
2 Subscriptions
Non-renewing - users pay for one subscription period at a time
Auto-renewing - subscription is automatically renewed after each subscription period
Pros of the model
Can be adapted to suit almost every type of app
Gaining users is easier because the app has a free version
Users are able to test the application before paying to upgrade
Sales and limited-time offers can incite users to upgrade
Can be blended with additional monetization models
Cons of the model
Offering too few free features leads to high user churn
By offering too many free features, users won’t have the incentive to upgrade
Prompting users to upgrade may lead to annoyance and anger
Only a small percentage of users will decide to spend money
Revenue fluctuations can be very high
IDEAL USAGE
This monetization model is ideal for apps that provide a continuous value for users - ones with
a great free version and a premium version that provides unquestionable benefits.

In order for the freemium model to work, the free version of your
app needs to find the sweet spot between providing users with too
many or too few features. If features in the free version of the app
are too good, users won’t have the incentive to buy the full version.
On the other hand, if they aren’t good enough, users won’t think
the full version of the app is worth the money.
APP SPOTLIGHT - SLACK
Slack is a communication tool that brings the right people,

information and tools together to get work done. Its free
version enables users to take advantage of their core
functionalities, while paid versions bring more value to users
by giving them additional upgrades like full messaging history,
unlimited integrations, collaborations with organizations
and individuals, screen sharing and much more.
4.4
In-app purchases
One of the first big undisputed

kings of revenue generation from
mobile applications.
4.4
Current reigning champion

of monetization
Despite the fact that only 5% of users make in-app

purchases, revenue earned from this small percentage is
almost 20 times higher than revenue earned from all the
other users.
In-app purchases are one of the most widely used app monetization models - it revolves
around the application being free, but enabling users to purchase various types of digital
goods. Those goods can take many forms - from additional app features, in-game currency
and power-ups to additional content, new levels and customization options, as well as
anything and everything in between.
A key component of this model is that the free aspect of the app must be fully functional:
in-app purchases should serve only as enhancements to the user experience.
There are 2 main types of in-app purchases:
1 Buy once, keep forever

This type is used for features, goods, content and options that can’t expire or be spent
within the application. A great example for this would be a feature that, when
purchased, removes all ads from the application.
Repeatable
2
This type is ideal for features, goods, content and options that can be used within the
application. An example for this would be extra lives in a game or in-app currency that
can be spent on premium features.
Also, keep in mind that just because you’re offering consumers an in-app purchasing option
doesn’t mean they’re actually going to buy anything. To be successful with this monetization
model, you’ll need to create a strategy that will encourage users to pay - send them
notifications about goods that fit their needs and offer them time-sensitive discounts, and try
to match those notifications and messages to specific activities and actions within the app as
much as you can.
In-app purchases currently make up about 47 percent of the

total revenue generated from apps worldwide and a lot of
applications rely on this monetization model to be
profitable, but the prediction is that it will soon be dwarfed
by ad revenue.
Pros of the model
Profit margins for selling digital goods can be very high
As the app is free, building a large user base is simpler
In-app purchases can be tied to specific moments in the app to boost conversion
Buying virtual goods can highly increase user engagement and loyalty
If done properly, it’s a low risk, high reward model
Blends well with other monetization models
Cons of the model
Only a small percentage of app users spends money on in-app purchases
There can be large fluctuations in app revenue
Deciding how much should in-app purchases cost can be difficult
Mismatches in price and perceived value of virtual goods can anger users
Accidental purchases and requests for refunds are frequent
Both App Store and Play Store take a 30% of the revenue for all in-app purchases
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IDEAL USAGE
This monetization model is ideal for games and service-based apps that are engaging enough
even if users don’t spend money, as in-app purchases are used to improve the experience.

Users like the idea of using a free application, and having the
option to spend money if they feel like it. You just need to make
sure that every in-app purchase you incorporate into your app
provides real value and boosts the overall user experience.
Otherwise, your app might fall into a cash grab category and
users really dislike cash grabs.
APP SPOTLIGHT - CANDY CRUSH SAGA
With 300 million active users and a projected daily revenue of

4 million USD, Candy Crush Saga is the biggest mobile game
of all time. A large aspect of its success lies in its casual
gameplay that attracted lots of users, while its financial
success stems from an extremely balanced combination of
free and paid features. This game is a benchmark for any
game looking to implement in-app purchases.
4.5
Subscriptions
Current gold standard for anyone

looking for a stable and recurring
revenue from apps.
4.5
New kid on the block

backed by Apple and
Google
This model is like a free trial mode as it enables users to
download and try the application for free, but then require a
subscription to bypass feature or content restrictions.
Subscription model is similar to in-app purchases as it enables users to buy additional goods,
content and features. But instead of giving them the option to buy whenever they wish,
subscription model introduces ‘subscription periods’. When users have an active
subscription, they can use app’s premium aspects, and when that subscription expires, users
can no longer use them - unless they subscribe again.
With the subscription model, users are able to use a feature or consume content for a
predetermined amount of time called a subscription period. And when that period passes,
they are prompted to extend their subscription in order to get continued access to those
premium features or additional content.
2 main modes of subscriptions:
1 Non-renewing subscriptions
Users pay for one subscription period, and when this period ends, users are prompted
to choose whether they want to buy another subscription.
Automatically renewing subscriptions

2
Users pay for the subscription and it automatically renews after each subscription
period comes to an end.
Subscription model is quickly becoming one of the top monetization options due to the fact
that users get to try the application for free and that subscriptions can bring in steady
recurring revenue. And in addition to that, application owners pay less transactional fees to
Apple and Google for long-term subscriptions - 15%, as opposed to other models that have
a strict 30% fee.
The key to achieving success with the subscription model

lies in providing users with a constant stream of fresh and
valuable content and services.
Pros of the model
Provides you with recurring revenue
Subscribers are usually loyal app users
Significantly increases app engagement
Users keep subscribing as long as they keep getting value from the app
Can attract a large number of users with a free version of the app
You can still monetize your non-subscribed users with ads
Cons of the model
Can be hard to determine what to put in the free version and what behind a paywall
Needs to be constantly updated with new, relevant and valuable content
Limits families from sharing the same app across multiple accounts and devices
IDEAL USAGE
This monetization model is ideal for apps that are primarily service-oriented or very content-
centric, and whose overall concept encourages frequent and repeated usage.

Steady, reliable revenue and the overall financial predictability
of this monetization model has made both Google and Apple
double down in their efforts to make subscriptions the primary
monetization model. They have even decreased their
commission from 30% to 15% when it comes to all
subscription renewals after the first year.
APP SPOTLIGHT - HEADSPACE
Headspace is a meditation app that teaches users how to

breathe and meditate. It can help users focus, stay calm and
create the conditions for a better night’s sleep. Headspace
gives users 1 or 2 weeks of free trial and then prompts them
to subscribe in order to get access to the complete library
which has hundreds of guided meditations, mindfulness
training and breathing exercises.
4.6
eCommerce apps
What started as an extension for

other platforms is now a standalone
powerhouse.
4.6
Brick and mortar’s best

friend and worst enemy
This model is also straightforward – your application is a

marketplace through which you sell physical goods.
Taking advantage of the eCommerce model focuses around building a mobile application
that serves as your digital storefront. And more and more brands are turning to this model due
to higher profit margins and the fact that app stores don’t charge a commission for selling
physical goods through an app (as opposed to virtual goods that are sold as in-app
purchases, and are subject to a 30% fee).
Although utilizing the eCommerce monetization model is an ideal option for various brick
and mortar stores that want to digitize their business and take advantage of higher profit
margins, as well as eCommerce shops that want to create a simpler, faster and more
streamlined shopping experience for their users, the truth is that almost any service-oriented
brand can incorporate it into their business strategy as a secondary monetization option.
You can consider this monetization option even if your

business doesn’t primarily operate as an e-shop - it can be
an option for selling your brand’s apparel.
Pros of the model
Great upgrade for brick and mortar stores
Provides a better, more streamlined shopping experience
eCommerce profit margins are higher than traditional brick and mortar profit margins
Much easier to set up than traditional stores
Blends well with content-centric brands
Cons of the model
eCommerce profit margins are lower than profit margins on all-digital models
Large eCommerce marketplaces dominate the market
High competition makes it difficult for smaller shopping apps to break out
IDEAL USAGE
This monetization model is ideal for apps whose primary focus is selling physical goods to
specific audiences.

If you want to maximize user engagement, you need to
leverage push notifications. As users are more likely to see a
notification than open an email, you can incite them to buy
more by creating a push notification strategy and sending
offers specifically tailored to their needs.
APP SPOTLIGHT - ETSY
Etsy is an extremely user-friendly shopping platform that

enables its users to find and buy one-of-a-kind items. With
Etsy, users can easily explore the global marketplace of
handmade, vintage, and creative goods. A standout feature of
Etsy are curated collections and personalized
recommendations for stylish jewelry, art, clothing, furniture or
anything else its users might need or want.
4.7
White labeling
Great option for getting a little bit

extra revenue on top of your
existing app revenue.
4.7
Profitable for others, even

more profitable for you
If you created a mobile application with a unique

functionality or one that solves a specific problem, you can
monetize it by reskinning it for other brands or licensing your
code to other companies.
A white label product is a term that means you are creating a product that another company
can buy from you, rebrand it and sell as their own. It is a great option for earning additional
revenue from that application without affecting your customers’ experience by implementing
some other monetization models.
As many companies prefer getting finished applications and promoting them under their
brand, there is a steady demand for white label applications. If you’re thinking about
implementing this model, you need to know there are a few instances where it works
extremely well - if you have created an application and have trouble getting users under your
own brand, or if your application is at the end of its lifecycle and no longer profitable, and you
want to get some more income out of it.
For this monetization model to be truly successful, the

application you created needs to be built on top of a great
concept and have amazing user experience, as well as code
that enables complete customization.
Pros of the model
Licensing enables you to earn revenue from multiple sources
Great option if you have trouble selling the app under your brand
You can get extra revenue from apps on the end of their lifecycle
Cons of the model
There is no connection to you
App needs to be unique for this model to work
Apple and Google delete copycat apps if they’re all on the same account
Can’t be blended with other models
IDEAL USAGE
This monetization model is ideal for apps that are built on unique concepts that can be applied
to multiple brands. It is also great for pulling additional revenue from apps that are at the end of
their lifecycle and have stopped being profitable on their own.

In addition to earning revenue by reskinning and reselling your
entire application to other brands, you can also resell your
mobile application’s code. This will enable other companies to
use your application’s code as a framework that will enable
them to build their own applications on it.
APP SPOTLIGHT - GAMEZBOOST
GameZBoost is one of the most widely used white label

gaming platforms that offers users an extensive games
catalogue from which they can buy a white label application
for their business. What makes GameZBoost’s white label
mobile gaming platform so popular is the fact that it is easily
integrated with Mobile Networks, Content Aggregators, Billing
Platforms, Publishers, Brands, Loyalty Platforms.
4.8
Data licencing
Controversial option, but very

effective and profitable if you can
follow the rules to a T.
4.8
High entry barrier, high

revenue
If your mobile application has a large number of active

users, you can start collecting information on their behavior
and sell anonymous data to third parties like advertisers and
analytics companies.
App owners have been collecting user data for ages - it showed them how their applications
are being used and what aspects should they improve. But, prices that companies are willing
to pay for user data are constantly rising, so a lot of app owners want to leverage that situation
and generate additional app revenue.
The more daily active users an app has, the more precise,
relevant and valuable that data is for data collectors.
If you want to start with data licencing, your first step is to find a valuable monetization partner
- one who’s willing to abide by all of the privacy and security laws. This is crucial because
regulations regarding user data are getting more and more strict, and penalties for breaking
them are extreme.
Companies are willing to pay large amounts for relevant user

data, so this model combined with the right type of
application can be one of the most lucrative model of
mobile app monetization.
Pros of the model
Can be applied to any type of mobile apps
Once successfully implemented, this model drives stable earnings
Revenue gained by licencing high-quality data is extremely high
The longer you connect user data, the more valuable it gets
Data gathering activities have no negative effect on user experience
Cons of the model
To be effective, this model needs an extremely large number of active users
Laws are extremely strict when it comes to user data protection
Data protection laws are different from country to country and can be confusing
It can be easy to overstep boundaries and disclose users’ personal information
IDEAL USAGE
This monetization model is ideal for apps that have an extremely large and engaged user base,
and can generate a significant amount of data on client preferences or habits.

If you decide to focus on data licencing as your primary model
of monetization, make sure to be mindful of different privacy
laws connected to the action of selling customer data you’ve
connected through the application.
APP SPOTLIGHT - FOURSQUARE CITY GUIDE
Foursquare City Guide is a local search-and-discovery

mobile app that provides personalized recommendations of
places to go near a user's current location based on users'
previous browsing history and check-in history. It enables its
millions of users to write personal reviews for places they’ve
visited and browse hundreds of lists based on ratings, tips,
and insights from the Foursquare City Guide community.
4.9
Sponsorships
Just like in-app ads, but better for

your users and their overall app
experience.
4.9
Tailored in-app ads your

users want to click

Sponsorship revolves around brands and agencies paying to
have an exclusive spot within your app. With this model,
brands provide relevant rewards to your customers when
they perform specific in-app activities, and you earn money
by taking a share of the revenue from redeemed rewards.
This model is among the newest addition to app monetization as app owners looked for a
way to gain revenue from advertising, but without decreasing the application’s user
experience by incorporating traditional banner ads. By directly partnering with specific
brands, you can not only control the type of promotional content that will be displayed within
your application and make sure that it is relevant to your target group, you can also create
brand activations that are more creative, engaging and interesting to your users. And that can
ultimately lead to increased user loyalty.
There are numerous ways to integrate sponsorship within your application:
1 Placing a sponsor’s logo on the splash screen
2 Adding sponsor’s content in the footer
3 Putting sponsors in icons
4 Creating special sponsor pop-ups
5 Promoting sponsor’s special offers
6 Writing sponsored posts
Getting sponsors is easier if you start by contacting smaller

companies, as larger brands usually only partner up with
applications that have a very large base of users.
Pros of the model
Can be adapted for many verticals
Created and promoted content is related to app’s purpose
Collaborating with right sponsors leads to increased user retention and engagement
Can be used to expand services you provide
Achieves great results due to promoting relevant content
Cons of the model
Mismatch in partnership may incite users to stop using the app
Finding the right sponsor usually takes a lot of time
Demands long-term commitment and usually takes a long time to show results
Very limited when it comes to blending with other models
IDEAL USAGE
This monetization model is ideal for apps that want to provide their users with customized
experiences, and can partner with a brand that has a similar user base so all their activities feel
like native elements of the app.

For the sponsorship model to be effective and provide you
with revenue, your mobile application’s user base needs to be
either large enough or niche enough to attract brands that will
want to pay to get additional exposure through the
application.
APP SPOTLIGHT - RUNKEEPER
Runkeeper is a GPS fitness-tracking app that has more than

50 million users. It enables its users to join a running
community, track their exercises, set goals and track their
progress. This app is one of the early adopters of the
sponsorship model and it keeps providing its users with
exclusive rewards from health and fitness brands if they
complete pre-determined in-app actions.
4.10
Indirect
monetization
When done right, this app

monetization model can make your
business grow exponentially.
4.10
Specific in usage, extreme

in benefits

doesn’t provide direct financial benefits through the app
This monetization model is quite different from the others as
it
itself. It revolves around creating a custom mobile
application that takes your business models, digitizes them
and provides you value by making your business more
streamlined, efficient, profitable or just better overall.
With more and more companies embracing digital technologies as one of the primary ways
to upgrade their businesses and speed up past their competition, demand for high-quality
custom mobile applications that can turn traditional business processes into technologically
advanced agile solutions is constantly on the rise.
To have the most effect on your business, mobile

applications need to be tailored to fully fit your needs. In
order to do so, they can be implemented with a wide variety
of customized features.
The great aspect of this model is that it can be applicable to various industries, as well as
various types of business processes - from internal communication, change management
and employee development to customer acquisition, financial analysis, customer satisfaction
and everything in between.
Depending on your business and processes you decide to

digitize through a mobile application, this model has the
potential to become one of your most lucrative app
monetization techniques.
Pros of the model
Fully tailored to your business
Can be transformed into BPaaS
Applicable to different industries
Revenue is directly connected to your business goals
Cons of the model
Only for a specific type of business apps
Doesn’t blend with other monetization models
IDEAL USAGE
This monetization model is ideal for companies that want to digitize their business processes
and have decided to leverage the benefits of mobile technology in order to do so.

If you create a mobile application to streamline, simplify or
upgrade business processes within your company, try to see
if your application could be turned into a Business Process as
a Service (BPaaS) platform, and earn even more revenue by
licencing it (or smaller, less feature-packed parts of it) to
other companies.
APP SPOTLIGHT - BEYOND
BEYOND is a business app that serves as a private social

network, and is used for improving internal communication in
a multinational corporation with 2000 employees situated
across 8 countries. Its uncluttered feed and easy to use
features enable all members of the corporation to connect
with each other and strengthen the feeling of being a part of
one large team working towards the same goal.
05 Hybrid models of monetization Business models for mobile app monetization
05
Hybrid models of
monetization
More revenue is what happens

when you properly combine
different monetization models
05
Hybrid models of
monetization
Now that we have covered the most important details about each specific monetization
model, their pros, their cons and usage, it’s time to talk about some of the most popular,
effective and profitable hybrid models.

crucial aspect
A hybrid model isof app development,
a combination as it will help you earn
of two or more monetization
revenue
models while you’re each
that complement satisfying youryour
other to provide users needs
users with and
providing them
more choice whenwith a great
it comes to using user experience.
the application, and you
with more opportunities to earn income.
By understanding what makes your users tick, understanding what they want, what incites
them to engage with your application and, ultimately, what would make them spend money
on or in your application, you can take out the guessing game completely out of the picture
and put all your focus on polishing the elements that provide your users with a better
experience.
5.1
In-app advertising + in-app

purchases

One of the most widely used hybrid models that enables app owners to simultaneously gain
revenue from both free users and paying ones. A common tactic with this model is to use a
combination of ads and give users an option to buy an in-app purchase that removes ads.
SPECIFICS OF THIS MODEL
Great option for all app types
Ideal for games and service-based apps
Very profitable due to increased ad spend and in-app purchase popularity
Users can pay to have a better user experience (no ads)
In-app purchase price balance is extremely important
5.2
In-app advertising +
subscription

A great try before you buy option for mobile applications that are constantly pushing new
content to users. It enables users to use the app for free while it’s earning revenue through
ads, but also gives them the option to turn off the paywalls by subscribing.
Ideal for content-centric applications
Great for attracting new users with free options
Users can pay to have a better user experience (unlimited content)
Paywall positioning is crucial for app success and profitability
Great for achieving stable, recurring revenue
5.3
eCommerce app + data

licencing
This hybrid model is very limited in usage as it works only for eCommerce brands with a large
number of active users, but it is highly beneficial as it enables those brands to utilize the data
they are gathering and turns it into an additional stream of income.
Ideal for applications with high volume of users
Provides additional revenue on top of sales
Has no negative effects on user experience
Only for a specific type of apps
Extreme caution is required when deciding which type of data to sell
5.4
Subscription + in-app
purchases
An extremely profitable hybrid model of monetization that is challenging to set up properly,
and can be successfully used only by mobile applications that provide users with top quality
content and services.
Very profitable due to combining two top-level monetization models
Ideal for applications providing premium, top-level content
Great for achieving stable revenue
Revenue streams build upon each other
Value provided to users needs to be extremely high
5.5
In-app advertising + data

licencing
This is an extremely popular hybrid model due to the fact that it’s easily applicable to all types
of apps. To be really successful, this model needs to be used with an app that has a high
volume of users, but that’s an easier goal to achieve as all of the app’s features are free to use.
Applicable to almost all types of applications
Ideal for apps with a high number of active users
Profitable due to increased ad spend and the price of data
Revenue streams don’t cancel each other out
Extreme caution is required when deciding which type of data to sell
06 The future of monetization Business models for mobile app monetization
06
The future of
monetization
Key aspects that will have a strong

effect on the mobile ecosystem in
the following years.
06
The future of monetization

Just as mobile technologies are quickly changing the entire digital ecosystem, mobile app
monetization is also experiencing rapid changes that make some models extremely efficient,
profitable for app owners and popular among users, while other models are continuing their
steady decline.
Here are a couple of changes and trends that will be shaping the
mobile app monetization space in the years to come.
Increased ad spending
Google and Apple doubling down on subscriptions
Continued rise of rewarded video ads
Machine Learning and Artificial Intelligence
Get more details about these trends and the overall future of app
monetization on the following pages.
6.1
Increased ad spending
In-app advertising isn’t just the most popular monetization model because it can be
implemented into almost any application that’s ever been published or because it blends
extremely well with other monetization. It’s on the top of the list because advertisers are
willing to spend more and more money on in-app ads with every passing year.

crucial aspect of app development, as it will help you earn
revenue while you’re
Global spending on mobilesatisfying
advertising is your users needs and
being forecasted
providing them
to reach $280 with
billion a great user experience.
in 2022.
As mobile phones and mobile applications have become an irreplaceable aspect of our
lives, and one we use quite extensively every single day, advertisers know that’s what they
have to target if they want to get their messages in front of as many eyes as possible. And app
owners would be wise to give them that option and start turning it into revenue for
themselves.
6.2
Google and Apple doubling

down on subscriptions
It is true that the subscription model is one of the latest entries in the world of mobile app
monetization, but it has taken that world by storm. As stable and recurring revenue is one of
the holy grails of app monetization, more and more applications are starting to implement
some kind of subscription.

revenue while
Apple and you’re
Google satisfying
take only a 15% fee foryour users
long-term needs and
subscriptions.
providing them
As opposed to 30%with
for alla great
other user experience.
transactions.
And when we add the fact that both Google and Apple have backed this model and named it
the future of mobile app monetization (because recurring revenue for app owners also
means recurring revenue for Google and Apple), we can be fairly certain that this model will
continue to grow exponentially.
6.3
Continued rise of rewarded

video ads
Rewarded video ads are proving to be extremely popular because users can choose whether
they want to watch them in exchange for in-app currency, points, lives or other virtual goods.
And they have been rapidly blowing up, especially with the rise of hyper casual games, which
are taking over the app market.

Rewarded video ads are 53% more likely to be described more
revenue while you’re satisfying your users needs and
positively than video interstitials, and users are 23% more likely
providing them with a great user experience.
to buy or use a product they saw in it.
Due to the fact that rewarded video ads are always accompanied by a clear value for users,
and that almost 80% of users opt-in to this type of advertising, we will probably be seeing
more and more of this type of ads (even in non-gaming mobile applications).
6.4
Machine Learning and

Artificial Intelligence
Although machine learning and artificial intelligence are still in their infancy when it comes to
usage in mobile app monetization strategies, their potential is enormous as they can provide
extremely deep insights about each app user.

revenue
Artificialwhile you’re
intelligence satisfying
industry your
is projected users
to exceed $100needs
billion and
providing
by the yearthem
2025. with a great user experience.
The main benefits of artificial intelligence and machine learning lie in the personalized user
experiences they can offer, and that can lead to increased customer lifetime value and the
implementation of highly targeted monetization and advertising strategies.
07 Final thoughts Business models for mobile app monetization
07
Final thoughts
A couple of last-second tips and

nuggets of wisdom before we wrap
up this whole thing.
07 Final thoughts Business models for mobile app monetization
07
Final thoughts
And we have reached the end of this ebook - now you know why every mobile application
needs a right monetization model if it wants to attract users, grow and be profitable. You know
the pros and cons of each model, as well as what you should keep in mind when you’re
creating a monetization strategy.
Now, if you’re ready for the next step of the process and want to
turn that app idea you have in your head into a reality, we’ll share
with you a little bit of advice we always give our clients:
1 Think about your users - who are they, what are their needs, how can you solve their
problems
2 Know your end goals - be specific, define what you’re trying to achieve with your app
and let that guide you
3 Don’t go all in on the first version of the app - create a Minimum Viable Product, test it
on users, gather feedback, iterate and repeat
If you need more information about creating successful mobile applications, check out the
blogs and case studies on our website. Or contact us if you need direct assistance.
If you need more information about creating successful mobile
applications, check out the blogs and case studies on our website.
Or contact us if you need direct assistance.
Bornfight is a digital
innovation company that
creates progress.
We create custom WordPress websites and mobile applications, as well as advanced B2B
and B2C software. Our team consists of more than 70 designers, developers and strategists
who understand both the technical and business aspects of creating digital solutions.
Custom Software Mobile Applications Advanced Websites
From our clients

“Bornfight's development team is very “The website has become one of our main
strong, and we were all very impressed selling tools and serves as the first point of
with what the development and design contact in our buying funnel, and we’ve
teams came up with.” seen a substantial increase in revenue.”
Chloe Ravat / Lufthansa Daniela Lepeš / Adriatic Luxury Hotels

Marketing Manager Head of Marketing & PR
www.bornfight.com
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Bornfight Ebook

App Monetization Models

The other necessary step is to define a relevant monetization

This ebook will tell you more about:

The current state of mobile applications

Trends affecting the mobile app monetization

10 most profitable monetization models

Connecting two or more models into a hybrid monetization model

Tips for defining a monetization strategy

Topics and aspects covered in this ebook can be especially

1 Entrepreneurs willing to create and launch their first mobile application

2 Product managers in charge of overseeing the process of app development

Want to learn more about the process of developing mobile

Before we dig any deeper, let’s explain mobile app

What is mobile app

Understanding how to monetize your mobile application is a

1 What source of income am I pursuing with the application?

2 What value will I be providing and at what price?

Understanding how to monetize your mobile application is a

Mobile app monetization by the

Current mobile app

2016. 2017 2018 2019* 2020* 2021*

2013 2014 2015 2016 2017 2018 2019* 2020* 2021*

Understanding how to monetize your mobile application is a

So how much money is in

204B $204B 3.7 Hrs 825% 60%

If the forecasts are true, worldwide revenue from mobile

Global Mobile Ad Spend

Now that we briefly covered the current state of mobile, let’s

The short answer to this question is - yes, you absolutely need

But, the most important reason for defining a monetization strategy

If the forecasts are true, worldwide revenue from mobile

Tips for creating a

Some monetization models only work with specific types of

Tip #02: understand your target persona

If you want your product to be successful on the market, you need to

If your app is to be successful, it needs to provide users with

Tip #05: see what your competition is doing

Tip #06: provide value to your users

A line between providing value while maximizing revenue and being

Tip #07: define your goals with the app

By defining specific goals you want to achieve with your mobile

Tip #08: be in it for the long run

Establishing a relationship with users is a process that takes time, but

Tip #09: don’t sacrifice user experience

When choosing the right monetization model, great user experience

Tip #10: keep your eye on monetization trends

Tip #11: don’t try to reinvent the wheel

The app market is filled with examples of apps successfully using

Tip #12: test, get feedback, iterate, repeat

10 most effective app

Premium apps Subscriptions

In-app advertising White labeling

Freemium apps Data licencing

In-app purchases Sponsorships

eCommerce apps Indirect monetization

An older, limited model that can

Monetization model that

This monetization model is pretty straightforward - if people

1 Is your app superior to free alternatives?

2 Why would users choose your app over a free one?

While this model connects your revenue directly to the

Pros of the model