If you're reading this blog, you've probably already come across a lot of articles about app monetization strategy, and it may all seem easy in theory, but in practice, it's crucial to take things step by step and know how to lay a good foundation for earning money quickly.
Your budget plan likely includes many expenses that all seem equally important, but this will help you avoid spending money on app features with low market demand. Mobile app monetization is something that doesn’t easily allow for changes if you don’t set a solid foundation from the start. When you start generating revenue quickly, you can reinvest it into the future development of your app and business.
In this article, we will focus on the common mistakes startups often make that cost them success and how to quickly start generating revenue from your mobile app.
Why do startups choose MVP development?
The main difference between MVP development and full app development is in scope and purpose.
MVP development focuses on building a basic version of the app with only the essential features needed to test the core idea, validate it in the market, and gather user feedback.
On the other hand, full app development involves creating a complete product with all planned features and functionalities, often after the MVP has been tested and validated.
Have an app idea and want to validate it before investing money in MVP development? This article may help.
Why everyone talks so much about the importance of MVP development?
Every startup founder who has developed a plan for his idea knows it’s crucial to validate it before finding app developers to make that idea into a full mobile app.
Idea validation is most commonly done by creating an MVP version, which includes only the core functionalities to gather user feedback and determine whether the market actually needs such an app. This approach is also budget-friendly since it requires less investment compared to a complete version.
Benefits of creating an MVP:
- Cost savings: You minimize development costs and avoid wasting resources on unnecessary functionalities by focusing only on core features for MVP.
- Faster time to market: An MVP allows you to launch your product quickly, helping you get it in front of users and start gathering feedback sooner.
- Market validation: It helps validate your product idea with real users, ensuring there’s demand before committing to full-scale development.
- User Feedback: Early users provide valuable feedback, allowing you to make data-driven improvements and tailor the product to market needs.
- Risk reduction: MVP development reduces the risk of failure by enabling you to test assumptions, iterate, and make adjustments early in the process.
- Attracting investment: An MVP that is well planned can be a powerful tool for attracting investors, as it demonstrates your idea's potential and shows progress.
- Focus on core features: Focus on the most important aspects of your product, ensuring you solve the right problem for your target audience.
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Steps to build MVP that generates revenue quickly
When approaching app developers to build an MVP, they have specific steps they follow to complete the project successfully. Just as they do their part, startup founders should also know exactly what problem the app solves and who the target audience is, conduct market research, and follow other crucial steps that must not be overlooked.
How to speed up the process of making money from an app?
If your goal is to achieve fast app monetization and generate your first revenue, here are specific steps you should follow to have an effective monetization strategy:
Find an urgent problem to solve
There is always a high-demand problem people have and are willing to pay to solve it. Focus on an idea that can be developed into an app solving users' big pain points, and they will soon become paying customers.
Focus on in-app purchases
Prioritize features directly tied to revenue generation, like payment gateways, subscription options, or premium content access. Skip features that are not necessary for MVP and don’t contribute to making money.
Choose a fast app monetization model
Implement a monetization strategy that generates income from day one, such as one-time purchases or paid trials, instead of models that rely on long-term user growth.
Prioritize features smart
Don’t let the need for perfection distract you before launching your MVP on the App Store or Google Play Store. Focus on a simple and functional app version because speed is crucial for selling faster.
Target early adopters willing to pay
When it comes to marketing strategy, target users who aren't there just to test the app, but pay for a solution. Those are the people who value innovation and want to be involved in early success.
Launch fast
Find app developers to help you go live on app stores quickly, track how users engage with your app monetization features, and make rapid adjustments to pricing and offers based on real data.
Maximize revenue during engagement
Maximize revenue per user by offering upgraded versions, premium features, or bundled services right after the initial purchase when interest is highest.
Reinvest in growth
Use the first revenue to invest in marketing to increase long-term revenue. Improve your user acquisition strategy and monetization model to maintain a successful app.
Want to launch your own app or need a team extension?
App monetization strategy
If you have a few ideas on how to make money from your app but lack a detailed monetization strategy to execute them, be prepared for your first revenue stream to take longer than expected.
Without a clear plan, you may struggle to cover the cost of app developers and overall app development expenses, making it difficult to achieve sustainable income.
Once you turn user engagement into real money, it can then be re-invested into the app and marketing to ensure long-term success. By choosing the right app monetization model (in-app purchases, subscriptions, in-app ads, etc.), you can align the app’s offering with how users are willing to pay, creating a profitable and scalable business model.
Not every app category is suitable for the same monetization model. When you choose the right payment model, users will be more willing to pay for a specific feature, making it easier for you to generate revenue.
Popular app monetization models
When it comes to app monetization, startups choose the most appropriate app monetization model depending on their app type, target audience, and business goals.
Here are some of the most popular app monetization models:
1. In-app purchases (IAP)
In-app purchases allow users to buy content within the app. This app monetization model works well for apps that can be used without paying but at the same time offer additional value in the form of upgrades, virtual currency, or premium features. Example: A photo editing app that allows users to buy premium filters, advanced editing tools, or exclusive effects to enhance their images. It allows users to try the app for free but pay for exclusive content, offering a flexible way to monetize while still attracting a large user base.
2. Freemium model
The freemium model gives users free access to the app with basic features while charging for premium features or enhanced content. This is one of the most common app monetization models for apps in categories like productivity, fitness, and entertainment. Example: Spotify offers a free version with ads and a premium version with additional features like offline listening and no ads. It attracts a large user base since the app is free to use, while still generating revenue from users who want more advanced features.
If you've developed a free app and want to monetize through ads, main ads formats are banner ads, native ads, interstitial ads and rewarded ads. Find more about it here.
3. Subscription model
A subscription-based model charges users a recurring fee to access the app’s content or features. This can be a monthly, quarterly, or yearly fee. This is a popular app monetization strategy for mobile apps that provide ongoing services, content, or features that users regularly need. Example: Netflix or Amazon Prime Video charges a monthly subscription for access to their library of content. It provides steady, predictable revenue, which helps in forecasting and scaling the business. It also encourages customer retention, as users are more likely to keep paying if they’re getting continuous value.
4. In-app advertising
Ad-based monetization involves displaying advertisements within the app. This is one of the most common models for apps that are free to use and rely on user engagement to generate revenue. Revenue is earned through impressions, clicks, or specific actions triggered by the ad. Example: Free apps like Instagram display ads to generate income without requiring users to pay directly. It allows apps to remain free while making money from advertisers. The app developer earns revenue based on user engagement with the ads.
5. Paid apps
A paid app model requires users to pay upfront to download and use the app. This model is most effective when the app offers a unique value proposition that justifies the cost, such as highly specialized software or exclusive content. Example: A productivity app like Evernote that charges a one-time fee or a premium app offering specialized tools. The paid app model can quickly generate revenue once users purchase the app. However, it often limits the app’s reach because users must be convinced the app is worth the upfront cost.
6. Transaction-based monetization
This model earns revenue through transactions made within the app, typically seen in e-commerce apps or apps that act as intermediaries. The app takes a percentage of each transaction made through the platform. Example: Uber or Airbnb takes a commission from drivers or hosts for every ride or booking made through the app. It generates revenue without requiring users to pay for the app upfront. The more users transact, the more the app earns, making this model scalable.
7. Affiliate marketing
Affiliate marketing involves recommending products or services within the app and earning a commission when users make a purchase through the app’s affiliate links. This model works well for apps that offer content, reviews, or recommendations. Example: A fitness app that includes links to affiliate products like workout gear or supplements. It’s a low-risk model since you don’t need to develop or sell the products directly, yet you still earn from user purchases through your affiliate links.
8. Crowdfunding or donations
Some apps, especially those with a social or community-driven focus, use crowdfunding or donations to generate revenue. Users or supporters contribute money to support the app, often in exchange for special rewards or benefits. Example: A community app that asks users to donate to support ongoing development or access exclusive content. It leverages the power of loyal users who want to see the app succeed. This model is often used by apps that offer value to a niche audience or cause.
Read here more about How to Make Money from Your App.
Mistakes startups make that can destroy revenue potential
Startups often have multiple tasks and face countless challenges, from strategy development and team management to marketing and funding. With so many priorities, it’s easy to overlook critical steps that directly impact revenue potential. Founders can easily get stuck at perfecting features, scaling too quickly, or focusing solely on user acquisition. That leads to unintentionally neglecting essential aspects like market validation, monetization strategy, or user retention. These overlooked details may seem minor at the moment but can create significant barriers to growth and profitability.
Here are some of the most common mistakes startups make:
- Overcomplicating the app too soon: In the rush to launch a more complete app on the app stores as quickly as possible, startups often skip MVP development. It usually turns into, "Let’s just add this feature, and it’s ready," and this goes on endlessly. Then, when the app is finally launched, they realize many of the features aren’t needed, there's not an expected number of users download, and the target audience doesn’t even use them. This leads to wasted resources on features users don’t need, increasing costs without guaranteeing revenue.
- Not defined mobile app monetization: In the desire to acquire as many users as quickly as possible, some startup founders focus primarily on their user acquisition strategy without a concrete app monetization strategy or a clear plan for how they will generate revenue from the app.
- Ignoring market research results: Many conduct market research because it’s the logical first step, but when it comes to app development, they either ignore the results they’ve gathered or misinterpret them. The whole process is meant to identify the pain points users have, and there’s no need to add features that don’t address those issues from the start.
- Underestimating marketing costs: Startups sometimes overlook the budget for marketing campaigns and user acquisition. A great product is pointless if no one hears about it, so keep in mind that a significant part of the budget should go toward attracting and retaining paying users. Without effective marketing, even apps with strong in-app advertising strategies won’t generate significant revenue because they lack a large, engaged user base to monetize. Using an app monetization platform can help you optimize revenue by efficiently managing ads, in-app purchases, and subscription models.
- Setting wrong app monetization methods: Poor pricing decisions, whether the price is too high or too low, have a long-term impact on the revenue you generate from the app. Testing different pricing models helps find the right balance for both revenue and user satisfaction.
- Relying on a single revenue stream
Depending only on one monetization model, like ads or in-app purchases, makes revenue vulnerable to market shifts. Diversifying revenue streams reduces risk and increases financial stability.
- Not tracking analytics: Without tracking key performance indicators (KPIs), startups miss critical insights into user behavior and revenue trends. Data-driven decisions are essential for identifying what works and what needs adjustment.
- Forgetting about app scalability: Focussing only on launching the app quickly without planning for future growth, startups risk creating a product that can't handle an increasing user base or evolving market demands. Performance issues, as the number of active users grows, lead to slow load times, crashes, and a poor user experience. All these factors drive users away and reduce revenue.
To avoid these mistakes, calculate your development costs in advance and know at every time what part of your budget is going towards MVP development.
Mobile app monetization: conclusion
To make a revenue-generating app fast, you need to choose smart among the app monetization models. By following monetization models like in-app purchases, subscriptions, or in-app advertising, you can start generating revenue from day one. The best app monetization strategies are those that align the app's value with what users are willing to pay for. A well-defined mobile app monetization strategy + a good user acquisition strategy will drive long-term success and app revenue by users paying for the features and services they need.
Prioritize a simple MVP with only the necessary features for the beginning. That will let you make fast changes based on user feedback. Finally, invest in user acquisition early on, targeting those willing to pay for premium features or content. App developers play a crucial role in quickly building a functional app that aligns with your monetization strategy.
By collaborating closely with experienced app developers, you can ensure the app is scalable and optimized for revenue generation from the outset. Expert app developers from Aetherius will help you develop an app ready to generate profit from day one. Get in touch and start earning money in a short period!
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