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Monetization in general means to convert an asset or any other object into money or legal tender.

For app developers it is one of the key challenges to monetize their app as efficient as possible. Since there is a massive amount of choice for mobile users with over 1,6 million apps available in the Google Play Store and 1,5 millions apps in Apple’s App Store, there is a great competition on the mobile market. Thus it is a big challenge for app developers to generate a sufficient revenue through their app. Therefore they require a suitable and effective app monetization strategy, that needs to be planned in advance before the app launches.

Depending on the offered services and functions of the application, there are different approaches to app monetization:

  • Advertising Based: entails offering a free download, relying on advertising to generate revenue
  • Pay Per Download: users pay a one-time fee for downloading the app
  • In-App Purchases: users are able to purchase items from within the app
  • Freemium: offers free downloads of the app that include additional premium features that users have to pay for to access
  • Subscription: similar to the freemium model; focuses on gating access, but to content rather than features

Which of these app monetization strategies is the most effective one, is largely depending on the corresponding business. For example, subscription models work best for services like music or video streaming, news and entertainment, and other applications focused heavily on content. In-app purchases, on the other hand, are lucrative for free-to-play games and apps centred around products, for example shopping/retail apps.