How to Effectively Monetize Your App In 2025

The mobile app industry is booming, with demand for diverse, high-quality apps constantly increasing. In 2024, users downloaded approximately 110 billion apps across iOS and Android platforms. But simultaneously, the market remains highly competitive, with millions of apps contending for user attention and market share. As of August 2024, Google Play offered approximately 2.3 million apps, while the Apple Store had around 2 million apps available (Statista), with an average of 30,000 to 100,000 new apps released monthly. 

It means creating a successful app that attracts users is not a small feat. But even when you manage to achieve this goal, it often appears that the real battle lies in generating consistent revenue from it.  After all, mobile apps are a business with the final goal, like in any other case, to make money.  

Initially, companies sold apps as paid versions, but with the increasing competition, paid downloads are gradually dying as there is always an app that can offer something similar for free. So today, only 3% of apps on Google Play and the Apple Store are paid. These are typically high-quality, niche offerings with no comparable alternatives. Most businesses have shifted to offering apps for free and monetizing them through different models and strategies. So, what are the most effective monetization strategies in 2025 when you can offer your app for free while still receiving income? We will discuss it further in this blog post.

First, it is worth noting that not all apps drive revenue in the same way. Many apps inherently drive revenue through their core business models, so they are less dependent on additional monetization strategies. For instance, e-commerce apps like Amazon drive revenues through sales. On-demand service apps like Uber and DoorDash, as well as marketplace/aggregator models like Airbnb or Booking, drive revenue through service fees and commissions. Fintech and banking apps like PayPal do it through transaction fees and financial services. Other apps may be totally dependent on external monetization strategies. So, selecting the best approach depends on your app's type, niche, audience, and goals. 

Most popular app monetization methods 

by publishers from the United States as of March 2024

Although there are many appearing and supplementary monetization strategies, we will focus on the most popular and proven ones, driving the biggest revenues, such as in-app ads, in-app purchases, freemium to premium conversions (often with subscriptions coming after freemium), and how to make these strategies effective in 2025. 

AI-driven In-App Ads

In-app advertising may not have the best reputation, but it remains the most popular monetization method in the USA and worldwide (Statista). The main reason for this is probably that it can allow the app owner to keep the app completely free to use, earning revenue from ads views and clicks. In 2025, effective in-app advertising is about keeping users engaged and even anticipating ads, but not in any way annoyed or interrupted. And the key to it is utilizing Artificial Intelligence. AI-driven in-app ads are transforming how ads are delivered and perceived by users. They are becoming more personalized and less intrusive, which enhances user engagement and monetization effectiveness.

How It Works:

Today's AI-powered advertising platforms like Google AdMob, Unity Ads, Meta Audience Network, AppLovin, and IronSource analyze user behavior patterns, predict engagement likelihood, and deliver personalized, relevant, and non-intrusive ads when and where users actually treat them as valuable content and even appreciate seeing them. While banner ads or intrusive pop-ups with AI-driven algorithms can still work, the following ad formats are expected to be the most effective in 2025: 

Interstitial Ads are full-screen size ads that appear in between pages, articles, levels, stories, and so on for a brief time. They can be in the form of a display or video, and users usually need to watch the screen for a few seconds. Even if it takes longer, the ads always come with an easy-to-find "X" button that allows people to exit shortly after it appears. Such ads have high visibility, which makes them a popular option. 

Native ads integrate into the look and feel of your app because they follow the same pattern as the app's original content. Such ads feel less intrusive and disruptive and have a high engagement rate because they blend in well with the other app's content. It means they're far more user-friendly than other mobile advertising options, have higher click-through rates and less annoying user experience.

Reward Ads are opt-in ads that usually come in the video format where the user watches an ad and then receives an in-app reward like extra game lives or exclusive content in exchange for ad views. By making video ads optional and offering clear incentives for users who watch them, it is possible to bypass most user objections. They work exceptionally well in gaming apps. It is worth noting that with this type of ad, careful video timing is extremely important to avoid overwhelming users or not letting ads dominate the app experience.

What apps are they best suited for? 

In-app ads are suitable for free tiers of most apps and are the most appropriate choice for e-commerce, entertainment, news, and gaming apps. For example, Instagram, a well-known social network app, is full of native ads, so users don't even realize they view ads until they notice the corresponding mark. TikTok, a popular video-sharing platform, includes sponsored branded content, influencer promotions, and video ads. Massive user base of both platforms allow them to generate significant ad revenue from advertisers. ‍CNN news app uses different in-app ads such as native, in-story ads, paid content sections at the bottom of the screen, and in-app video ads.

Implementation Tips to Consider:

• Avoid using too many ads to maintain engagement and satisfaction.

• Analyze key metrics like engagement rate, viewability, and conversion points for optimization.

• Choose AI-driven ad platforms that offer both automation and transparency.

• Avoid it in professional apps where user focus is essential (e.g., task management or educational apps).

In-App Purchases (IAPs)

In-app purchases are the second most popular app monetization method for apps in the US and worldwide (Statista). In this model, users can buy additional features like virtual goods in games, premium features in productivity apps, some enhancements within the app itself, like a new user level or reward, or even the option to eliminate ads. Its popularity can be attributed to the fact that you can still offer your app for free, while add-ons are optional and are intended to enhance the user experience. In 2025, successful IAP strategies focus on providing value and personalization to attract users. Personalized recommendations, gamification, and AI-driven dynamic pricing are becoming increasingly important and can significantly improve conversion rates.

How It Works:

In-app purchases can range from one-time upgrades to recurring subscriptions, providing flexibility for different user needs. They can cover:

Consumable Purchases: you can offer items that users can use, i.e., "consume" within an app. Once they're consumed, users need to purchase them again. Typical examples include extra lives, virtual currencies, and power-ups. 

One-time Non-consumable Purchases: offer users lifetime access to the items they purchase with a single payment, focusing on digital content like character skins in games or eBooks. For example, users can unlock additional levels, characters, or weapons in a game or unlock special filters in a photo editing app. In utility apps, they can offer access to premium features or ad-free experiences. 

Renewable Subscriptions: give users continuous access to premium content or an ad-free experience for a set period. Users pay a recurring fee to keep enjoying the benefits. It can be charged weekly, monthly, or annually. This model provides app owners with steady, ongoing revenue, with the subscription automatically renewing until the user decides to cancel it.

Non-renewing subscriptions: allow users to purchase access to services or content for a limited period of time, such as time-limited courses or access to certification training. This type of subscription is suitable for apps that offer time-limited or seasonal content. As it does not renew automatically, users need to renew when needed.

What apps are they best suited for? 

Works well for apps with engaging features that encourage users to make purchases. This model is particularly popular for games. However, other app categories such as fitness, education, utility, and photo and video editing have adopted this strategy successfully. A popular example is Pokémon GO, an augmented reality game where players capture virtual Pokémon in real life and can make in-app purchases like Poké Balls, Incense, and Lucky Eggs to supercharge the Pokémon-catching experience. Or, for instance, LumaFusion, a photo and video editing app that, along with some subscription plans, offers in-app purchases for extra effects sold separately, like FCPXML Export or Improved Animation. Or, say, on Tinder, a popular dating app, you can buy boosts or super likes.

Implementation Tips to Consider:

• Avoid the "Pay-to-Win" concern, as users who make purchases should not gain an unfair advantage over those who don't. It is especially important in gaming apps.

• Keep in mind revenue fluctuation, as even if users love your app, some will never purchase anything, so revenue can fluctuate greatly.

• A/B test different pricing models, product offers, or marketing messages to find the most effective option for driving engagement and revenue.

• This monetization model will not benefit professional B2B apps or niche enterprise software.

• Ensure the purchasing process is fast and secure.

Freemium to Premium Conversions

Many apps nowadays follow the freemium business model. The freemium model means you offer users the possibility to download and use an app's core limited features for free, but alongside this free version, you also offer a paid, premium one with more advanced features. It differs from in-app purchases in that purchases typically offer bonus items or content, while premium versions provide access to the full experience beyond a basic, limited app version with gated content. The idea is to attract a large user base with a free version and then encourage users to pay for extra value. The freemium model has earned its well-deserved popularity because it offers a low barrier to entry for users and scalable revenue potential for developers. This approach helps users get used to your app, see its benefits, and check if the premium version is worth the investment. In 2025, successful freemium-to-premium conversion relies on personalization, AI-driven insights, and exclusive features that make upgrading feel like a natural choice rather than a forced one.

How It Works:

This model works for mobile app owners who find the right balance between providing sufficient basic functionality so users can understand the purpose and value of the app and restricting key features behind the paywall, encouraging users to upgrade to the premium version to access the complete experience. By attracting users for free, you can persuade them to pay to access premium content or features either through a one-time payment (less common today) or, more popularly, a recurring subscription. The major benefits of subscription plans rather than one-time payments are that app owners can receive a steady revenue stream, making it easy to predict their future growth while users receive fresh, unique, and regularly updated apps.

Freemium mobile apps need to target large audiences because of the nature of their revenue generation. According to different resources, on average, only from 3 to 5% of freemium users transition to paid subscriptions. So, this model can be highly profitable for apps with millions of users, but niche apps may struggle to generate revenue.

Premium upgrades can be implemented via:

Tiered Plans that offer users different subscription tiers to cater to different preferences and budgets. You can create plans that offer various access levels, allowing users to choose what best suits their needs. For instance, the basic plan provides access to the core app features but may include ads or limited content, while the premium plan offers access to all features, content, or services with no ads and additional perks (e.g., unlimited streaming or access to exclusive content). For example, a fitness app may offer a free basic version, a mid-tier plan with guided workouts, and a premium plan with one-on-one coaching.

Recurring Subscriptions, where the user usually pays every month or for an entire year upfront, usually at a discounted rate compared to monthly or quarterly payments. This model suits content-driven or service-focused apps offering lasting value or content that justifies the recurring cost. Perfect for streaming apps, news sites, and blogs with a steady readership. However, with the rise of the recurring economy, fitness and productivity apps are also increasingly adopting the subscription model.

Micro-Subscriptions are smaller, short-term subscriptions designed for users who might not want to commit to a long-term plan. These subscriptions provide access to specific features for a limited time, such as a week. Ideal for users who want temporary access to niche services.  For example, a language learning app offering a one-week premium tier.

What apps are they best suited for? 

This monetization strategy works well for entertainment, productivity, and creativity apps that can restrict advanced features in the free version. Many successful apps use this monetization strategy. For instance, using Canva's graphic design app, you can enjoy its free version with limited designs and templates. But to unlock more advanced design elements, editing tools, and collaboration features, you need to upgrade from a free plan to premium paid plans that come in the form of subscriptions with regular payments. Ot, for instance, with Evernote, a productivity note-taking tool, users can start with basic needs but then realize they need unlimited device sync, more storage, search functions, and subscribe for an upgrade.  When subscribing to Spotify Premium, users can remove ads and unlock offline listening.  Duolingo, a popular language learning platform, gets users hooked with its free version and everyday practicing, but ad-free experience, offline access, or a Streak Freeze to maintain progress and achievement creates motivation to keep going with a paid subscription.

Implementation Tips to Consider:

• Ensure the free version is useful enough to hook users while making the premium version highly desirable. Users may abandon the app instead of upgrading if the free version feels too limited.

• Provide an easy upgrade path for users who want to access premium features.

• Offer a free trial period to showcase the app's features and unique value to potential users. It will allow users to experience all the features of your app, encouraging them to upgrade to the premium version. 

• Provide various subscription options (monthly, quarterly, annual) to suit different user preferences.

• Content offered in premium subscriptions must be valuable, unique, and regularly updated. If similar offerings are easily available for free, retaining users won't likely be possible.

Final Thoughts

Mobile app monetization is not just a one-time activity buta long-term plan. In 2025, the key to success will be balancing monetization efforts with a seamless and engaging user experience, often achieved through the capabilities that AI can now offer. Consider combining multiple monetization strategies to maximize revenue. For example, a freemium app could offer in-app purchases, additional subscriptions, and display ads to free users, thereby diversifying revenue streams. Apps that drive revenue directly through their core business can also consider additional monetization strategies to maximize earnings. For example, e-commerce apps offer in-app ads or premium memberships for exclusive deals. Test different combinations to find the right balance, monitor user feedback to ensure a positive experience, and use analytics to track performance and make data-driven decisions.