Turn your app into a revenue stream with small business app monetization

Published Friday 31 October 2025

Table of contents

• App monetization strategies
• In-app purchases and subscriptions
• Advertising and freemium models
• Choosing the right monetization model for your app
• Costs of developing an app
• The process of building an app
• Marketing your app
• After launch
• Managing your app business finances
• FAQs on app monetization

Key takeaways

• Choose a monetization strategy that aligns with your app type and target audience, whether through in-app purchases for games, subscriptions for ongoing services, or advertising for high-traffic apps.

• Build a minimum viable product with only 1-2 essential features to control development costs and test market demand before expanding functionality.

• Implement a comprehensive marketing strategy that includes beta testing for feedback, app store optimization with clear problem statements, and dedicated website pages to drive user acquisition.

• Track your app's financial performance by monitoring revenue, development costs, and marketing expenses to make informed decisions about growth investments and profitability improvements.

App monetization strategies

App monetization is the process of generating revenue from mobile or web applications through various business models and strategies.

Your app can create value by automating tasks like checking the weather, managing projects, or identifying music. The most successful apps generate significant revenue because you can scale your product to reach more people.

The main advantage is that you build your app once and sell it to many people. After launch, each new customer costs very little to acquire.

In-app purchases and subscriptions

In-app purchases allow users to buy digital goods or features directly within your app. This could be anything from extra lives in a game to an advanced photo filter. This approach lets people try your app for free and pay only for the features they value most.

Subscriptions are another popular model where users pay a recurring fee, often monthly or yearly, for continuous access to your app's content or services. Subscriptions give you a steady income and help you build a loyal customer base. For some businesses, revenue from existing clients makes up more than half of their yearly growth.

Advertising and freemium models

With the advertising model, you can offer your app for free and earn money by displaying ads. Growth often depends on getting more clicks on advertising banners. This can include banner ads, full-screen videos, or native ads that blend in with your app's content. It works best for apps with a large number of daily users.

The freemium model is a hybrid approach where the basic version of your app is free, but users can pay to unlock premium features. This approach lets more people try your app. You can then encourage them to upgrade for extra features.

Choosing the right monetization model for your app

Deciding how to monetize your app is a big step. Start by looking at what your competitors are doing and what your target audience expects. If your app provides ongoing value, a subscription might be a good fit. If it's a game, in-app purchases could work well.

You can start with one model and adjust as you learn more about your users. Choose a strategy that feels fair to your customers and supports your business goals. A clear plan helps you build a sustainable app that can grow over time.

Costs of developing an app

Michael Yared,

Echobind

Web apps are cheaper to produce. You can create a web app that does one task really well for about $60,000. Expect to pay double if you want your app to include multiple features. If you want your app to work on mobile as well, expect to pay over $200,000.

App development costs vary significantly based on complexity and platform requirements. Here's what to expect:

Here is a breakdown of typical development costs:

• Basic web app: Around $60,000 for focused functionality
• Complex web app: $120,000+ for multiple features
• Mobile + web app: $200,000+ for cross-platform functionality

When planning your app, consider these additional costs:

• Additional expenses: Marketing costs increase total investment
• DIY option: Build yourself if you have coding skills
• ROI potential: Apps with a clear market can deliver strong returns and offset high upfront costs.

The process of building an app

Cost control is essential for app profitability. Plan your development carefully to avoid budget overruns and focus on core features.

To control costs, focus on building a minimum viable product (MVP):

• Limit features: Choose only 1-2 essential features initially
• Build minimal: Create the lowest-cost viable product first
• Avoid feature creep: A focused MVP often outperforms competitors with more features.
• Focus on execution: Perfect core functionality before expanding

This approach maximizes your chances of making a profit. It keeps your upfront investment low while you test market demand.

The app development process follows five sequential phases, each building toward a functional product that can generate revenue.

Development phases:

1. Discovery: Define essential features and design user flows
2. Wireframes: Create basic black-and-white page layouts
3. Prototypes: Build clickable navigation between wireframes
4. Designs: Transform wireframes into fully designed pages
5. Development: Write code to create the functioning app

Making changes later in the process costs much more. Plan carefully during the discovery phase to control costs.

Marketing your app

App marketing is essential for monetization. You need users to generate revenue from your app.

Pre-launch strategy:

• Beta testing: Distribute test versions to gather feedback and identify potential customers
• User feedback: Improve the product based on real user experiences
• Early adopters: Convert beta testers into paying customers at launch

Launch optimization:

• App store presence: Optimize listings with clear problem statements and relevant keywords
• Website marketing: Create dedicated product pages explaining your app's value
• Problem-focused messaging: Clearly communicate what specific problem your app solves

User acquisition drives revenue. Make marketing a priority from day one.

After launch

Michael Yared,

Echobind

See how the app is bearing up to real-life use. Certain areas may be getting more traffic than you'd anticipated, which can slow down performance. Deal with those things. Track which features your users like most and improve those experiences. If a feature is not being used, decide whether to remove it or promote it so your users know about it.

Getting your first users is exciting, but keeping them is how you make money from your app. Yared explains those early adopters are a great stepping stone to a better product, more users, and improved profitability.

Managing your app business finances

When your app starts making money, keep your finances organized. Track your revenue, developer costs, and marketing expenses to see how profitable your app is. This helps you make better business decisions and see where to invest for growth.

Xero accounting software makes it easy to manage your finances. Connect your bank accounts, track cash flow in real time, and manage expenses in one place. This lets you focus on improving your app and running your business. Find a plan that works for you and get one month free.

FAQs on app monetization

Here are some common questions and answers that small business owners might have about app monetization.

How do you monetize an app?

You can monetize an app by choosing a revenue model that fits your product and audience. Common methods include charging a one-time download fee, offering in-app purchases for special features, using a subscription model for ongoing access, or displaying ads to users.

How much does a 10,000 download app make?

Revenue does not depend only on the number of downloads. An app with 10,000 downloads may earn little if you do not have a monetization strategy. But if people make in-app purchases or subscribe, you could earn much more. Your earnings depend on your monetization model and how engaged your users are.

How can you create an app that makes thousands a day?

To earn thousands a day, you need a high-demand app, a strong monetization strategy, and a solid marketing plan. You also need to keep improving your app, understand your users, and use data to make decisions that increase revenue.