How to make money from an app: monetisation and costs

Published Tuesday 14 April 2026

Table of contents

• Can you still make money from an app?
• App monetisation strategies
• How to choose the right monetisation strategy
• Realistic revenue expectations
• The process of building an app
• Costs of developing an app
• Marketing your app
• After launch
• Managing your app business finances
• Getting started with your app business
• FAQs on making money from apps

Key takeaways

• Choose your monetisation strategy based on your app type and audience, with subscription models working best for business apps that provide ongoing value, while advertising and in-app purchases suit consumer apps with large user bases.
• Start with a minimum viable product (MVP) that focuses on one or two essential features to test market demand before investing in full development, as this approach can reduce development costs by up to 55%.
• Expect realistic timelines and conversion rates, as most apps take six to 12 months to generate meaningful revenue and freemium apps typically see only 3-5% of free users convert to paying customers.
• Track your app's financial performance from day one using accounting software to monitor all income streams, manage operating expenses, and maintain healthy cash flow as your business grows.

Can you still make money from an app?

Yes, you can still make money from apps. The app business model remains attractive because you build a solution once and sell it repeatedly to many users at minimal extra cost.

Apps generate revenue in several ways:

• Low marginal costs: Adding new customers requires little extra expense.
• Scalable income: One app can serve thousands of users simultaneously.
• Recurring revenue: Subscriptions and in-app purchases create ongoing income streams.

Here's the current pricing landscape:

• Business apps: £100–500 or more per year
• Consumer apps: £1–10 per month or advertising-based
• User expectations: Powerful features at affordable prices

To turn a profit, you need enough users to cover your development and operating costs. The number depends on your pricing model and how engaged your audience is.

App monetisation strategies

App monetisation is how you generate revenue from your app, whether through direct payments, advertising, or a combination of both. The right approach depends on your audience and business goals, and many successful apps use more than one strategy.

Subscription models

Subscription models provide predictable, recurring revenue by charging users monthly or annually for access to your app's content or services.

This approach works best for apps that deliver ongoing value, such as:

• Productivity tools: Project management, note-taking, or accounting apps
• Content platforms: News, streaming, or educational services
• Software as a service: Business tools with regular updates and support

In-app purchases

In-app purchases let you sell virtual or physical items directly within your app. Users download the app for free or at low cost, then pay for extras as they use it.

Common in-app purchase types include:

• Consumables: Extra lives, virtual currency, or one-time boosts in games
• Premium features: Advanced tools or functionality unlocked for a fee
• Digital content: Additional levels, templates, or exclusive material
• Physical goods: Products shipped to customers through an e-commerce app

Advertising revenue

Advertising revenue lets you earn money by displaying ads to your users, which is the leading app monetization method worldwide. This model works well for free apps with large, engaged audiences.

Common ad formats include:

• Banner ads: Small ads displayed at the top or bottom of the screen
• Interstitial ads: Full-screen ads shown between content or actions
• Rewarded ads: Users watch ads in exchange for in-app benefits
• Native ads: Ads designed to match your app's look and feel

Balance is key. Too many ads frustrate users and drive them away, while too few limit your revenue potential. Test different placements to find what works for your audience.

Freemium vs premium pricing

Freemium and premium represent two different pricing approaches.

• Freemium: Users download a basic version for free and pay to unlock advanced features. This lowers the barrier to entry and lets people try before they buy.
• Premium: Users pay upfront to download the full app. This generates immediate revenue but can limit your audience reach.

Freemium typically converts a small percentage of free users to paying customers, with studies showing that self-serve products see 3–5% conversion rates, so you need significant download volume to generate meaningful revenue.

One-time purchase apps

One-time purchase apps charge users an upfront fee to download from the app store. You receive payment immediately, with no ongoing billing to manage.

This model works best when:

• your app solves a specific, one-time problem
• users expect to pay for similar tools (such as professional utilities)
• you can clearly communicate value before purchase

The challenge is that many users now expect free downloads. In fact, over 95.24% of apps in the Apple App Store are free. One-time purchase apps typically need strong reviews and clear differentiation to compete.

How to choose the right monetisation strategy

The best monetisation approach depends on your app type, target audience, and business goals. Different strategies work better in different situations.

Match your model to your app type:

• Business and productivity apps: Subscription models work well because users expect ongoing value and are willing to pay for tools that save time or money.
• Games and entertainment apps: In-app purchases and advertising suit casual users who prefer free access with optional upgrades.
• Utility apps: One-time purchases or freemium models work when users need a specific function without ongoing engagement.

Consider your audience's willingness to pay:

• Professional users: More likely to pay for subscriptions or premium features that improve their work.
• Consumer users: Often prefer free apps with ads or optional purchases.
• Niche audiences: May accept higher prices for specialised functionality.

Test and refine your approach:

Many successful apps combine multiple strategies or adjust their model based on user feedback. Start with one primary approach, measure the results, and experiment with alternatives as you learn what your audience responds to.

Realistic revenue expectations

Most apps take time and consistent effort to become profitable. Your income depends on your pricing model, user volume, and engagement levels.

Realistic benchmarks to consider:

• Advertising apps: Typically earn £1–5 per 1,000 ad impressions.
• Subscription apps: Need hundreds or thousands of paying subscribers to cover costs.
• In-app purchase apps: Often see 2–5% of users make a purchase.

Focus on creating a product that solves a real problem. Build a loyal user base, deliver a great experience, and refine your approach based on what the data tells you. Sustainable profit follows consistent value.

The process of building an app

A minimum viable product (MVP) is a version of your app with only the essential features needed to solve the core problem. Starting with an MVP lets you test demand before investing in additional functionality, and industry research shows it can slash development costs by up to 55%.

Focus on one or two must-have features. Competitors rarely succeed by simply adding more features to your core idea.

The development process typically follows five phases, with changes becoming more expensive at each stage:

1. Discovery: Identify essential features and design user flows during this planning stage. Changes here cost roughly ten times less than in later phases.
2. Wireframes: Create basic black-and-white page layouts that show where elements will appear. Focus on functionality placement, not aesthetics.
3. Prototypes: Build clickable navigation that simulates how users will move through your app. Validate concepts before expensive development begins.
4. Visual design: Add colours, images, and final styling to create the complete look of your app. Developers can build exactly what you've approved.
5. Development: Write the functional code that brings your designs to life. This is the most expensive phase for changes, so thorough planning in earlier stages saves money.

Yared says you should make most of your changes during the discovery phase. 'It's the most important part of building custom software, otherwise you risk building a house with the wrong foundations. Changes get ten times harder and more costly to make with each step in the process.'

Costs of developing an app

App development costs vary widely based on complexity, platform, and who builds it. With businesses now paying an average of $171,450 for custom applications, understanding your options helps you budget realistically and avoid overspending.

Professional development cost ranges:

• Simple web app: Around £50,000 for an app that does one thing well
• Feature-rich web app: £100,000 or more for multiple functions
• Web plus mobile app: £165,000 or more for cross-platform presence

Free and low-cost development options

You don't always need a large budget to build an app. Several approaches can reduce or eliminate upfront development costs:

• No-code platforms: Tools like Glide, Adalo, or AppSheet let you build simple apps without programming knowledge.
• DIY development: If you have coding skills, you can build the app yourself using free frameworks.
• Templates and app builders: Pre-built templates reduce development time and cost.
• MVP approach: Start with basic features and add more as revenue grows.

These options work best for simpler apps. Complex functionality or custom features typically require professional development.

Marketing your app

App marketing is how you attract users and convert them into paying customers. Even the best app needs a strategy to get discovered, and your marketing efforts should start before launch and continue well after release.

Pre-launch strategy:

• Beta testing: Recruit test users for feedback and build early adoption momentum.
• Market validation: Confirm demand exists before committing to full launch.
• User acquisition: Convert testers into your first paying customers.

Launch optimisation:

• App store presence: Write clear problem-solution messaging with relevant keywords.
• Website landing pages: Create dedicated pages that explain your app's value.
• Search optimisation: Help potential users discover your solution through organic search.

After launch

Once your app is live, ongoing management determines its long-term success. Here's advice from an expert on what to focus on after your app goes live.

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. Take note of which features are popular and make those experiences as good as you can. If a feature's going unused, decide if you'll drop it or promote it more so users know it's there.

Post-launch management determines whether your app generates sustainable revenue or fades after initial interest. Focus on retaining customers and improving based on real usage data.

Key post-launch activities:

• Performance monitoring: Track which features get heavy use and optimise accordingly.
• User behaviour analysis: Identify popular features to enhance and unused features to remove or promote.
• Technical optimisation: Address slowdowns and capacity issues as traffic grows.
• Feature refinement: Improve popular experiences to increase user satisfaction and retention.

Early customers provide valuable insights. Use their feedback to guide development priorities and build the features that drive long-term engagement.

Managing your app business finances

Financial management becomes essential once your app starts generating revenue. Tracking income and expenses from the start helps you make informed decisions about growth and investment.

Key financial tasks for app businesses:

• Track all income streams: Monitor revenue from subscriptions, advertising, in-app purchases, and app store sales
• Manage operating expenses: Keep tabs on development, marketing, server hosting, and app store fees
• Monitor cash flow: Understand when money comes in and goes out to avoid shortfalls

Why accounting software helps:

Research shows that businesses using accounting software see a significant increase in employee sales, averaging 11.8% over three years. Accounting software gives you a clear view of your financial health, simplifies tax preparation, and frees up time to focus on growing your app.

You may also qualify for support through government schemes. The UK's Help to Grow: Digital programme offers eligible small businesses discounts worth up to £5,000 on approved business software.

Getting started with your app business

Building a profitable app takes planning, investment, and ongoing attention. The good news is that the path is well established, and you don't need to figure it out alone.

Start by validating your idea with potential users. Choose a monetisation strategy that fits your audience. Build an MVP to test demand before committing to full development. Then market your app, monitor performance, and refine based on real data.

When your app starts generating income, get one month free to manage your finances with accounting software built for small businesses. Tracking revenue, expenses, and cash flow from the start sets you up for sustainable growth.

FAQs on making money from apps

You may have questions about making money from apps. Here are answers to some of the most common ones.

How much money can you make from an app?

App earnings range from nothing to millions of pounds, depending on your monetisation model, user volume, and engagement levels. Most apps require significant user numbers before generating meaningful income, so focus on building a loyal audience before expecting substantial revenue.

How can I create my own app to make money?

Start with an idea that solves a real problem, then follow these steps:

1. Research your market
2. Build a minimum viable product to test demand
3. Choose a monetisation strategy
4. Market your app to your target audience

Most successful apps refine their approach based on early user feedback.

How do free apps make money?

Free apps generate revenue through three main methods: in-app advertising, in-app purchases for virtual goods or premium features, and freemium upgrades where users pay for advanced functionality. Most successful free apps combine at least two of these approaches.

Do I need coding skills to build a money-making app?

No, you don't need coding skills to build an app. No-code platforms and app builders let you create simple apps without programming knowledge. However, complex features or custom functionality typically require either learning to code, hiring a developer, or working with a development agency.

How long does it take to start making money from an app?

Most app businesses take six to 12 months to generate meaningful revenue. Building an MVP typically takes two to four months, followed by time to acquire users and refine your monetisation approach. Advertising-based apps can earn sooner but require large user numbers, while subscription apps take longer to build a paying customer base.