EspañolAn executive framework for monetizing apps without eroding growth, brand, and retention
Building an app is no longer a technology project. It is a bet on a distribution asset, a data asset, and at best, a new economic engine. And yet, many organizations still treat monetization as a layer to be added at the end, once the product is “ready.” That sequence is not only inefficient. It is dangerous.
The underlying problem is structural. In the major app stores, the norm is that apps are free at the time of download. On Google Play, around 97 percent are free, and on the App Store, close to 95 percent. This means that for most products, profitability depends on post installation monetization decisions. It is not about choosing a price. It is about designing a system that captures value without breaking the behavior that makes the product viable.
This becomes even more relevant when you look at the size of the market an app can enable. Apple reported that in 2024, the global App Store ecosystem facilitated 1.3 trillion dollars in billings and sales. For a business leader, the message is clear. An app can be a massive transaction channel, but only if the economic model fits both the product and user psychology.
Why monetization usually fails
An app rarely fails due to a lack of features. Much more often, it stalls because the organization fails to align three forces pulling in different directions: growth, experience, and revenue generation. Poorly designed monetization becomes a silent tax on retention.
The reason is simple. Experience and monetization are two sides of the same system. When revenue capture becomes intrusive, users reduce engagement or leave. When retention drops, the business tries to compensate by increasing commercial pressure. That pressure further degrades the experience. This relationship between UX, retention, and monetization is well documented as a balance that requires deliberate design, not improvisation.
At the same time, the cost of growth is unforgiving. AppsFlyer reported that global user acquisition ad spend recovered in 2024 and reached 65 billion dollars, with growth driven especially by non gaming apps.
The right question is not “how do we make money”
The right question is: what behavior are we buying with our revenue model. Every monetization strategy rewards one type of usage and penalizes another. That is why monetization is not a pricing problem. It is product design and incentive design.
Advertising
Advertising remains the largest revenue engine in the mobile ecosystem. According to Statista, the global in app advertising market surpassed 330 billion dollars in 2024, consolidating its position as the main source of revenue for mass consumer apps.
Apps that monetize well with advertising share a clear pattern: high usage frequency and relatively short sessions, where interruptions do not break a critical task.
Instagram and TikTok are obvious, but not trivial, examples. They do not just insert ads. They design the feed so the ad becomes part of the flow, reducing the feeling of interruption. In both cases, monetization works because users do not enter with a specific goal, but to consume content in an open ended way.
By contrast, when this model is applied to categories like productivity or finance, it often fails. Google has even removed hundreds of apps from the Play Store for disruptive ad practices that degraded the experience.
Strategic takeaway
Advertising works when the product is a habit. When the product is a tool, it usually erodes value.
In app purchases
In app purchases work especially well in gaming, education, and lifestyle. Fortnite is one of the most cited examples because it monetizes almost exclusively through cosmetic items and season passes, without blocking core progression.
This approach avoids the backlash generated by pay to progress models, where users feel the product creates artificial friction just to charge them. In education, apps like Duolingo use purchases and subscriptions to remove ads and unlock advantages, without making the free version unusable.
Strategic takeaway
In app purchases work when users pay by choice, not by frustration.
Subscription
The subscription model has become dominant in apps that deliver ongoing value. RevenueCat estimates that subscription based apps already represent close to 40 percent of total App Store revenue.
Spotify, Netflix, and Headspace do not charge for a single feature. They charge for continuous access to a system that renews itself. Users do not evaluate the subscription every day, but when they feel that canceling it would imply a loss.
The risk is high. RevenueCat also shows that around 30 percent of subscriptions are canceled within the first month, turning onboarding and clarity of the value proposition into critical business factors, not just UX concerns.
Strategic takeaway
Subscriptions do not sell access. They sell continuity. If value does not renew, churn appears fast and hits hard.
Freemium
Freemium is one of the most misunderstood models. It is not about giving things away. It is about allowing users to experience enough value to justify paying.
Canva is a paradigmatic case. Its free version is fully functional for a large portion of users, but upgrading to Pro unlocks real productivity for more demanding profiles. The same happens with Notion, where the free tier builds habit and payment unlocks scalability.
This model works because the upgrade is not perceived as a ransom, but as a natural expansion of usage. That psychological difference explains why well designed freemium often converts better than aggressive trials.
Strategic takeaway
Freemium turns habit into willingness to pay. If the product does not create habit, the model collapses.
Hybrid models: when one lever is not enough
The most profitable apps tend to combine models. Spotify blends freemium, advertising, and subscription. YouTube uses ads, premium subscriptions, and revenue sharing. Many games combine rewarded ads with in app purchases.
The mistake is not hybridization. The mistake is doing it without a clear hierarchy. When everything monetizes, nothing is understood.
A decision framework for founders
Before discussing ad formats, paywalls, or plans, it is worth closing three decisions that determine everything that comes next.
What role does the app play in the business model?
It can be a channel, it can be the product, it can be an operational enabler. Direct monetization only makes sense when it does not destroy the primary value the app creates in the P and L.
What contract do you want to sign with the user?
Advertising, subscription, and freemium are different contracts. What kills conversion is not price, but inconsistency: promising one thing and charging another. Applied UX literature on monetization insists that sustainability is born from the balance between trust and value capture.
Where is the real economic engine?
Volume, margin, or recurrence. The typical mistake is forcing an engine the product cannot sustain. For example, subscriptions without continuous value, or ads without recurrence. When that happens, the app enters a cycle of tactical adjustments without addressing the structural cause.