How Do Apps Make Money: 7 Monetization Models and How to Pick the Right One
An app makes money through one of seven basic models: subscriptions, freemium conversion, in-app purchases, transaction commissions, advertising, one-time purchase or B2B licensing. And the choice of model isn't a detail to leave for the end — it shapes the app's design from the first screen, its technical architecture and how much development will cost you.
In this article we'll go through all seven models with realistic numbers. Not the numbers from investor decks, but the ones you'll actually see in practice.
1. Subscriptions
The user pays repeatedly — monthly or yearly — for access to the whole service. Today the most widespread model for apps that solve an ongoing need: fitness plans, productivity, photo editing, languages.
Who it's for: products that deliver value repeatedly. If a user opens your app once and their problem is solved, subscriptions won't work.
Realistic numbers: of the people who download the app and start a trial, typically 30–50% end up paying. Of total downloads, 1–5% convert to paying users. An annual plan with roughly a 40% discount compared to twelve monthly payments significantly reduces cancellations.
Pros: predictable recurring revenue (MRR), higher customer lifetime value, an ongoing relationship with the user.
Risks: you have to keep delivering value. A subscriber who hasn't opened the app in two months cancels. Expect monthly churn of 3–8% in B2C.
2. Freemium
A basic version for free, advanced features paid. Freemium isn't a standalone revenue source — it's an acquisition strategy that leads to a subscription or a one-time upgrade.
Who it's for: products where the free version genuinely does something (otherwise people leave) and the paid version has clearly visible added value (otherwise nobody upgrades).
Realistic numbers: 2–5% of free users convert to paid. Famous exceptions like Slack (~30% of teams) are exceptions. If your business plan assumes a 15% conversion, redo the math.
Pros: low barrier to entry, a large user base, viral potential.
Risks: you pay infrastructure for 100% of users, but only a fraction earns you money. A badly placed free/paid boundary can sink the product in both directions.
3. In-app purchases
Individual purchases inside the app: credits, premium features, cosmetic items. The dominant model in games (the vast majority of mobile game revenue comes from in-app purchases), but it works outside them too — e.g. a one-time export unlock.
Who it's for: games, apps with natural "consumable" units (credits for AI generation, SMS bundles).
Realistic numbers: in games, typically 1–3% of players buy anything, and a large share of revenue comes from a narrow group of top spenders. Average revenue per user in casual games is in the units of crowns.
Pros: no ceiling on a single user's spending, no upfront commitment.
Risks: revenue is spiky and unpredictable. Designing "so people spend" easily slides into dark patterns that damage the brand.
4. Transaction commissions (the marketplace model)
The app brokers a deal between two sides and takes a percentage. Uber, Wolt, Airbnb — but also smaller niche marketplaces.
Who it's for: two-sided markets where you connect supply with demand. The key question: does the transaction go through you, or do the parties settle outside the app?
Realistic numbers: commissions range from 5–15% (high-value services) to 15–30% (delivery, small services). A marketplace needs critical mass on both sides — without it you're stuck in the empty-marketplace loop.
Pros: revenue grows with the market's volume, not with your headcount. The network effect builds a moat against competitors.
Risks: the hardest model to launch. For the first 6–12 months you usually subsidize one side of the market so the other has a reason to show up.
5. Advertising
The app is free and earns money by showing ads. The model that looks simplest — and works worst for small apps.
Who it's for: apps with a huge number of daily active users and long session times. News, entertainment, casual games.
Realistic numbers: effective CPM (revenue per thousand impressions) in the Czech market is in the range of units to low tens of crowns. An app with 10,000 daily active users earns on the order of thousands of crowns per month from ads — that won't even cover hosting and maintenance.
Pros: zero barrier for users, simple implementation via ad networks.
Risks: you need hundreds of thousands of users for the model to make sense. Ads hurt UX, and in B2B or industry apps they look cheap.
6. One-time purchase
The user pays once and owns the app. A model that's slowly disappearing from the app stores — but it still has its place.
Who it's for: tools with clearly bounded value where a recurring payment would feel unfair. Professional utilities, one-off calculators, offline guides.
Realistic numbers: one-time app prices in the Czech market are typically CZK 99–499. Without recurring revenue you need a constant stream of new customers — and every major OS update is a cost nobody will pay for anymore.
Pros: clarity for the customer, no subscription management.
Risks: revenue ends with the purchase, maintenance costs don't. That's why most successful "one-time" apps eventually add a subscription or paid major versions.
7. B2B licensing
You don't sell the app to end users but to companies — for a monthly or annual licence based on the number of users or locations. An outwardly unremarkable model that in total often earns the most.
Who it's for: industry solutions — attendance, inventory, field service, bookings. Apps that a company rolls out to employees or customers.
Realistic numbers: B2B licences in the Czech market range from hundreds of crowns per user per month to tens of thousands per location. The sales cycle is longer (weeks to months), but churn is far lower than in B2C — companies don't cancel tools that work.
Pros: high value per customer, low churn, predictable revenue.
Risks: selling requires sales work, not just marketing. The first few customers often mean custom tweaks.
Watch out for App Store and Google Play commissions
For digital content sold inside the app, both Apple and Google take 15–30% of every payment. The reduced 15% rate applies to smaller developers (under USD 1 million in annual revenue) and to subscriptions after the first year.
When you can legally avoid the commission:
- B2B SaaS: companies buy licences via the web (invoice, card) and the app is just for signing in. You don't pay for Slack or Notion through the App Store.
- Physical goods and services: e-shops, transport, bookings — store commissions don't apply to them.
- Web checkout: after the rule changes of recent years you can link out to payment outside the app in many regions; the conditions keep evolving and differ by market.
For B2C apps with in-app subscriptions, simply budget for the commission in your pricing — the extra 30% margin has to fit into the price.
Model comparison
| Model | Conversion / rate | Revenue predictability | Launch difficulty | Typical product |
|---|---|---|---|---|
| Subscription | 1–5% of downloads | high | medium | productivity, fitness, B2C SaaS |
| Freemium | 2–5% free → paid | medium | medium | tools, productivity |
| In-app purchases | 1–3% paying | low | medium | games, credit-based services |
| Commission | 5–30% per transaction | grows with volume | very high | marketplaces, delivery |
| Advertising | units of CZK CPM | low | low (but needs mass) | media, casual games |
| One-time purchase | CZK 99–499 each | low | low | utilities, professional tools |
| B2B licence | hundreds of CZK–tens of thousands/mo | very high | high (sales) | industry solutions |
How to pick the model for your idea
Three questions that decide for you:
- Does the app solve an ongoing or a one-off need? Ongoing → subscription or B2B licence. One-off → one-time purchase, or rethink the model.
- Who pays — the end user or a company? A company can bear a multiple of the price and cancels less. If your product can be B2B, it's almost always worth more.
- Does a transaction flow through the app? If yes, a commission is more natural than forcing both sides to pay subscriptions.
And one rule on top: design monetization before development, not after. Subscriptions need renewal management and trial logic, marketplaces need payment splitting, freemium needs a well-thought-out free/paid boundary. Grafting a model onto a finished app is one of the most expensive changes we know — we write more about planning in how to plan an MVP for a startup.
How much of it you'll actually see
Returns aren't calculated from revenue but from margin after store commissions, payment gateway fees and operating costs. How to work out when an app pays for itself is covered in our article on measuring mobile app ROI — and indicative development costs are in our overview of how much a mobile app costs.
Want to discuss which model makes sense for your idea? Get a price in our configurator in two minutes, or book a consultation — we'll tell you straight whether your monetization plan stands on realistic numbers.
