Monetisation Models
Monetisation Models Overview
| Model | Example | Pros | Cons |
|---|---|---|---|
| Paid upfront | Procreate, Things | Clear value exchange | High install friction, declining revenue |
| Freemium | Spotify, Dropbox | Low friction, viral potential | Conversion rate often <5% |
| Subscriptions | Calm, Headspace, Netflix | Predictable revenue | Requires ongoing value delivery |
| In-app purchases | Candy Crush, Roblox | High spend from power users | Pay-to-win perception |
| Ads | Facebook, TikTok | Scales with usage | Hurts UX, depends on massive reach |
| Hybrid | Strava, Notion | Diversified revenue | Complex to execute |
Store Commissions
Apple takes 15–30% (15% for subscriptions after year 1 and small businesses). Google takes 15–30% (reduced to 15% for first $1M of revenue).
Implications:
- Pricing must account for commission margin.
- Web-based payment alternatives work for services (subscriptions purchased on website).
- Promotional codes and family sharing affect unit economics.
Pricing Psychology for Mobile
- Anchor prices — show a higher-tier option to make the mid-tier feel reasonable.
- Weekly vs monthly vs annual — annual should be ~2× monthly to anchor on savings.
- Free trial before subscription — 7-day trial converts better than 30-day (urgency).
- Introductory pricing — 3 months at 50% off drives adoption.
Subscription Retention
The most important metric: passive churn (failed payment) and active churn (user cancels). Reduce passive churn with retry logic and grace periods. Reduce active churn by showing value just before renewal — usage summaries, milestones, or personalised insights.
Ads
If your primary model is ads, your product incentives are engagement-maximised, not utility-maximised. This changes roadmap decisions — longer sessions beat faster task completion. Be transparent about data use to stay within privacy regulations.