Mobile app monetization strategies to drive app growth in 2025

Advertising revenue:

Apps display ads to generate income. Includes banner ads, interstitials, and rewarded video ads. Revenue depends heavily on user engagement and ad placement optimization.

Best practices (at a glance) 

• Ad format performance hierarchy: Rewarded video ads generate more revenue per impression than banner ads but can only be shown 3-5 times per session without hurting retention. Interstitial ads fall in between but require careful frequency capping.
• Mediation vs. direct deals: Ad mediation platforms take 5-15% of revenue but increase fill rates by 20-30%. 
• Seasonality impact: Ad revenue fluctuates 30-50% seasonally, with Q4 peaks and Q1 valleys. 
• User segmentation for ads: High-value users (top 10% by engagement) often generate around 40-60% of ad revenue. Over-monetizing these users with ads can drive them to paid tiers.

Key consideration: iOS 14.5+ privacy changes reduced ad targeting effectiveness significantly across most categories. 

Freemium models: 

Basic app functionality is free, with premium features requiring payment. Effective for user acquisition but conversion rates typically range from 1-5%.

Best practices (at a glance) 

• Feature gating strategies: The "10-7-3 rule" suggests offering 10% of features for free, gating 70% behind paywall, and reserving 20% for power users. However, this varies significantly by app category, always test and experiment to find the right balance. 
• Conversion timing: Most freemium conversions happen within 7 days (immediate need) or after 30+ days (habit formation). The 14-21 day period typically shows the lowest conversion rates.
• Value demonstration: Apps that show premium feature benefits within the free experience see higher conversion rates than those that simply describe premium features.

Key consideration: Competitive freemium positioning requires constant feature differentiation as competitors copy successful models

Looking beyond the app stores

The app stores excel at discovery and distribution, particularly for new developers.

They provide built-in payment infrastructure, handle customer support for basic issues, and offer established user trust. For simple apps with straightforward monetization needs, app stores remain an effective starting point.

As the business of app development has matured, so too have the companies behind apps bringing in millions of dollars in revenue. There are now publicly-listed app companies and, with over 250 billion new app downloads and $170 billion of app spend last year, there is clear demand from consumers to download and purchase mobile apps. As these apps have matured and the revenue targets have increased, app store limitations have become more apparent.

App store limitations:

• Platform dependency: App stores control pricing, promotions, and user communication
• Attribution challenges: iOS privacy changes and Android restrictions limit marketing optimization
• Revenue sharing: 15-30% platform fees significantly impact unit economics
• Geographic restrictions: App store policies vary by country, limiting global monetization strategies
• Innovation constraints: Platform review processes slow monetization experimentation

All of these are driving developers, large and small, to seek out opportunities on the web.

The future of app monetization lies not in choosing a single strategy, but in intelligently combining traditional methods with new web-based approaches that provide greater control, better economics, and more sophisticated user experiences.

App store limitations and how to bypass them

According to GP Bullhound, 'app stores are the largest markets in human history' with Apple's App Store and Google's Play store accounting for 95% of the world's app store market outside of China.

With 1 billion subscriptions and $87 billion of app expenditure in 2022, there are clear benefits for the 5.7 million apps currently on Google and Apple's app platforms. 

Yet the most successful apps are diversifying beyond these platforms. Many mobile app developers are now turning to the web to bypass the following challenges.

Acquisition costs are getting higher

One of the major issues facing app developers is accurately tracking and optimizing marketing activities since the roll-out of Apple's SKAdNetwork (SKAN).

Without tracking transparency and specific targeting, this is leading to higher acquisition costs and threatening profitability for some developers.

The numbers are stark: IOS 14.5 and the demise of third-party cookies and stricter consumer privacy legislation like CCPA and GDPR have increased customer acquisition costs by 60% Meanwhile conversion tracking accuracy has decreased significantly.  This perfect storm has made traditional user acquisition increasingly expensive and unreliable.

Web monetization solves attribution challenges by providing complete visibility into the customer journey. Apps using web funnels report 85% attribution accuracy compared to 45% accuracy through traditional app install campaigns.

Heavy app store fees

App stores levy an average 30% commission fee on app transactions. According to the Coalition for App Fairness, Apple makes over $15 billion a year from this ‘app store tax’ alone, enabling the Apple App Store to generate more revenue than 90% of the Fortune 500. Even recent reductions to the commission rate in Europe are counterbalanced by a complex malaise of complex trad-offs.

In contrast, web monetization typically involves payment processing fees of 5+%, representing a significant improvement in cost efficiency if the right platform is chosen

Anti-competitive rules

From stringent marketing restrictions to inflexible subscription management approaches, app stores’ rules have long been accused of limiting developers’ freedoms to promote and sell their products. Since 2020, Apple’s App Store has faced a mounting tide of regulatory investigations and lawsuits for breaching competition rules in the EU, the UK, and the United States.

For example, the EU fined Apple almost $2 billion over ‘anti-steering policies’ in March 2024, claiming Apple had “abused its dominant position in the market for music streaming apps” by preventing Spotify from communicating alternative ways to download its app outside the App Store.

Paddle's Danielle Delahunty-James and Alanna Harvey, founder of app investment firm Braavo, touch on this in the video below, click here to check out the full webinar.

Web monetization vs. App monetization

Monetizing your mobile app on the web opens up 5 key opportunities:

Reach an untapped audience: Apple's App Store attracts 650 million weekly visitors. Google's Play Store claims 2.5 billion active users. But there are over 8.5 billion mobile subscriptions worldwide and selling via the web opens your app to all mobile users, not just app store customers. This wider audience is also largely untapped with only a 15% audience overlap between the web and the app stores.

Boost your app's lifetime value (LTV): In 2022, the mobile game market generated $110 billion from player spending, but approximately 30% ($35 billion) was sucked up by platform fees.

By avoiding high commission rates and platform fees (and reducing your customer acquisition costs), web sales enable you to increase the lifetime value (LTV) of your mobile app.

Improve your marketing: Since 2021, Apple's IDFA has only been available upon user permission, with less than 10% of iOS users opting in. Alongside app stores' SKAdNetwork (SKAN) restrictions, this has limited developers' marketing scope and increased advertising (and acquisition) costs. But restriction-free marketing programs on the web provide greater clarity on campaign performance, enabling you to test ads at lower cost, analyze channel traffic more precisely, pin down purchase attribution and iterate quicker.

Minimize churn: According to RevenueCat's State of Subscription Apps 2024 report, involuntary churn accounts for over 23% of lost customers on the App Store due to billing errors. On the other hand, web sales give you greater oversight of churn risks so you can implement impactful strategies for involuntary churn, such as smart payment retries and email prompts to update payment details.

Web monetization platforms typically reduce involuntary churn by 45-60% through advanced payment recovery systems and direct customer communication capabilities not available through app stores

Increase flexibility: App store rules restrict how you go to market because you don't have the flexibility of testing different pricing options, bundling deals, or offering discounts. However, selling on the web allows you to customize subscription packages and price points to drive higher-value purchases, such as offering flexible trials or better-value term limits (i.e., annual subscriptions over monthly ones). This is especially useful if you're looking to move from purely serving consumers to also selling B2B (i.e., adding per-seat pricing).

Selling outside the app store - Is it right for your app?

While web monetization offers superior performance for most apps, the optimal approach depends on your specific situation:

Traditional app store monetization works best for:

• New apps with limited resources (under $10k monthly revenue) 

• Simple utility apps with low price points 

• Apps targeting markets with strong app store preference (like Japan for iOS)

• Developers who prioritize simplicity over optimization

Web monetization becomes advantageous when:

• Monthly revenue exceeds $30k and growth targets are aggressive

• Customer acquisition costs are limiting scale

• International expansion is a priority

• Pricing optimization and customer relationship control are important

Hybrid approaches work well for: 

• Established apps transitioning to web monetization

• Apps with diverse user bases across different markets 

• Teams wanting to test web channels without abandoning app store revenue

• Apps on the Small Business Program who don’t want to hit the threshold

How to nail selling your mobile app on the web in 3 steps

If you’ve only sold your mobile app or game via the app stores, you’ve probably never had to think about the complexities of driving sales on the web, such as building an onboarding flow, managing international payments and ensuring users end up in your app.

But if you sell directly on the web, you need to overcome these challenges to nail your app monetization strategy.

To set up a profitable web monetization strategy, here are three steps you need to take.

1. Choose the right mobile app monetization strategy for your product

There’s no one-size-fits-all strategy when driving users to purchase on the web. 

It’s also not about abandoning IAP altogether but testing and refining what works for your specific audience.

App2Web: Convert in-app users through a web checkout

What: Prompt users in the app to convert or upgrade through a link to a web checkout.

Why: The Epic v. Apple ruling now allows apps in the U.S. App Store to include buttons, external links, and calls to action for web payments without Apple fees or restrictive design requirements. This means you can finally guide users to better pricing and payment experiences outside the App Store ecosystem.

In the EU, Apple's compliance with the Digital Markets Act also enables App2Web flows, but with added complexity. Developers face a tiered fee structure (5%-13% Store Services Fee), additional charges (2% Initial Acquisition Fee + 5% Core Technology Commission, as well as payment processing fees), and mandatory monthly reporting requirements to Apple.

For most apps, the tradeoff will not be worth it.

Benefits:

• Lower fees (up to 6% vs 30%)
• More billing flexibility (discounts, bundles, pause options)
• Direct communication with customers
• Improved cash flow with faster payouts 

Proven tactics:

• In-app support links ("Subscribe online and save")
• Triggered email flows post-trial or pre-renewal
• Cancel/save offers via Paddle

Best for:

• Apps in the U.S. App Store
• Price-sensitive audiences
• Subscription upgrades and win-back campaigns

Web2App: Acquire and convert on web, then direct to the app

What it is: Run your entire acquisition and purchase flow on the web, then direct users to download the app post-purchase.

Benefits:

• Lower fees (up to 6% vs 30%)
• Better ad attribution (no SKAN or ATT limitations)
• Experiment freely with billing models, pricing and offers
• Own the user relationship 
• Audience expansion: Web users often show minimal overlap (as low as 15%) with App Store users
• Improved cash flow with faster payouts 

Best for:

• Paid acquisition campaigns
• High-LTV audiences
• Global expansion with localized pricing

Where does this make sense? This approach is the best way to adopt a web monetization strategy no matter where your users are located. By executing the entire acquisition flow on the web, outside the app stores, you’re not restricted by Apple’s policies. 

Check out our Web2App funnel fundamentals playbook here

2. Choose the right platform to handle payment

One of the app stores’ primary benefits is the billing infrastructure they provide. 

They not only handle localized payments but also take care of refunds and chargebacks, all while managing sales taxes globally. But when selling directly on the web, these become your responsibility.

Sales tax compliance, in particular, can be a real headache for companies who haven’t had to manage this before. Taxes on digital products can differ between countries and even states, making it difficult to keep on top of what you owe and where.

There are two main types of payment solutions you can choose when selling on the web: a Payment Service Provider (PSP) or a Merchant of Record (MoR).

Payment Service Provider (PSP)

PSPs, such as Stripe and Checkout.com, are effectively the middlemen between your customers’ bank accounts and payment methods like Visa and Mastercard.

PSPs charge a fee for facilitating the payment transaction, but are not the legal seller and don’t support you with other financial obligations, such as chargebacks, refunds, fraud protection or handling sales tax.

In effect, PSPs are the ‘lite’ version of a payment service. They are therefore best suited to apps that are concentrated on one country or market and don’t require international payment or global tax compliance support.

Merchant of record (MoR)

A Merchant of Record (MoR), such as Paddle or Xsolla, is a legal entity responsible for selling your mobile app or game to the end customer.

As such, an MoR not only manages all your payment requirements (i.e. international transactions, currency conversions and banking connections), but also your financial liabilities, such as chargebacks and refunds, collecting and remitting sales tax, and adhering to Payment Card Industry (PCI) regulations.

The easiest way to understand an MoR is that the App Store essentially acts as one when you sell there. The big difference however is that fees are much lower and you get access to different pricing and discounting options.

An MoR is therefore better suited for apps and games that will attract customers from all over the globe.

Learn more about how Paddle helps mobile app companies successfully sell on the web

See how Paddle compares against Stripe here

3. Choose to build or buy the platforms to support this

Successfully launching a web monetization strategy requires 4 key components:

1. Creating a web experience
   To sell on the web, you’ll need to set up a web experience that will facilitate your strategy. If you opt for a Web Store strategy then this will mean building that store to show your products. For Web2App, you’ll need to build the onboarding flow for users to go through.
2. Global-ready billing and payments infrastructure
   From hosting a checkout with multiple payment methods and currencies to taking subscription payments, offering discounts, and managing chargebacks and refunds, you need a payments infrastructure that handles the complexities of global sales.
3. Syncing web transactions with app subscriptions
   Making sure that newly-acquired customers can easily log in and use the app. It’s also important to have all your revenue streams (web and app stores) in one place so you have a single source of truth for your app revenue.
4. Ensure effective analytics measurement and tracking:
   High-performing web funnels will see 20% of users reach the paywall and 1.5-2% make a purchase. But to understand how your funnel is performing and make meaningful interventions, you need to establish metric tracking.
   
   You can either choose to build these four components internally or leverage solutions that integrate and do these for you.

5. Get the moments that matter right 

Most app developers focus too heavily on checkout optimization while ignoring the complete customer journey, leaving significant revenue on the table.

Based on extensive analysis of web monetization campaigns, there are five critical moments where users make decisions that determine your revenue outcomes:

Moment 1: Click to View - Your ad creative and initial touchpoint set the foundation for everything that follows.

Moment 2: View to Paywall - Streamlined onboarding with clear messaging and social proof drives users toward pricing.

Moment 3: Paywall to Checkout - Transparent pricing builds trust. Avoid dark UX patterns that boost short-term conversions but increase refunds.

Moment 4: Checkout to Paid - Fast, one-click experiences with Apple Pay and localized payment methods maximize successful payments.

Moment 5: Paid to Retained - Smart dunning, renewal reminders, and strategic cancellation flows with salvage offers determine lifetime value.

The cascade effect matters: Improving conversion by 10% early in the funnel provides exponentially more impact than late-stage improvements. A better click-to-paywall rate affects every subsequent step. 
Measure holistically across return on ad spend, customer lifetime value, and net proceeds rather than isolated conversion metrics. The most successful teams run continuous experiments across all five moments while tracking overall business outcomes.

Buy vs Build: Which should you do?

Building this capability in-house

Building in-house requires hiring front and back-end developers to work on getting everything set up. This can take at least 3 months depending on how much resource you can allocate to this. And you’ll need to continuously monitor and manage what you build to ensure there are no issues.

On top of this, you’ll also need to find and pay for experts to handle local taxes, exchange rates, billing, refunds and chargebacks.

The risks of this approach are detailed in part by Erkmen Erakkus CEO of Stoikk below.

Buy ready-made

Using third-party services enables you to focus more on your customer acquisition strategies and less on technical hurdles.

For instance, Web2App solution FunnelFox provides templates for web funnel optimization with an inbuilt integration to Paddle’s merchant of record payment and billing platform, which allows you to outsource your billing infrastructure, maintenance and tax compliance, and benefit from Paddle’s real-time subscription and revenue metrics.

Examples: App companies selling outside the app store

Goodnotes

Web monetization strategy: Hybrid 

Goodnotes is a digital note-taking app designed for students, educators and businesses with over 24 million monthly active users spread across 144 countries.

In 2023, Goodnotes wanted to go multi- platform and sell the app in the App Store, Google Play Store and on the web. But it didn’t want to manage its own payments stack or take on the responsibility for sales tax in over 100 jurisdictions. Goodnotes decided to launch the new version of the app with Paddle as its merchant of record.

This meant it didn’t have to worry about the back-office admin of taking payments globally. It also enabled the company to introduce a B2B offering and increase revenue through more flexible payment options and subscription choices.

Check out the full Paddle and Goodnotes story here.

HubX 

Web monetization strategy: Hybrid

HubX’s apps boast over 100 million users worldwide. Its Nova app turns any phone into an AI-powered assistant, DaVinci transforms words and images into stunning artwork, PhotoApp is the fastest and most powerful photo enhancer app, and PlantApp can identify over 100,000 plants with over 80% accuracy.

In early 2024, it launched its web monetization strategy. However, this brought with it a number of complexities, such as managing refunds and chargebacks, customer support on billing and payment issues, and collecting and remitting sales tax.

Paddle’s Merchant of Record model immediately appealed to HubX, as well as the ability to easily add new payment methods and offer over 30 currencies, and its built-in churn prevention tools.

Since using Paddle, HubX has:

• Recovered over $100,000 in past-due payments in 72 days with Paddle Retain
• Prevented $110,000 MRR in churn by implementing cancellation flows.
• Offloaded 10,000+ billing support tickets per month

Check out the full HubX story here.

Runna

Web monetization strategy: Web2app

Runna is the world's #1 rated personalized running coaching app with nearly 1 million monthly active users across 180+ countries. Founded by university friends Dom Maskell and Ben Parker, the app provides tailored training plans for runners from complete beginners to sub-2:15 marathoners.

As Runna scaled globally, they faced costly app store fees and complex tax compliance across 175+ countries. They implemented a Web2App strategy, allowing users to subscribe on the web before downloading the app.

Stoikk

Web monetization method: External payments

Stoikk Turkey-based Stoikk creates apps across wellness, AI, and consumer tech, reaching over 25 million users worldwide. Its first app, Kompanion, began as an intermittent fasting tracker before expanding into a broader portfolio.

When the US court ruling opened the door to web checkouts, Stoikk moved quickly to bypass app store fees. This brought new challenges—managing disputes, taxes, and user experience.

By adopting Paddle’s Merchant of Record model, Stoikk launched a seamless web checkout with no drop in conversions, higher LTV, and reduced operational risk. Today, it’s scaling web payments across its portfolio to drive long-term growth.

How to optimize your web revenue with Paddle

Paddle manages your payments, sales taxes, currencies, financial compliance and back office admin when selling apps and games outside the app store.

With Paddle as your merchant of record, you can boost your web revenue through better payment success, better conversions, and better retention.

Global payments infrastructure from day one

Smart payment solution

Instead of having to set up different PSPs and payment methods for different regions, Paddle’s global payments infrastructure deals with all the local payment gateways, acquiring banks and payment entities.

This smart payment solution minimizes foreign payment issues and increases payment acceptance, helping you monetize customers quicker and grow revenue globally.

Global sales tax compliance

40+ countries have introduced sales tax on digital goods and software, which applies to where your customers are based, not where you are based.

Paddle takes on all the sales tax liability for your web sales, ensuring you’re globally compliant from your first transaction in over 100 jurisdictions. As Paddle collects, files and remits sales tax for every purchase, you not only avoid financial penalties, but also the cost of tax lawyers.

Fraud monitoring and protection

According to Juniper Research, payment fraud will cost merchants an estimated $362 billion between 2023 and 2028. In addition, if your chargeback rate exceeds 1%, you’re at risk of PSPs offboarding you and freezing your funds at short notice.

But with Paddle monitoring fraud on web transactions and fighting chargebacks for you, you won’t lose out to false or fraudulent attempts to claim back revenue.

Improved payment conversions outside the app stores

Localized currencies

Selling on the web opens up your app to customers anywhere in the world - even countries that you may not be targeting. With Paddle, you can localize your entire checkout by automatically converting the language and currency to fit your customers’ region, so you maximize customer conversions and revenue in every market.

• Achieve up to 24.8% quicker growth by offering +25 currencies

Localized payment methods

Not all web customers like to transact in the same way. For instance, card payments account for 57% of US transactions, but only 16% of payments in Germany (77% prefer Paypal).

From digital wallets to country-specific payment preferences (i.e. iDEAL in the Netherlands), Paddle offers a range of payment methods, so you don’t miss out on potential revenue.

• Achieve up to 21.8% faster growth by offering at least one alternative payment method

Localized pricing

A web customer in Japan has a different willingness-to-pay than an app user in South Korea or Sweden. For instance, the Nordics are prepared to pay 28% more than your US app price, while Brazilians are prepared to pay 12% less. Paddle hyperlocalizes your web pricing to maximize your revenue intake.

• Gain up to 30% more revenue by adjusting to price sensitivity

Minimize customer churn

Smart payment retries

Paddle reduces involuntary churn with intelligent failed payment recovery and automated churn interventions.

For instance, with Paddle Retain, you can improve your failed payment recovery rate by up to 17% and recover 5-10% more by automatically sending payment recovery emails.

• Up to 17% recovery rate through improved failed payments

Term optimization

The longer a customer subscribes, the more revenue you earn. By offering quarterly and annual term plans, this not only improves your yield by up to 4x more than monthly plans, but gives you greater control of pricing measures and subscription management flows.

• 4X more LTV yield with quarterly and annual term plans

Cancellation flows & salvage offers 

Implementing cancellation flows is simple with Paddle. This presents salvage offers, like pausing a subscription or switching to a different plan, when subscribers are looking to cancel and have been shown to reduce churn by up to 30%.

Catch more revenue selling your app on the web

At Paddle, we help you grow your app sales on the web, hassle-free. 

• No need to deal with app stores’ fees, rules or restrictions.
• No need to build your own billing and payments infrastructure.
• No need to manage refunds, chargebacks and sales tax complexities.

See how Paddle serves mobile app companies here.

Or get in touch with one of our experts here if you’re ready to launch or optimize your web monetization strategy.