How to make money from your mobile app (realistic strategies)

The uncomfortable truth that app development agencies will not tell you is that only 0.4% of consumer apps achieve financial success. Around 80% fail to earn even £800 per month after two years of operation.

Building a profitable app is NOT impossible. We just mean you need to approach monetisation with clear eyes, realistic expectations, and a strategy that starts on day one rather than as an afterthought once your app is already built.

At kwiboo, we have spent over 20 years helping businesses turn software ideas into reality through our web and mobile app development services. We have seen what works, what fails, and why the difference between success and obscurity often comes down to decisions made before a single line of code is written.

Being realistic about how your app compares to the UK market

Before diving into monetisation strategies, it's worth understanding the full picture of what it costs to build an app in today's UK market.

The UK remains Europe's largest app market with £3.97 billion in revenue. British consumers spend an average of £74 annually on apps, ranking fifth globally. Those numbers sound promising until you examine them more closely.

RevenueCat's analysis of 75,000 apps tracking over £8 billion in revenue reveals a stark reality: the top 5% of newly launched apps generate 400 times more revenue than the bottom 25%.

Only 3.5% of subscription apps reach the £8,000 monthly recurring revenue threshold that typically allows for full-time indie development work. The median indie app earns under £40 per month after twelve months. On Google Play, 68% of apps never reach 1,000 downloads.

We don't share these to put you off, we share them because understanding the market helps you make better decisions. Selling your idea takes time and consistency, the path to profitability typically spans two to five years for sustainable app businesses. When we think about those timeline, it changes everything about how you should approach your project.

Its not just doom and gloom, there is better news if you are considering a business-focused application. B2B apps have a 13-14% success rate compared to less than 1% for consumer apps. With that in mind, what audience you target can significantly improve your chances of having a successful strategy.

The different ways you can monetise your app

Freemium

Freemium is the dominant model, 97% of Android apps and 95% of iOS apps available for free download. The model works by offering basic functionality at no cost, then charging for premium features

Conversion is the challenge. Median freemium-to-paid conversion sits between 2-5%. Only exceptional products achieve rates above 10%.

Interestingly, hard paywalls requiring payment before any access convert at 12.11% compared to 2.18% for standard freemium approaches. That challenges the assumption that free trials always outperform.

If you want an effective freemium strategy, make sure you gate features users naturally bump into as their usage matures, rather than arbitrarily restricting functionality from the start.

Subscriptions

Before even considering subscription pricing, we must first understand consumer psychology. The threshold for annual subscriptions sits around £100-120, roughly equivalent to combined Spotify and Netflix costs that consumers use as mental anchors.

Weekly subscriptions now dominate gaming apps at 78% market share and increasingly appeal across categories as subscription fatigue grows. The UK has 155 million active subscriptions, with roughly 10 million deemed unwanted by consumers. Lower-priced apps convert trials to paid at 47.8% compared to 28.4% for higher-priced offerings.

One-time purchases

Lifetime licences (The traditional model of paying once and owning forever) still work for certain categories, particularly utility apps with finite value propositions. Consumer utility apps typically price between £4-40 for one-time purchases.

The hybrid approach of offering both subscription and one-time purchase options captures subscription fatigued users alongside power users willing to pay more for convenience.

Advertising

Advertising revenue varies dramatically by format. UK eCPM rates for rewarded video reach £12-24 on iOS, making this the highest-performing format when users voluntarily watch ads for in-app rewards. Interstitial (full screen in-between levels/tasks) ads generate £6-8, while banners deliver under £0.40.

Peak advertising revenue occurs between 7-9pm local time. If you implement ads, frequency capping at one to two interstitials per session protects user experience while still generating meaningful revenue.

In-app purchases

In-app purchases work differently for consumables versus non-consumables. Around 90% of monetised games include ad removal as an in-app purchase, while consumables like virtual currency drive repeat purchases from engaged users.

UK consumers demonstrate considered purchasing behaviour rather than impulse buying. Starter packs at £1.99-2.99 provide low-friction entry points, while premium tiers at £29.99-49.99 target high-value users who generate the majority of your revenue.

B2B versus B2C apps

Who your target audience is, massively changes how you should monetise your app.

B2B (Business to business) apps command higher price points, longer sales cycles, and dramatically better success rates. Per-seat pricing remains most common, used by 40% of software companies, though usage-based pricing is trending. Over half of companies now incorporate at least one consumption element.

The 13-14% success rate for B2B apps compared to under 1% for consumer apps can make the business path significantly more viable for long term growth.

B2B suits you if you have strong business relationships, a higher per-user value proposition, features solving operational problems, and tolerance for longer sales cycles.

B2C (Business to customer) works if you have mass market appeal, marketing capability for large-scale acquisition, content or entertainment focus, and ability to monetise through advertising and high-volume transactions.

There is also B2B2C, where two businesses partner to serve consumers together. Think of models like Instacart selling logistics software to grocers who then serve consumers, or OpenTable connecting restaurants and diners.

How to build for revenue from day one

How you monetise your app affects app architecture in ways that are difficult and expensive to change later.

Subscription models require account systems, entitlement tracking, and receipt validation infrastructure. Advertising integration needs ad mediation SDKs, placement planning, and A/B testing capability. In-app purchases demand storefront interfaces, purchase flow design, and restore functionality.

Planning these systems during your initial architecture planning prevents costly refactoring later on.

Design decisions also impact revenue through conversion optimisation. Many of the top-converting apps use reverse trials that start users with full access before downgrading, increasing conversion by 10-40%. Contextual upgrade prompts appearing when users hit limitations convert 32% better than static paywalls.

Testing is incredibly important. Companies running 10 or more conversion experiments per quarter achieve 60% higher conversion rates. Testing priorities should include how you display your pricing, trial length, feature gating decisions, upgrade prompt timing, and subscription duration options. Our UX/UI design team specialises in creating conversion-optimised interfaces that balance user experience with revenue goals.

How much the are App store fees and what are their impact on margins

Apple's standard 30% commission drops to 15% through the Small Business Program for developers earning under £800,000 annually. Most indie developers qualify.

Google's structure applies the 15% reduced rate to the first £800,000 for all developers regardless of size. Both platforms reduce subscription commissions to 15% after users remain subscribed for twelve months.

These fee structures significantly impact unit economics. For a £9.99 app at 30% commission, developers receive £6.99. At 15% commission, they keep £8.49. That is a 21.5% increase in per-sale revenue. On 10,000 sales, this difference amounts to £15,000 annually.

Registration costs also differ. Apple charges £79 annually for developer programme membership, while Google requires only a £20 one-time fee.

How much it costs to acquire users

UK user acquisition costs run 10-20% higher than global averages due to market maturity and competition, but UK users deliver higher lifetime value.

Apple Search Ads command approximately £2.10 per install with high purchase intent. Google Ads cost £2.40-3.20. Facebook Ads reach £3.00-4.00. TikTok Ads at £2.00-3.60 perform best for reaching Generation Z audiences.

Category variations matter for budget planning. Finance and fintech apps face iOS costs of £3.20-6.40 per install. Shopping and e-commerce apps run £2.40-4.80. Casual games cost £1.20-2.40. Health and fitness apps typically require £2.00-4.00.

For a typical £40,000 launch, allocate 40-50% to paid user acquisition, 5-10% to App Store Optimisation, 5-15% to influencer marketing, and 15% to reserve and testing funds.

How to keep your users once you've got them

The critical window for retention occurs between Day 1 and Day 7, where 77% of daily active users are lost within the first three days.

Industry benchmarks show all-app Day 1 retention averaging 25-26%, dropping to 10-13% by Day 7 and just 5-7% by Day 30. Finance and fintech apps outperform these averages with 30-32% Day 1 retention. Education apps struggle with just 14-15% Day 1 and 2-3% Day 30 retention.

Push notification users demonstrate 30% higher Day 30 retention. In-app messages boost retention by approximately 30% when implemented thoughtfully. These findings suggest investing heavily in onboarding optimisation and engagement systems rather than focusing exclusively on acquisition.

Healthy businesses target a 3:1 lifetime value to customer acquisition cost ratio minimum, with payback periods under twelve months.

When an internal business app is more valuable than a public app

Sometimes the most profitable app is one you never release publicly.

Build internal when software creates competitive advantage, requirements are highly specialised, data security is critical, and no off-the-shelf product meets 60% or more of your requirements. Netflix's proprietary recommendation engine drives 80% of viewership, demonstrating the competitive value of internal tools.

Custom enterprise software typically costs £40,000-400,000 for development plus 15-25% annual maintenance. The build versus buy decision should favour buying when commercial products achieve around 80% of your requirements, it should favour building when it only meets less than 60%.

Common mistakes to avoid

Pricing too low. This undervalues your product, leaves revenue on the table, and makes later increases difficult. UK consumers expect 10-20% lower prices than US equivalents, but that still leaves room for sustainable pricing.

Delaying monetisation planning. When monetisation comes as an afterthought, architecture decisions may not support intended revenue models. Planning starts on day one.

Introducing ads or paywalls too aggressively. Users who have not yet experienced your value will simply uninstall. RevenueCat data shows 80-90% of all trials begin on Day 0, making onboarding and early value demonstration critical.

Copying competitor pricing. Without understanding their cost structure and value, you end up with unsustainable economics.

Neglecting retention. Spending heavily on acquisition while ignoring the 77% of users lost in the first three days is burning money.

Platform policy violations. Apple and Google regularly update guidelines. Building business models that push policy boundaries invites removal from stores with little recourse.

How we make it happen

The UK mobile app market offers genuine opportunities for developers. The 0.4% consumer app success rate demands realistic expectations, while the 13-14% B2B success rate suggests business-focused applications merit serious consideration.

Success requires treating monetisation as a strategic decision from initial architecture through ongoing optimisation. The most successful apps combine multiple revenue streams, test continuously, plan for two-to-five-year timelines, and build direct relationships with users.

At kwiboo, we help businesses navigate these decisions from the earliest concept stage. We do not just build apps; we build apps that are designed to generate revenue.

Got an app idea? Let us talk and turn your next big idea into reality.