There are multiple ways to earn money from an app. The most popular ways are in-app purchases and in-app advertising. If we look at some of the popular apps, most of them have in-app purchase model for revenue generation. However, there can be many other ways to earn money from an application.
Paid Apps: A lot of premium apps are available these days. These apps are paid apps and the user needs to pay a fee to use them. However, this model of earning money from an app is not so common because a lot of people do not like paying money for using an application, especially when there are a lot of similar applications available for free. Spotify, Netflix, HBO, and Hulu, all offer subscriptions for their users.
In App Purchases: This is the most common revenue model used by app developers worldwide. A lot of applications, mostly games, give in-app purchase options to their users. It is a very simple idea, first get the user hooked on to the app and then offer them an option to purchase a way to speed up or progress faster in the game. Sing! Karaoke has various in-app purchase options that range from $0.99 to $99.99 per item.
Freemium Model: Free to download and use the app, but paid to use the premium features. A lot of companies utilize this model for their applications. These companies provide a free download of the application but with some locked features.They do it so that the user can try their application out before making a purchase. Tinder and Pendora both have a premium subscription model to unlock additional features.
In App Advertising: Advertising within applications is probably one of the most famous ways of making money through an application. Widely used by app developers, this method is very simple and easy to implement and it works on a simple model of showing ads to the user while he is using the app. The revenue earned by such advertising can be huge or minimal depending on the number of active users of the application. The more the users, the more the ad revenue. Games like Temple Run and Candy Crush utilize in app advertising to increase their revenue.
Even if in-app advertising is the most famous ways of earning money through an app, but the most famous and highest revenue generating apps are actually those which are utilizing in-app purchase model. Most top revenue generating apps are games and most of them offer in-app purchases to “help” the user win the said game.
Summing up, whether it is a utility app or a game, the relationship between the number of users and the sales revenues is always directly proportional: the more the users, the more the revenue.