Sunil GillMost apps earn very little. In RevenueCat's 2026 data on subscription apps, the median app is making about $72 a month one year after launch, and only 4.6% of new apps reach $10,000 in monthly revenue within two years. The top 10% clear $2,500 a month in that first year.
The gap is rarely the idea. It comes from a short list of decisions about how you charge: which model, where the paywall sits, how long the trial runs, which plan you push and what you set the price at. App monetization is the sum of those decisions. This guide goes through each one with the numbers behind it and tells you what I would pick.
How apps make money: the five models
| Model | How it earns | Use it when |
|---|---|---|
| Subscription | Recurring payment for continued access | People use the app every week and get ongoing value |
| In-app purchases | One-off payments for features, content or virtual goods | There is a specific thing worth buying once, or again and again |
| Advertising | Advertisers pay per impression | Usage is high and most users will never pay |
| Paid download | One payment before installing | The value is obvious from the listing alone |
| Goods and services | The app sells physical products, bookings or rides | The app is a storefront for a business |
Free apps make money through the first three, usually in combination: a minority pays for a subscription or an upgrade, and advertisers pay to reach everyone else. RevenueCat finds only about 10% of subscription apps run a true hybrid of subscriptions, purchases and ads, and most of those are games. For everyone else the gains are in getting one model right.
Pick the model from how often people use the app
- Weekly or daily use with ongoing value (fitness, language, budgeting, meditation): subscription.
- Occasional use for one job (a scanner, a converter, a trip planner): a one-off purchase. People resent a subscription for something they open four times a year, and the reviews will say so.
- Very high session counts and an audience that will not pay (casual games, wallpapers, simple utilities): ads, with a purchase to remove them.
- A business behind the app: keep the app free and earn on the transaction. Neither store takes a commission on physical goods and services.
Decide before you design. A paywall added after launch always looks bolted on, and it converts like it.
Subscriptions: six decisions that move revenue
1. Hard paywall or freemium
Apps that ask for payment before giving access convert five times better than apps with a free tier: a median 10.7% of installs become paying subscribers within 35 days, against 2.1% for freemium. The usual objection is that paywalled users churn faster. They do not. Year-one retention on annual plans is 27% for hard paywalls and 28% for freemium.
My default is a paywall with a free trial, shown during onboarding. Go freemium only if free users do something for you, such as inviting others, creating content other people see, or spreading the app by word of mouth.
2. Trial length
Longer trials convert better. Median trial-to-paid conversion is 25.5% for trials of four days or less, 37.4% for five to nine days and 42.5% for 17 to 32 days. Yet nearly half of apps (46.5%) now use the shortest bucket, mostly because a short trial gets cash and ad-platform feedback sooner.
Start with seven days. Go shorter only if your app shows its value in one sitting, and test a longer trial if it takes a few weeks to feel the benefit, as with fitness or language learning.
3. The first session
About half of all paid conversions happen on the day of install, and 80 to 89% of trials start that day. So do the cancellations: 55% of people who cancel a three-day trial do it on day zero.
That makes the first session the whole game. Show the paywall in onboarding, when interest is highest. Then get the new subscriber to the thing they came for before they close the app, because people often start a trial and cancel straight away so they cannot be charged by accident. What they see in the next ten minutes decides whether they come back to un-cancel.
4. Which plan to push
Annual plans are worth roughly twice as much per install as monthly ones and five times as much as weekly. After a year, the median app still has 28% of its annual subscribers, 8% of its monthly ones and about 1% of its weekly ones.
Lead with the annual plan, selected by default, with the price also shown per month. Keep a monthly option beside it so the annual price has something to look cheap against. What is normal varies by category: games sell 82% weekly plans, productivity apps 77% monthly, health and fitness apps 68% annual. Check what the leaders in yours do before going against it.
5. Price
The most common price points are $5 a week, $10 a month and $30 a year, and the median yearly price is $34.80. If you are pricing well below that out of caution, the data says it is costing you. Higher-priced apps convert more installs to paid (2.8% against 1.4% for low-priced apps) and earn far more per payer in the first year: $62 against $11.
There is a cost. Refund rates rise about one point with each price tier, and expensive annual plans lose more people at the first renewal (37% against 24%). Raise the price in steps, and judge each test at the first renewal as well as at checkout.
6. Billing failures
Not everyone who churns meant to. On Google Play, 31% of subscription cancellations are failed payments, more than double the App Store's 14%. Turn on the grace period and account hold settings in Play Console and billing grace period in App Store Connect, and show an in-app message asking the user to update their card. It is the cheapest revenue you will ever recover.
Why subscribers cancel, and who comes back
When people give a reason, two dominate in every category: cost (25 to 45% of cancellations) and not using the app enough (26 to 40%). Technical problems account for only 3 to 7%.
The second reason is the one you can do something about. A subscriber who has not opened the app in two weeks is at risk, so that is the moment for a reminder of what they are paying for. Win-back offers work best on monthly plans, where 20% of churned subscribers reactivate. For annual plans it is 5%.
In-app purchases
Apple defines four types: consumable, non-consumable, auto-renewable subscription and non-renewing subscription. For non-game apps the useful one is the non-consumable, sold as a lifetime unlock.
Offer it beside your subscription. I would price it at two to three times the annual plan. Some people will never subscribe to anything and will happily pay once, and the lifetime price makes the annual plan look reasonable. Consumables (credits, coins, extra exports) suit apps with a real per-use cost, which now includes anything that calls an AI model for each request.
Advertising
Ad revenue is impressions divided by 1,000, multiplied by eCPM. It scales with usage, so it only adds up when people open the app often.
- Start with rewarded ads. The user chooses to watch in exchange for something, so they do the least damage to retention.
- Never show an interstitial in the first session. You have not yet earned the interruption.
- Place interstitials at natural pauses, such as between levels or after a result, and cap how many one user sees in a day.
- Skip banners unless the app has nothing better. They take screen space all the time and usually pay the least for it.
- Sell "remove ads" as a purchase or as part of the subscription. For a utility, that one button can earn more than the ads do.
Measure day 7 retention before and after adding any ad placement. If it falls, the placement is costing more than it brings in. Formats and pricing models are covered in the glossary entry on in-app advertising.
What Apple and Google take
| Store | Standard | Reduced rates |
|---|---|---|
| App Store | 30% of paid apps and in-app purchases | 15% in the Small Business Program, for developers who earned up to $1 million in proceeds in the prior calendar year. Subscriptions drop to 15% once a subscriber completes one year of paid service. |
| Google Play | 30% above $1 million a year | 15% on the first $1 million each year, and 15% on auto-renewing subscriptions. |
The Small Business Program is not automatic. You have to enroll, and it is the easiest 15 points of margin available to a new developer. Google's figures above are what it lists for most markets. From June 30, 2026 in the US, UK and EEA, and September 30, 2026 in Australia and Japan, a newer structure applies in which the fee depends on when the user first installed, so check Google's service fee page for your markets.
Work out what an install is worth
Before spending on growth you need one number: revenue per install. For a subscription app, multiply the share of installs that pay by what a payer spends, then take off the commission.
Some medians to compare yours against, 60 days after install: $3.09 per install for hard-paywall apps and $0.38 for freemium. By category, health and fitness apps reach $0.66 and games $0.14. By region, North American users are worth $0.55 and users in India and Southeast Asia $0.11.
If your cost per install is higher than your revenue per install at day 60, you are funding each user for longer than two months. That can still work on annual renewals, but you need the cash to wait. Getting the numbers on the other side of that equation is the subject of the guide to app marketing.
Mistakes that cost the most
- A subscription on an app people need once.
- Hiding the paywall deep in settings because asking for money feels rude. Nobody finds it.
- Pricing at $1.99 a month to be safe. You need five times the subscribers to earn what $9.99 brings, and the cheap plan attracts the least committed users.
- Offering only a monthly plan.
- Changing price, trial and paywall design in the same test, then not knowing which one worked.
- Judging a price test at checkout and never looking at refunds or the first renewal.
Revenue per user is retention multiplied by price. If people are leaving in the first week, fix that before any of the above, starting with the guide to app engagement.
FAQs
How do free apps make money?
A minority of users pay for a subscription or a one-off upgrade, advertisers pay to reach the rest, or the app sells goods and services. In subscription apps with a free tier, a median of about 2% of installs become paying subscribers within 35 days.
How do I monetize my app?
Match the model to usage. If people use the app weekly, sell a subscription with a seven-day trial, show the paywall during onboarding and lead with the annual plan. If they use it occasionally, sell a one-off unlock. If usage is high and nobody will pay, use rewarded ads and sell their removal.
How much money will my app make with 100,000 downloads?
Multiply downloads by revenue per install. At the 60-day medians in RevenueCat's 2026 data, 100,000 installs would be worth about $38,000 for a freemium subscription app and about $309,000 for one with a hard paywall. Your category and countries can move that several times in either direction.
What percentage do Apple and Google take?
The standard commission is 30%. Apple charges 15% to developers enrolled in its Small Business Program and on subscriptions after a subscriber's first year. Google lists 15% on the first $1 million a developer earns each year and on subscriptions in most markets.
Is a free trial worth offering?
Usually, yes. Most subscription apps offer one, and longer trials convert better: a median 42.5% of trials lasting 17 to 32 days become paid, against 25.5% for trials of four days or less. Seven days is a sensible starting point.
Sources
- RevenueCat: State of Subscription Apps 2026. All conversion, retention, pricing and revenue-per-install figures are medians from this report, which covers apps that use RevenueCat, mostly on 2025 data.
- Apple Developer: business models, subscriptions, in-app purchase and the Small Business Program
- Google Play Console Help: service fees
Commission rates and program terms were checked on October 5, 2026.