There are a lot of different ways to think about making money from your app, and a lot of articles you can read about it. (Including our own recent article on monetization strategies. It’s a rich subject, and a really important one for anyone who’s thinking about making a game, app or piece of software. Because there are so many terms used to describe the different models, we wanted to provide a brief rundown on the various different models.
Here we go:
Retail Purchase — Physical purchase is made at a retail location. Customers pay for it once and can play it forever.
Paid Download — Paid download of complete game. Customers pay for it upon download, and enjoy the full gameplay experience forever (or, more accurately, for as long as the game is supported). One example of this is Lifeline—it costs $1.99 to download, but once you have it, everything is included, with no in-app purchases or in-app advertising.
Free/Premium — Two versions of the game. One that’s free to play, and a premium version that's paid. The free version may have limited features or restricted gameplay. It should be valuable on its own—but should also try to convert users to the paid version. In Team Fortress 2, the premium version includes the ability to store more items in your backpack, access to rare and cosmetic items, and more powerful trading and crafting abilities—but anyone can download and play the free version.
Freemium — Very similar to the above, but instead of two versions of the game, there’s one version, which includes premium paid content. World of Warships is a PC game that uses this model, allowing users to purchase additional premium ships within the game.
“Paymium” — Paid download, with additional premium content or gameplay available for purchase. Marvel Pinball is a popular example—it’s $0.99 to download, with additional tables available as in-app purchases.
Free + In-App Purchases — Free to download and play, with extra content available for purchase in the app/program. Sometimes also called microtransactions, these could include anything from cosmetic upgrades or in-game currency to extra lives and otherwise unavailable gameplay. In Candy Crush, users can purchase things like extra lives, extra moves, color bombs, lollipop hammers and gold bars. For more about how to price your in-app purchases, see our article about pricing.
Free + In-App Advertising — The game is free to download and free to play, without any restricted content, but the user will see ads, either in-game, around the game canvas (for browser games), or even intermittently throughout the game (like television ads). This is a form of indirect monetization, meaning that the money doesn’t come directly from the consumer. Sometimes there’s an option to pay to remove ads. Angry Birds is always free to download, but players will see banner and video ads for Rovio products and other select partners.
Subscription — Service or content that’s available by paid subscription. Usually paid monthly. The most famous example of this is World of Warcraft.
Server leasing — Virtual space in the game is sold. Much like in real life, players pay money to own real estate—but within the world of the game. In Second Life, users can purchase an apartment where their virtual friends can visit them, or a storefront where they can interact with customers.
Virtual currency — Also sometimes called “real cash economy games.” These games have an in-game currency that has a fixed rate of exchange with real-world currency. Players purchase in-game currency, and then cash out when they want to. An example of this is Entropia Universe, which has set records for the most expensive virtual world objects ever sold.
Offer walls — Instead of in-app purchases for cash, players are shown a "wall" of offers from partners which require some action or participation. For example, "Take this online survey to receive extra lives.”
Free flash games — Free flash games available on portal sites, driving traffic and interest to your game.
Which method do you prefer as a player? Which are you planning to implement in your game or app? Let us know in the comments!