How to monetize a web app: Subscription models, in-app purchases, and more

Building a fully functional web app is just the beginning of your journey. To turn it into a profitable business, you need a monetization strategy that aligns with your app’s purpose and target audience.

While methods like subscription and advertising are widely used, not all of them will work for every app. It depends on user behavior and preferences, as well as the experience your app provides.

In this guide, we’ll explain how to monetize a web app, helping you understand different strategies, their benefits, and how to implement them successfully. Let’s get started!

How to monetize your web app

To ensure long-term sustainability, it’s important to evaluate your audience, the app’s features and experience, and the value it provides.

Start by asking yourself these key questions:

• Who is your target audience, and what are their key characteristics?
• What sort of experience does your web app offer, and how frequently will users interact with it?
• What features have you added to help users address their problems?

Analyzing your target audience helps you determine whether they mainly consist of casual users looking for free tools or professionals willing to pay for premium features.

You also need to consider the experience and features your web app offers. Some features are essential for usability, while others offer additional, exclusive value worth paying for.

For example, if you’re offering a personal budget tracking tool, basic features like expense tracking can be free, while premium features like financial reports and goal setting can be monetized.

Use this simple framework to help you determine the best revenue model:

• If your web app provides ongoing value, consider subscriptions.
• If you want to attract a large user base while monetizing certain features, try a freemium model.
• If your web app gets high traffic, advertising or affiliate marketing could work best.
• If your web app serves a niche audience or industry, look for sponsorships from relevant brands.
• If usage varies per user, a pay-per-use model ensures they only pay for what they need.
• If users benefit from one-time enhancements, explore in-app purchases or microtransactions.

Additionally, research top competitors in your industry to see how you can monetize your web app based on the strategies that work for them.

Choosing the right strategy not only ensures revenue growth, but also improves user satisfaction and retention.

Web app monetization strategies

We’ll explain each web app monetization strategy to help you understand how it works, its advantages, and the best practices for implementing it.

Subscription models

A subscription-based model generates recurring revenue by charging users a periodic fee for ongoing services or premium features.

This strategy provides a predictable revenue stream, allowing you to have a more steady income that can be reinvested into improving your web app.

Offering subscription plans can also boost customer retention and encourage long-term user engagement. Once subscribers commit to a paid plan, they are more likely to continue using the service.

One of the best examples is Netflix, which offers a content library through monthly subscriptions.

Subscription-based models typically include multiple pricing options to cater to different user needs:

• Flat-rate subscription – Users pay a fixed monthly or annual fee for unlimited access to all features.
• Tiered pricing – Users choose from multiple subscription plans, each offering different levels of features or access.
• Usage-based pricing – Users are charged on a recurring basis based on how much they consume.
• Add-on pricing – Users pay a base subscription fee and can purchase additional features or premium tools separately.

Consider these key tips to successfully set up and maximize revenue from this model:

• Offer flexible subscription options – Provide different tiers with varying features and prices to meet different needs and budgets.
• Choose a reliable payment gateway – Choose a payment gateway that can securely handle recurring payments.
• Automate management – Implement a system to process renewals, cancellations, and invoicing automatically.
• Offer discounts for longer subscriptions – Encourage users to subscribe for longer terms by offering discounts on annual or multi-year subscriptions.
• Make it easy to change tiers – Users should be able to easily upgrade or downgrade their subscriptions as their needs change.

Implementing these strategies helps you generate consistent earnings and build a loyal user base, which is crucial for the long-term success of your web application.

Freemium

A freemium model lets users try a free version of your app with the option to unlock premium features later. It is a great way to attract users and let them experience your app before deciding to upgrade.

Many web-based productivity tools, like Miro, use this model by offering free access to basic features while keeping advanced tools behind a paywall.

To successfully implement a freemium model, focus on providing a valuable free experience while clearly demonstrating the benefits of upgrading to a premium plan. Here are some effective pricing models to guide your strategy:

• Feature-based pricing – The free plan includes basic functionality, while premium features are locked behind a paywall.
• Add-ons and upsells – Users can purchase extra components or services without committing to a full subscription.
• Seats-based pricing – The free plan supports a single user or small team, while paid plans allow more team members to join.
• Time-limited free trial + freemium – New users get full access for a limited time. After the trial, they can revert to a basic free plan or upgrade to keep premium access.
• Pay-for-speed pricing – Free users get standard performance, while paid plans offer faster processing or better resources.

To convert free users into paying customers, make the upgrades feel natural rather than a hard sell. For example, suggest an upgrade when users hit a storage limit or need a more advanced tool.

You can also showcase success stories from your premium users who achieved better results to help potential customers see the value of upgrading.

Advertising

Monetizing web apps with advertising works similarly to website monetization. You put ads from ad networks within your web app’s interface, and earn revenue based on user interactions.

However, in-app advertising always requires careful planning. Choose the right ad formats and optimize placements to ensure they don’t negatively impact your app’s functionality.

The most common ad formats that you can integrate include:

• Display ads – Standard banner or sidebar ads that remain visible without being too intrusive.
• Native ads – Ads that blend into your app’s content, making them contextually relevant.
• Video ads – Short ads that play before content or as optional rewarded ads.
• Interstitial ads – Full-screen ads that appear between interactions or page loads.

Place ads strategically to avoid interrupting critical workflows. A few convenient areas are in sidebars, footers, or between content sections, where they remain visible without being disruptive.

Limit ad frequency per session to prevent overload and maintain engagement. Too many ads can drive users away, reducing retention and long-term revenue potential.

Choose a reliable ad network, such as Google AdSense, Mediavine, or AdThrive. These platforms analyze your content and audience to display relevant ads that align with user interests, improving click-through rates and overall earnings.

Affiliate marketing

Affiliate marketing is a commission-based revenue model in which you earn money by referring users to third-party products or services. When a user clicks an affiliate link on your web app and makes a purchase, you receive a percentage of the sale.

It’s low-risk and high reward, as you earn commissions without dealing with inventory. It also provides passive income—once your affiliate links are set up, they can earn money over time.

This strategy works best if you have a dedicated user base, especially if you focus on a specific niche. For example, a travel booking web app like Trivago earns commissions by directing users to hotels through partner platforms.

Successfully implementing affiliate marketing requires you to prioritize relevance and build users’ trust:

• Recommend relevant products or services – Choose affiliate programs that match your audience’s interests, as irrelevant links can hurt credibility.
• Quality over quantity – Select a few well-chosen partners and high-value products rather than flooding users with links.
• Be transparent – Build trust by disclosing affiliate links so users know you may earn a commission.
• Make recommendations useful – Don’t just add links—explain how the product helps users so they find it useful.

Think of affiliate marketing as more than just monetization. It’s a way to connect users with genuinely valuable products, allowing you to generate money while building trust and loyalty from your users.

Sponsorship

Sponsorship means partnering with brands that align with your audience. It’s true that this strategy requires more effort, but in turn it offers more than just revenue.

When you feature a brand in your app, you’re doing them a favor by putting them in front of your user base. In exchange, they often help promote your web app to their own audience, which expands your reach.

This monetization model is ideal when your web app targets specific markets or industries. Companies are more likely to invest in your platform if it provides a relevant and valuable way to reach their target market.

The process of securing sponsorships involves strategic negotiation, clear expectations, and transparent disclosure to create a mutually beneficial partnership. Here are some key tips:

• Create a strong pitch deck – Showcase your app’s value, audience, and sponsorship opportunities in a clear and compelling presentation.
• Provide audience insights – Share demographic and engagement data to help sponsors see how your users align with their target market.
• Offer structured sponsorship packages – Define clear tiers, from basic branding to exclusive partnerships, so sponsors understand their options.
• Highlight exclusivity – Make your offer more attractive by providing category exclusivity, ensuring only one brand from a specific industry sponsors your app.
• Allow flexible placements – Give sponsors control over how their branding is integrated, whether through co-branded content, in-app promotions, or sponsored features.

Successful sponsorships require building strong relationships with potential sponsors. Once established, focus on turning these connections into long-term partnerships with renewals and performance reviews.

This creates a reliable revenue source and helps you continually improve how sponsorships benefit both your app and your users.

Pay-per-use

With pay-per-use, users are charged based on actual consumption rather than a fixed subscription. This approach is ideal for web apps with variable usage, such as cloud computing services, API-based tools, and AI-driven platforms.

This model makes your app more accessible by allowing users to pay only for what they need. It also creates a fair pricing structure, attracting users who prefer flexibility over long-term commitments.

If you’re considering a pay-per-use model, here’s how to set it up effectively:

• Determine what users will pay for – Charge users based on metrics that are easy to track, like API requests, storage, or processing time.
• Set usage limits and overage pricing – Set clear limits for each pricing tier and offer scalable options for users who exceed their initial limits.
• Track usage in real time – Provide users with a dashboard that shows their current usage and costs to avoid billing issues.
• Offer different payment options – Let users opt to prepay for a set amount of usage or be billed later based on actual usage.
• Prevent unpaid usage – Set limits like upfront deposits for high-usage tiers or automatic account pausing when limits are reached.

To make the pay-per-use model more efficient, automate billing for accurate cost calculations, invoicing, and integration with payment gateways. Additionally, offer volume-based discounts to drive higher usage while providing more value to long-term users.

In-app purchases

In-app purchases (IAPs) let users buy premium features, upgrades, or digital items directly within your web app. Depending on your monetization strategy, these can be one-time purchases or recurring payments.

Common in-app purchase models include:

• Consumables – Items that can be used and repurchased, like virtual currency or extra storage.
• Non-consumables – One-time purchases for permanent access to premium features, such as an ad-free experience.
• Feature unlocks – Paid access to advanced tools or exclusive content.

You can structure IAPs by offering a free basic version of your web app with optional premium upgrades. Alternatively, users can purchase access first, then unlock additional features through IAPs.

A well-integrated in-app purchase system should feel natural in your app’s flow without disrupting usability. Here’s how to make it more effective:

• Place purchase options contextually – Position upgrades where they add the most value, like within relevant settings or feature menus.
• Use non-intrusive prompts – Present premium features without blocking your web app’s core functionality.
• Drive larger purchases with bundles – Offer special deals or limited-time promotions to encourage users to buy more at once.
• Let users try before they buy – Provide free trials or temporary access to premium features to let users see the value before committing to a purchase.

To maximize revenue, streamline the purchasing experience, experiment with pricing, and analyze user behavior regularly.

When implemented correctly, in-app purchases should feel like helpful upgrades rather than paywalls that restrict your app’s core functionality.

Microtransactions

Microtransactions let users make small purchases within your app. While this method is similar to in-app purchases, it specifically refers to smaller purchases, often for virtual goods or minor upgrades.

This strategy is more likely to drive impulse buys due to its low price point and the instant gratification it provides.

For example, in a photo editing app, a user might be hesitant to spend $10 on a preset pack, but they’re much more likely to spend $0.99 on just one preset that they really like.

For microtransactions to work, purchases should be relevant to what users are already doing in the app. Offering a premium icon pack while a user is working on a project is more effective than a generic upsell.

Here’s how you can make it more effective in your web app:

• Speed up purchase – Let users complete transactions without leaving your app with stored payment methods, in-app credits, or digital wallets.
• Set tempting price points – Keep microtransactions affordable, but make sure the price matches the value.
• Bundle smaller items – Combine items at a discount to encourage users to buy more.
• Use limited-time offers – Use flash sales, daily deals, or limited-time content unlocks to drive a sense of urgency.
• Prevent accidental purchases – Give users control over their spending with settings like purchase confirmations.

If you implement them thoughtfully, microtransactions can help you create additional revenue opportunities by encouraging small, repeat purchases while ensuring users feel in control of their spending.

Web app monetization metrics and growth

Once you’ve implemented a monetization strategy, it’s essential to track its performance to learn what’s working and what needs improvement.

Monitoring the right key performance indicators (KPIs) helps refine your approach and increase revenue as your web app scales. Here are some key metrics to track:

• Monthly recurring revenue (MRR) – Tracks predictable monthly income for subscription-based apps, helping you understand your financial health and plan for long-term growth.
• Churn rate – Measures how many users cancel their subscriptions or stop making purchases. A high churn rate can indicate issues with pricing or features.
• Customer lifetime value (CLTV) – Estimates the total revenue a user generates over time to your web app. A high CLTV suggests strong retention.
• Conversion rate – Shows the percentage of free users upgrading to paid plans or making purchases. A low conversion rate might indicate problems with the buying process or pricing.
• Average revenue per user (ARPU) – Calculates how much revenue each user generates on average, helping you optimize pricing and identify trends.
• Return on investment (ROI) – Measures the profitability of your monetization efforts compared to the costs of acquiring and keeping users. A healthy ROI indicates that your monetization strategy is sustainable and efficient.

Use analytics tools that give you real-time insights into how users behave and how your revenue is doing.

Platforms like Google Analytics and Amplitude can help you monitor user engagement and conversion rates. For apps with subscriptions, tools like ChartMogul can help track revenue and identify areas where users might be dropping off.

You also need to continuously test and refine your approach. A/B testing different pricing structures, trial lengths, or in-app purchase offers can help you figure out what works best for your users.

As your web app grows, try combining different pricing models to create additional revenue streams.

For example, a subscription-based app could offer in-app purchases for premium features, or a pay-per-use service could provide discounts for bulk usage.

By consistently tracking performance, testing new approaches, and adjusting your strategies, you can build a sustainable monetization model that grows with your app.

Conclusion

Monetizing a web app starts with understanding your users and choosing a strategy that aligns with their needs. Whether through subscriptions, freemium, or another model, it’s important to balance revenue generation with a seamless user experience.

Tracking key metrics like conversion rates and churn helps refine your approach. Testing different pricing strategies, optimizing onboarding, and offering flexible payment options can improve retention and long-term growth.

If you’re looking to build more web apps quickly, Hostinger Horizons can help. You can build your next web app without the hassle of coding, giving you more time to focus on your monetization strategy.

Start building with Hostinger Horizons and bring your next web app idea to life today!

How to monetize a web application FAQ