Apps make money through subscriptions, in-app purchases, advertising, paid downloads or affiliate revenue, and subscriptions dominate for good reason. The commission you pay is genuinely unsettled: as of mid-August 2026, Apple is charging zero commission on US purchases made through external links, and a court is deciding what it may charge instead.
The Commission Situation, Because It Changes the Maths
Most guides state Apple’s commission as 30%, or 15% for small developers. That’s still the rate for purchases made inside the app. What’s changed is the alternative.
Apple has been unable to charge commission on external US purchases since an injunction violation in April 2025. That remains the position. On 13 August 2026 Apple filed proposed rates with the district court — 15% for standard apps, 10% for partner programmes and subscription renewals, and 5% for Small Business Program apps.
Those rates are proposed, not in effect. On 14 August 2026 Justice Kagan denied Apple’s request for a stay, allowing the lower court to proceed with setting a permissible rate. Epic has roughly 60 days to respond, and per reporting on the ruling, Apple “has been charging zero commission on these external purchases in the U.S. since the contempt ruling, a status that remains in place for now.”
Two practical implications. If you have a US app with meaningful revenue, external purchase links are currently the cheapest route you will get — worth implementing now rather than after a rate is set. And whatever you build should assume a commission returns, so don’t construct a business that only works at zero.
This is a moving situation. Check the current position before making a decision on it, rather than trusting any article, including this one.
The Five Models
1. Subscriptions
The dominant model for good reason: predictable revenue, and a customer relationship that compounds rather than resetting with every release.
It also means you inherit every subscription problem — failed payments, plan changes, cancellation compliance. Roughly a third of subscription churn is involuntary, caused by declined cards rather than decisions, which makes retry logic a revenue feature.
Works when your app delivers ongoing value. Fails when it solves a one-time problem, in which case you’re charging monthly for something people needed once, and they notice.
2. In-App Purchases
Consumables, unlocks, virtual goods, one-off feature purchases. Dominant in games, useful anywhere with a natural upgrade.
The honest risk: aggressive IAP design that pressures spending damages retention and reviews, and app stores have been progressively tightening rules around it. Design it as a genuine upgrade rather than a toll.
3. Advertising
Viable at scale and only at scale. Ad revenue per user is low, so it needs large volume, high session frequency, or both.
It also trades against the experience. An app with intrusive ads has a ceiling on retention, which caps the volume the model requires — a circularity worth thinking through before choosing it.
4. Paid Download
Simple, honest, and structurally hard now. Users have been trained to expect free downloads, so a price is a conversion barrier at the exact moment they know least about your app.
Still works for professional tools and niche utilities with a defined audience who understand the value before installing.
5. Affiliate and Referral
Recommending products and earning on resulting purchases. No app store commission, no eligibility review, and the income comes from the merchant rather than the platform.
Underused, and particularly effective for content and utility apps where recommendations are natural rather than bolted on.
Which Model to Choose
Work from usage frequency and value type, not from what pays best in the abstract.
- Ongoing value, frequent use — subscription. The user gets continuous benefit and continuous billing is defensible.
- One-time value — paid download or a single in-app purchase. Charging monthly for a solved problem generates cancellations and bad reviews.
- Occasional use, large audience — advertising, if the volume is genuinely there.
- Content or recommendation-heavy — affiliate, often alongside something else.
Most successful apps combine two. A free tier with subscription upgrade plus affiliate revenue is a common and durable shape, because the revenue lines fail independently.
The Free Tier Decision
Free-to-paid conversion is the number that decides whether a freemium app works, and the free tier is where it’s won or lost.
The workable principle is the one that governs any upsell path: the free tier should deliver a complete result and create a genuine next problem. Not a crippled version of the paid one — a smaller thing that works.
Time-limited trials of the full product often outperform permanently limited free tiers, because the user experiences the actual value rather than guessing at it.
Build Something the Platform Can’t Take Away
Everything above runs on infrastructure you don’t control. App stores set the commission, the review rules and the discovery, and they change all three.
The current Apple litigation is a reminder rather than an exception. So is every developer whose category got reclassified overnight.
Two hedges are worth building early:
Users who exist outside the app are users you can reach when the platform changes its mind, which is why the highest-ownership channel even for app businesses.
Selling your subscription on the web, outside the app, avoids app store commission entirely — and given the current US position on external links, this is more accessible than it has been in years. It needs a checkout that converts, because you’re now responsible for a step the app store used to handle.
The Numbers to Watch
Downloads are a vanity metric. Four numbers tell you whether the monetisation works.
- Free-to-paid conversion rate. The single most important figure in a freemium app.
- Involuntary churn as a share of total churn. Benchmark is around a third. Materially above and your retry logic is underperforming, not your product.
- Revenue per active user, not per download. Downloads that never open are noise.
- Retention at day 1, 7 and 30. Monetisation cannot outrun a retention problem — an app nobody opens has no model that works.
If retention is broken, fix that before touching pricing. Every monetisation improvement multiplies retention, so improving the multiplier when the base is near zero achieves nothing.
Pricing, Practically
App pricing gets set by looking at competitors, which is how whole categories end up underpriced together.
- Price against the outcome. What is the problem worth to the user in time or money? That’s the anchor, not what a rival charges.
- Offer annual alongside monthly. Annual plans improve cash flow and cut churn substantially, because there are twelve fewer opportunities to cancel. A meaningful discount for annual is usually worth it.
- Localise where it matters. The same price is not the same price in every market, and a rate that converts in one country can be prohibitive in another.
- Raise prices on new users first. Existing subscribers grandfathered onto old pricing generate goodwill and no churn spike, and you learn what the market bears without risking the base.
One thing worth testing rather than assuming: a free trial requiring a card converts far better to paid than one that doesn’t, at the cost of fewer trial starts. Which trade is right depends on your funnel, and it’s measurable in a fortnight.
FAQ
What is the best way to monetize an app?
Subscriptions, for apps delivering ongoing value, because they produce predictable revenue and a compounding customer relationship. For one-time value, a paid download or single in-app purchase is more honest and generates fewer cancellations. Most durable apps combine two models so the revenue lines fail independently.
How much commission does Apple take?
For purchases inside the app, 30%, or 15% under the Small Business Program. For purchases made through external links in the US, Apple has been charging zero since an April 2025 injunction violation, and a court is currently determining a permissible rate — Apple has proposed 15%, 10% and 5% tiers, which are not yet in effect.
Can I avoid app store commission?
Currently, in the US, by directing users to an external web checkout — a route that carries no Apple commission while the litigation is unresolved. Selling subscriptions on the web has always been an option, and it moves responsibility for conversion onto your own checkout rather than the store’s.
Do I need a lot of users to make money from an app?
It depends on the model. Advertising needs large volume because revenue per user is low. Subscriptions and affiliate income can work with a much smaller, better-matched audience, because you’re paid on purchases rather than impressions.
Should my app be free or paid?
Free with a paid upgrade converts more users overall, since a price is a barrier at the point where someone knows least about your app. Paid downloads still work for professional tools and niche utilities where the audience understands the value before installing.
Why is my app not converting free users to paid?
Most often the free tier is either too generous, so users have no reason to upgrade, or too limited, so they leave before seeing value. Check retention first — if users aren’t returning by day 7, the problem is the product rather than the paywall.
