Monetisation is not something you bolt on after your game is built. It shapes your game design, your progression systems, your economy, and your relationship with players. Choose the wrong model and you either leave revenue on the table or alienate the audience you spent months acquiring.
This guide covers the six main monetisation models used in games today: premium (paid), free-to-play with in-app purchases, free-to-play with ads, hybrid (ads plus IAP), subscription, and paymium. For each one, we cover how it works, when it fits, when it does not, what revenue looks like in practice, and which games have made it work.
If you want a quick recommendation based on your specific project, try our free Monetisation Strategy Picker. It takes about two minutes and gives you a tailored breakdown of which model suits your game, platform, and audience.
1. Premium (Paid Upfront)
The player pays once to download the game. No ads, no in-app purchases, no recurring fees. The entire game is included in the purchase price.
How it works in practice
You set a price (typically £2.99 to £9.99 for mobile, £14.99 to £59.99 for PC and console) and the player pays before they can play. The app stores take a 30% cut on the first year of revenue, dropping to 15% for subscriptions after the first year on both the App Store and Google Play. Steam takes 30%, dropping to 25% after $10 million and 20% after $50 million.
When premium works
Premium works best when the game offers a complete, self-contained experience that players can evaluate before buying. This typically means strong word of mouth, a recognisable IP, positive reviews, or a demo that sells the full version.
It also works when your audience actively dislikes free-to-play mechanics. Genres like narrative adventures, puzzle games with a clear endpoint, and simulation games have audiences that expect and accept paid pricing. Monument Valley, Stardew Valley (on mobile), and Plague Inc. all launched as premium titles and performed well because the audience expectation matched the model.
When premium does not work
Premium is a difficult model for games that depend on a large concurrent player base, such as multiplayer titles. A paywall reduces your install base dramatically compared to free-to-play, and if your game needs network effects to be fun, that reduction can be fatal.
It is also difficult on mobile, where the average revenue per download is low and the vast majority of players expect games to be free. On the App Store, paid games account for less than 5% of total revenue. You need strong marketing, strong reviews, or a strong brand to overcome the friction of asking someone to pay before they have played.
Revenue expectations
Premium revenue is front-loaded. You earn most of your money in the first weeks after launch, with a long tail that depends on discoverability, seasonal sales, and editorial features. A well-reviewed indie game on Steam might sell 10,000 to 50,000 copies in its first year. On mobile, paid games typically see much lower volume but can still be profitable if development costs are controlled.
The upside of premium is predictability. Your revenue per user is known from day one. There is no need to optimise funnels, tune virtual economies, or A/B test ad placements.
Examples
Minecraft (originally premium on all platforms), Stardew Valley, Monument Valley, Dead Cells, Plague Inc., Alto's Odyssey (later shifted to free with Apple Arcade).
2. Free-to-Play with In-App Purchases (IAP)
The game is free to download and play. Revenue comes from players purchasing virtual goods, currency, or content within the game.
How it works in practice
Players download for free and can play indefinitely without paying. A percentage of players (typically 2% to 5%) choose to spend money on in-app purchases. These purchases might include virtual currency, cosmetic items, gameplay advantages, additional content, or time-saving boosts.
The economics of IAP depend on a small number of high-spending players generating a disproportionate share of revenue. In most free-to-play games, the top 10% of paying players generate 50% to 70% of total IAP revenue. This is why understanding your spending distribution matters more than your conversion rate.
Types of IAP
Consumables are items that are used up and need to be repurchased: extra lives, energy refills, boosters, premium currency. These generate recurring revenue from the same players.
Non-consumables are permanent purchases: a new character, a level pack, an ad removal option. These have a natural ceiling because each player can only buy them once.
Cosmetics are items that change appearance without affecting gameplay: skins, themes, emotes, decoration items. Cosmetics are the gold standard for ethical monetisation because they generate revenue without creating pay-to-win dynamics.
Season passes and battle passes are time-limited content tracks that players progress through by playing, with a paid tier that unlocks additional rewards. Fortnite popularised this model, and it has since been adopted across genres because it drives both engagement and spending simultaneously.
When IAP works
IAP works best in games with long session times, deep progression systems, and strong social or competitive elements. If players are invested in their progress and their identity within the game, they are more likely to spend.
Games with live-service models (regular content updates, seasonal events, leaderboards) sustain IAP revenue over months and years rather than seeing it taper off after launch. Clash of Clans launched in 2012 and still generates hundreds of millions in annual revenue because the live-service loop keeps players engaged and spending.
When IAP does not work
IAP struggles in games with short lifecycles, limited replayability, or audiences that are hostile to microtransactions. If your game is a narrative experience that players complete in 5 to 10 hours, there is no natural point to offer purchases.
It also fails when the economy is poorly balanced. If free players feel like the game is deliberately frustrating them to drive purchases, retention drops. If paying players feel like their purchases do not provide enough value, conversion drops. Getting this balance right requires ongoing analytics, A/B testing, and economy tuning, which means ongoing development cost.
Revenue expectations
The median free-to-play mobile game earns very little. But the ones that work can generate extraordinary revenue. Average revenue per daily active user (ARPDAU) for a well-optimised mobile game is typically £0.05 to £0.30. At scale (100,000+ DAU), that compounds into significant monthly revenue.
The catch is that acquiring those users costs money. Cost per install (CPI) on mobile varies by genre and geography, but £1 to £5 per install is common for competitive genres. Your lifetime value (LTV) per user must exceed your CPI for the model to be sustainable.
Examples
Clash of Clans, Genshin Impact, Fortnite, Candy Crush Saga, Marvel Snap, Pokémon GO.
3. Free-to-Play with Ads
The game is free to download. Revenue comes from displaying advertisements to players during gameplay.
How it works in practice
You integrate an ad mediation platform (such as IronSource, AppLovin, or Google AdMob) into your game. The platform serves ads from multiple ad networks and optimises for the highest revenue per impression. You earn revenue based on impressions (CPM) or completions (for video ads).
The three main ad formats in games are:
Banner ads are small, persistent ads displayed at the top or bottom of the screen. They generate low revenue per impression (£0.10 to £0.50 CPM) but are always visible, so they accumulate over long sessions.
Interstitial ads are full-screen ads that appear between levels, after deaths, or at natural break points. They generate higher revenue (£2 to £10 CPM) but interrupt the experience, so placement and frequency matter enormously.
Rewarded video ads are opt-in video ads where the player chooses to watch in exchange for an in-game reward (extra life, currency, power-up). These generate the highest revenue per impression (£10 to £30 CPM in strong geos) and have the highest player satisfaction because the player is in control.
When ads work
Ad monetisation works best in casual and hyper-casual games with high session frequency, short session lengths, and broad audiences. The model scales with volume: you need millions of impressions to generate meaningful revenue, which means you need a large player base.
Rewarded video ads are particularly effective in games where players naturally hit friction points (running out of lives, failing a level) and can be offered a way to continue in exchange for watching an ad. This feels fair to players because it is their choice.
When ads do not work
Ads are a poor fit for immersive games where breaking the flow damages the experience. If your game is a story-driven RPG or a competitive multiplayer title, inserting ads between scenes or rounds will frustrate players and hurt retention.
Ads also struggle to generate sufficient revenue in niche games with small audiences. If your game has 5,000 daily active users, even aggressive ad placement will generate only a few pounds per day.
Revenue expectations
Hyper-casual games typically earn £0.02 to £0.10 per user per day from ads. Casual games with rewarded video integration can earn £0.05 to £0.20 per user per day. At scale (500,000+ DAU), ad-only models can generate substantial revenue. At smaller scale, they often cannot sustain a business on their own.
Examples
Subway Surfers, Crossy Road (rewarded video pioneer), Flappy Bird, most hyper-casual titles from Voodoo and Lion Studios.
4. Hybrid (Ads Plus IAP)
The game combines ad revenue with in-app purchases. Non-paying players generate revenue through ads, while paying players generate revenue through purchases.
How it works in practice
The hybrid model treats ads and IAP as complementary rather than competing. Free players watch ads and generate ad revenue. Players who want to remove ads or progress faster can purchase IAP. Some games even offer an "ad removal" IAP, effectively converting ad viewers into paying customers.
The key design decision is how ads and IAP interact. In a well-designed hybrid model, rewarded video ads give players a taste of what premium currency can do, which increases IAP conversion. The ad itself becomes a marketing tool for your own economy.
When hybrid works
Hybrid works well in mid-core and casual games that have both a broad audience (for ad scale) and enough depth to support meaningful IAP. Puzzle games, idle games, simulation games, and tower defence games are natural fits.
It is currently the dominant model on mobile. Most of the top-grossing mobile games outside of the very top (which tend to be IAP-heavy) use some form of hybrid monetisation. The reason is simple: it captures revenue from both paying and non-paying players, which means you are not leaving money on the table from either segment.
When hybrid does not work
Hybrid can feel cluttered if not implemented carefully. If players are being shown ads and asked to buy things and prompted to subscribe, the experience feels aggressive. The best hybrid implementations make ads feel like a natural part of the game (through rewarded video) rather than an interruption.
It is also more complex to implement and balance than either pure ads or pure IAP. You need ad mediation integration, an IAP store, economy tuning, and analytics to track how the two revenue streams interact. Changes to ad frequency can affect IAP conversion and vice versa.
Revenue expectations
Hybrid models typically outperform pure ad or pure IAP models because they capture revenue from a wider segment of the player base. ARPDAU for a well-optimised hybrid game can reach £0.15 to £0.50, depending on genre, geography, and how well the two streams are balanced.
Examples
Clash Royale (IAP plus rewarded ads), Coin Master, most King titles (Candy Crush and similar), Archero, many mid-core mobile games.
5. Subscription
Players pay a recurring fee (weekly, monthly, or annually) for access to the game, premium features, or ongoing content.
How it works in practice
There are two main subscription models in games. The first is access-based: the player pays to access the game at all, similar to how Netflix works for streaming. Apple Arcade is the platform-level version of this, where players pay a monthly fee for access to a library of games.
The second is enhancement-based: the game is free to play, but subscribers receive benefits such as bonus currency, exclusive items, faster progression, or an ad-free experience. This is essentially a recurring IAP that provides ongoing value.
When subscriptions work
Enhancement-based subscriptions work well in live-service games where there is always new content to justify the recurring fee. If your game has daily login rewards, seasonal content, and regular events, a subscription that amplifies those benefits can feel like good value.
Access-based subscriptions work when the game provides ongoing entertainment value comparable to other subscription services. This is more common on PC and console (Xbox Game Pass, PlayStation Plus) than on mobile, where individual game subscriptions face high churn.
When subscriptions do not work
Subscriptions face high churn rates on mobile. Players are accustomed to paying once (or not at all) for mobile games, and convincing them to commit to a recurring payment is a high bar. Most mobile game subscriptions see significant drop-off after the first month unless the value proposition is genuinely compelling.
Subscriptions also do not work for games with limited content or slow update cycles. If you cannot deliver enough new value each month to justify the fee, players will cancel.
Revenue expectations
The advantage of subscriptions is predictable recurring revenue. A game with 10,000 subscribers at £4.99 per month generates nearly £50,000 in monthly revenue before platform fees. The challenge is acquiring and retaining those subscribers.
Typical subscription conversion rates in mobile games are low (1% to 3% of active players), but subscribers tend to have higher lifetime value than one-time IAP purchasers because the revenue recurs automatically.
Examples
Clash of Clans Gold Pass, Fortnite Crew, Old School RuneScape membership, Apple Arcade titles (platform subscription), various "VIP" passes in mobile games.
6. Paymium
Players pay upfront to purchase the game and then have the option to make additional in-app purchases.
How it works in practice
Paymium combines a paid download with optional IAP. The initial purchase provides the core game, while IAP offers expansions, cosmetics, or convenience items. This is more common on PC and console (where paid games with DLC are the norm) than on mobile (where it can feel like double-dipping).
When paymium works
Paymium works when the base game is substantial enough to justify the initial price, and the IAP offers genuinely optional extras rather than content that feels like it should have been included. The Sims, Civilization, and many PC strategy games use this model effectively through expansion packs and DLC.
On mobile, paymium can work for games with very strong brands or highly dedicated audiences. Minecraft is arguably paymium, with a paid base game and a marketplace for skins and content.
When paymium does not work
Paymium has a reputation problem, particularly on mobile. Players who have already paid for a game can feel frustrated when asked to pay again for additional content. This friction means paymium games receive more negative reviews related to monetisation than either pure premium or pure free-to-play games.
It also reduces your addressable market twice: once with the upfront price (which filters out free-to-play-only players) and again with IAP prices (which filters out premium-only players who expected a complete experience).
Revenue expectations
Paymium can generate strong revenue per user because you earn from both the initial sale and ongoing purchases. But the user base is smaller than free-to-play, and player expectations are higher because they have already paid.
Examples
Minecraft (base game plus marketplace), many PC games with DLC (Civilization VI, Cities: Skylines), some premium mobile games with optional expansion packs.
Choosing the Right Model for Your Game
The right monetisation model depends on several interconnected factors:
Platform matters because player expectations differ. Mobile players expect free games with optional spending. PC and console players are more comfortable paying upfront. Web games traditionally rely on ads.
Genre matters because some genres have natural monetisation patterns. Hyper-casual games are almost always ad-funded. RPGs and strategy games lend themselves to IAP. Narrative games work well as premium.
Audience matters because spending behaviour varies by age, geography, and gaming habits. Younger audiences are more accustomed to free-to-play. Older audiences are more willing to pay upfront. Some markets (Japan, South Korea) have higher IAP spending than others.
Session length and frequency matter because ad revenue depends on impressions, which depend on time spent in the game. IAP revenue depends on engagement depth, which correlates with session length. Short, frequent sessions favour ads. Long, invested sessions favour IAP.
Content pipeline matters because subscription and live-service models require ongoing content production. If you do not have the resources to update your game regularly, a premium or one-time-purchase model may be more sustainable.
Our Monetisation Strategy Picker walks you through these factors and recommends a model based on your specific situation. It takes about two minutes and is completely free.
A Note on Children's Games and Compliance
If your game targets children under 13 (or under 16 in some EU jurisdictions), monetisation is subject to additional legal requirements.
COPPA (Children's Online Privacy Protection Act) in the United States restricts the collection of personal data from children under 13. This affects ad targeting, as behavioural advertising cannot be used for children. Ad revenue from children's games is typically much lower than from adult-targeted games because contextual ads pay less than targeted ads.
GDPR-K (the children's provisions of the General Data Protection Regulation) imposes similar restrictions in the EU and UK. Games targeting children must obtain verifiable parental consent for data collection, which limits both ad monetisation and IAP.
App Store and Google Play policies add further restrictions on IAP in children's games, including requirements for parental gates before purchases and restrictions on manipulative monetisation practices (such as showing ads for IAP that use language designed to pressure children into spending).
If you are building a game for children, factor these restrictions into your monetisation planning from the start. The available models are more limited, and the revenue per user will be lower than in adult-targeted games. Educational games in particular often find that a premium or institutional licensing model is more viable than free-to-play.
Our team has experience building educational games for institutions including Cambridge University Press and the Museum of London, and can advise on compliant monetisation approaches for children's titles.
Getting Monetisation Right
Monetisation is a design problem, not a business problem. The model you choose shapes how players experience your game, how long they play, and how they feel about spending money. Getting it right means understanding your audience, designing your economy around their expectations, and testing your assumptions with real data.
If you are planning a new game and want to think through monetisation early (which is when it matters most), start with our Monetisation Strategy Picker for a quick recommendation, or use our Brief Builder to put together a full project brief.
If you have an existing game and want to improve its monetisation performance, we offer monetisation consulting and implementation covering economy design, IAP integration, ad mediation setup, and analytics.
Need help implementing a monetisation strategy for your game? Our team has built games across every model covered in this guide. Get in touch to discuss your project, or estimate your development costs to start planning.
Related Resources
- Monetisation Strategy Picker — Our free interactive tool to find the best monetisation model for your game.
- How Much Does Game Development Cost? — Full cost breakdown by genre, platform, and team size, with an interactive estimator.
- Game Development Timeline Estimator — See how long your project will take based on scope, team size, and features.
- Questions to Ask Before Starting Your Game Project — Monetisation should be part of your planning from day one.
- What to Look for in a Game Development Partner — Your development partner should understand and support your monetisation goals.
- Mobile Game Development Services — We specialise in mobile games where monetisation strategy is critical to success.