Monetizing your Android app is something you'll probably need to think about at some point if you ever want to profit from the hard work you put into developing it. There are more than a few ways to do this, and ultimately you'll have to decide which is the best method for your app but there are certainly options available. The three most common methods are of course publishing your application as a paid app, which many developers do, or you can utilize an in-app purchase model where your application is published for free, but offers extras as in-app micro-transactions or the ability to unlock the full app through a one-time IAP. Lastly, you can rely on ads within your app to drive revenue, which tends to be a little more effective with the Android platform than IAP's.
Paid Apps are the first and most obvious strategy for making money from your application, but if you want to maximize your opportunity for raising app installs and generating more revenue, it isn't as simple as publishing your app the Play Store for whatever amount you choose. There are multiple steps to consider which should be taken into account. If you've settled on the decision to place your app into the Play Store for a set cost, it might be worthwhile to consider offering it to users for a fairly little amount. Something like $0.99 ensures you still get to publish your application and make it available for a fee, but a small enough fee that could cause users to feel it has more value and not feel gouged by a developer with an app that doesn't offer enough meaningful features or substance. This is of course considering your app may be just another offering in a sea of thousands all trying to grab a piece of the user base. If you offer something a little less common, with a specialized and targeted audience then charging more than $0.99 may work for you. Last but not least, you could always try publishing your app inside of third party app stores if you feel the Play Store isn't getting you enough exposure, and it might be worth it if done in conjunction with a Play Store listing.
In-app purchases are the next area of focus and given the rise in the freemium model for apps this may be a better way to go for your particular app. There are multiple factors to think about of course, but giving users something of value can help to keep them engaged and wanting to make in-app purchases, which in turn keeps them coming back for more. Not all users will like or utilize IAP's, but this doesn't mean they won't continue to use your app, however, users that do make in-app purchases are more likely to continue finding value in certain free applications and may use your app longer, which can result in making you more money. Allowing users to upgrade specific items (like in a game for example) can be a good way to foster in-app purchase adoption by users, as these tend to be purely aesthetic based, like a new app theme or a costume for a character in game.
In-app upgrades can also be a one-time buy upgrading the app to a premium version with more features that are offered in a free version. These types of in-app purchases aren't mandatory so users don't feel hounded to spend their own hard earned funds. Another common type of in-app purchase revolves around currency and consumable items, typically used for buying things like new items in a game or more new features within an app, although freemium games tend to use this type more often. Gameloft's most recent Dungeon Hunter 5 is a great example of this, which gives users the option to buy more health potions using an in-app currency called gems. These gems are obtainable without having to spend real cash, but they are accrued fairly slowly. For users that want to obtain them at a much faster pace, gems can be purchased in larger quantities and can then be used to purchase health potions and other items in game.
Subscriptions are another form of monetizing your Android app which may work for you. Take Spotify or Google Play Music Unlimited for example. Both of these streaming music services offer premium features and unlimited streaming of a vast library of music for a set monthly fee. Other apps like Office 365 from Microsoft charge a monthly fee for using the suite of Office apps like Word, Excel, and Powerpoint on a collection of different platforms. If subscriptions won't work for you, then you may want to think about trying for a mobile partnership with a larger company or a company who is also looking to co-brand and raise more awareness for their own application. Temple Run and Angry Birds for instance, are great examples of mobile partnerships, as they've made numerous apps that were co-branded with blockbuster Disney films such as Brave, and large Blockbuster franchises like Star Wars, Transformers and a Pixar film titled RIO. Using mobile partnerships can help to put your app out there in front of users who may have never given your application a second thought, but because it's partnered with a brand they recognize, it can grant instant recognition.
One method that tends to generate a lot of revenue for developers is mobile advertising. There are more ways than one to display mobile ads, and you'll want to choose the right platform for you. You can put mobile ads within your application, which usually begins with selecting a mobile ad network and then having those ads get promoted and pop up inside your application. You can insert regular mobile ads, app walls, video ads, rich media ads, banners, and a method called interstitials which displays ads at calculated times like when apps or games are opened or closed. Another form of mobile advertising to be aware of is geo-targeted mobile ads, which base the viewing of a targeted ad based on where a user is location wise. You might want to also think about cross-promotion and giving users incentives for installs, like handing out a specific amount of in-app or in-game items when someone installs and downloads your app.
App promotion is a must if you want your app to succeed, and there are many ways to do this. You don't have to engage in all of them, obviously, but the more the better. Promotions help to put your name out there and raise awareness that you have an app people should be interested in. Sending out emails to users is a great way to promote, so long as you aren't bombarding potential users and coming off as annoying or intrusive. You don't want to spam potential future users. When in doubt, use social media to your advantage. Social media is an extremely powerful tool and can help to spread the word of mouth about your app like wildfire. You reach a few influential people and he/she shares your app with everyone they know, then they share it with everyone they know, and so on. Don't forget about press coverage too, as a review service like the one we offer at Android Headlines can do wonders for spreading the word. If none of these solutions are working, or if you feel you just need some extra coverage to push your promotion to new heights, getting your feet on the ground and hitting up public tech events and speaking to attendees is a good way to put a face to a name and let people know about what you have to offer.
During the app development process, you can also think about developing a form of your app for other platforms, like web apps and even localizing your application for other markets. Constraining your app to one market might be limiting your reach, and if you truly feel you have something that is worth knowing about, chances are that users in other regions may enjoy what you've come up with.
Another way of monetizing your app can be through merchandise sales. Selling physical goods that promote your application like t-shirts, hats, or other things, (action figures that coincide with a specific game for example) can be a great way to capture more revenue for users who already enjoy the brand. A more direct approach can be through a crowd-funded campaign, and if your app is a breakthrough that you know people will be enthralled with, donations through a site or service like indiegogo or kickstarter might not be a bad idea. If you think people will love your app then they might be willing to donate. Last but not least, the sales of your app, your app's code and API, and/or the data within your application for use with analytics can be ways to generate revenue in addition to or in place of other monetization models. All of these methods can be useful and you may not want to employ all of them, but you can find the ones that work for you and after some careful consideration and thought on the matter, you can deliberate what meshes best with the type of application you're offering.