Monetization Strategies: 13 Proven Tactics

In business, there is a thin line between nurturing your golden goose and overburdening it. 

Too often, companies chase immediate gains. They forget that sustainable success demands a balance between short-term profit and long-term Product-Led Growth. This balance is where intention meets strategy — shaping not just how you earn but how you grow. 

When the stakes are high and the options endless, how do you ensure you're building something that thrives right now and in the long run? Three words — solid monetization strategy.

Growth Metrics Cheat Sheet

Master the metrics you need to keep things moving 'up and to the right'! Our Growth Metrics Cheat Sheet covers 45 metrics to measure success at every stage—from acquisition to revenue and referral.

Get the Cheat Sheet

What Is a Monetization Strategy?

A monetization strategy is your game plan for turning a product, service, or platform into a reliable source of revenue. 

Think of it as the blueprint that outlines how your product will generate income — whether through subscriptions, one-time purchases, advertising, or other methods. 

It's not just about slapping a price tag on your product. It's about aligning the way you make money with what your product does best and what your audience values most. 

In product management terms, a monetization strategy is where your product’s unique value proposition meets market demand in a sustainable and scalable way. Whether you’re launching a SaaS platform, a mobile app, or an eCommerce website, your monetization model shapes how you price your offerings and position your product to grow your customer base.

“It's not uncommon to see a lot of product teams think about pricing as one of the very last steps in the checklist to get a feature launch, as opposed to one of the very first steps. ”

— Alvaro Morales, Cofounder and CEO at Orb, on The Product Podcast

Unlocking Revenue: Monetization Strategy Examples That Work

Choosing the right monetization techniques can make or break your product’s success. 

From subscription models that build recurring revenue to pay-per-use systems that cater to fluid user needs, the options are as diverse as the products themselves. 

This list dives into proven monetization strategy examples. It will give you the tools to unlock new revenue streams, optimize product performance, and create lasting value for your users. Whether you’re a senior product manager, a Product Lead, or just exploring new avenues for growth, these approaches are designed to inspire practical, results-driven action.

1. Subscription Model

The subscription model creates a steady flow of recurring revenue by charging customers at regular intervals (monthly, quarterly, or annually). It’s ideal for products that provide ongoing value, such as SaaS platforms, content streaming services, or fitness and wellness apps.

The reason it works is this model leverages user retention to drive consistent revenue while creating opportunities to deepen customer relationships through additional offerings.

Here are examples of a good fit:

• SaaS tools like Slack or Adobe Creative Cloud.

• Content platforms like Netflix or Spotify.

• Health and wellness apps with guided workouts or meal plans.

Pros:

• Predictable revenue: Provides a steady income stream. This aids in financial forecasting and stability.

• User retention: Encourages ongoing engagement, fostering loyalty over time.

• Upselling: Enables tiered pricing, an important concept in Product-Led Marketing, allowing customers to upgrade for additional features.

• Scalable: Can grow with your customer base without a significant increase in operational costs.

Cons:

• Churn risk: Customers can cancel subscriptions which can largely impact revenue.

• Value delivery pressure: Requires continuous improvements to retain users.

• Competition: Subscription fatigue can set in due to market saturation.

• Setup complexity: Requires robust systems for billing and user management.

Practical tips for success:

• Offer flexible product pricing plans tailored to different user segments.

• Regularly communicate updates and add value to keep subscribers engaged.

• Use product analytics to identify users at risk of churning and engage them proactively.

• Provide a free trial option so that potential new customers can experience the product’s full potential.

2. Freemium Model

Freemium strategies provide a free version of your product to attract a large user base. The goal is to monetize through premium features, advanced tools, or additional services.

The freemium model reduces barriers to entry and allows users to experience the product’s value before committing to a paid plan. Growth loops within the product itself encourage engagement that, in turn, converts into steady revenue.

Here are a few examples of a good fit:

• Productivity tools like Trello or Evernote.

• Communication apps like Zoom.

• Digital entertainment platforms offering exclusive content.

For a detailed list of examples that use Freemium, check out these Product-Led Growth Examples.

Pros:

• Widespread adoption: Quickly builds a large user base.

• Low customer acquisition cost (CAC): The free tier acts as a lead generation tool.

• Scalable: Premium tiers grow revenue without requiring more resources for free users.

• Customer trust: Builds credibility by letting users explore the product risk-free.

Cons:

• Low conversion rates: Many users stick to the free tier.

• Costly to support: Maintaining a free tier for large audiences can drain resources.

• Complex value distinction: Striking a balance between free and paid features can be tricky.

• Revenue dependency: Reliant on a small percentage of paying customers (power users).

Practical tips for success:

• Design premium features that solve specific pain points for your audience.

• Use feature restrictions or limits (e.g., storage, team size) to motivate upgrades.

• Optimize your product experience to highlight the value of the premium tier.

3. Advertising Model

The advertising model monetizes products by selling ad space to businesses looking to reach your audience. Revenue comes from impressions, clicks, or conversions.

This model thrives on high-traffic platforms where advertisers are willing to pay to access a well-defined audience.

Examples of good fit:

• Content-heavy websites like blogs or news outlets.

• Social media platforms like Facebook or Instagram.

• Free apps and games supported by ad revenue.

Pros:

• Low cost of entry: No need to charge users directly, reducing friction.

• Scalable: Grows as your user base or traffic increases.

• Diverse ad formats: Options like native ads, video ads, and programmatic ads offer flexibility.

• Consistent income: Creates steady revenue with regular traffic.

Cons:

• User experience risk: Intrusive ads can alienate users.

• Traffic dependency: Revenue fluctuates with audience size and engagement.

• Ad fatigue: Overexposure to ads can decrease their effectiveness.

• Privacy concerns: User data collection for targeted ads may lead to trust issues.

Practical tips for success:

• Use ad formats that blend seamlessly with your product (e.g., native ads).

• Test placements to balance visibility and user experience.

• Focus on advertisers aligned with your audience’s interests for better engagement.

4. Affiliate Marketing

Affiliate marketing involves promoting third-party products or services and earning a commission for sales or leads generated through your referral.

This monetization strategy is a low-risk way to earn passive income while adding value to your audience through curated recommendations.

Examples of good fit:

• Niche blogs or websites with a loyal readership.

• Influencers on social media or YouTube.

• Apps or platforms offering partner integrations.

Pros:

• Low investment: Minimal upfront cost to start.

• Revenue diversification: Generates income alongside primary monetization methods.

• Aligned incentives: Partnerships succeed when both parties benefit.

• Flexible scalability: More traffic or audience growth boosts affiliate income.

Cons:

• Earnings dependency: Success hinges on the performance of affiliate partners.

• Reputation risk: Poor-quality partner products can harm your brand.

• Revenue unpredictability: Seasonal demand and partner program changes can impact earnings.

• Limited control: You can’t influence partner product pricing or product experience.

Practical tips for success:

• Promote products you’ve personally tested to build trust.

• Use analytics tools to monitor performance and optimize campaigns.

• Diversify your affiliate partnerships to reduce reliance on a single source.

5. Pay-Per-Use Model

This monetization strategy framework charges customers based on the frequency or volume of product usage. It's a flexible model often used for cloud services or consumption-based platforms.

The pay-per-use model appeals to users who prefer to pay only for what they need. This makes it especially effective for businesses with variable demands.

Examples of good fit:

• Cloud storage platforms like AWS or Google Cloud.

• Utility services like ride-sharing apps.

• Media platforms offering pay-per-view content.

Pros:

• Fair pricing: Users appreciate paying only for what they use.

• Revenue scaling: Increases naturally with user engagement.

• Broad appeal: Attracts cost-sensitive users and businesses.

• Transparency: Encourages trust through clear, usage-based billing.

Cons:

• Revenue unpredictability: Usage fluctuations can impact income stability.

• Complex pricing models: This may confuse or deter customers.

• Customer dissatisfaction: Sudden spikes in usage costs can frustrate users and adversely affect product adoption.

Practical tips for success:

• Provide upfront cost estimates and tools for users to calculate expenses.

• Set usage caps or offer notifications to avoid bill shock.

• Bundle usage tiers for frequent users to increase loyalty.

6. Licensing

Licensing is one of the monetization methods that allows you to monetize products by granting third parties the rights to use your intellectual property (IP), such as software, designs, or trademarks.

This strategy maximizes the value of your IP by enabling others to leverage it in their own offerings. This creates passive income opportunities.

Examples of good fit:

• Software tools offered to enterprise clients.

• Patented technologies in hardware or manufacturing.

• Content licensing for use in marketing campaigns.

Pros:

• Passive revenue: Earn income without selling products directly.

• Market expansion: Partners distribute your IP to new audiences.

• Low risk: Revenue comes with minimal operational demands.

• Flexible agreements: Customizable terms based on partner needs.

Cons:

• Limited control: Risk of partners misusing your IP or damaging your reputation.

• Complex negotiations: Licensing deals require legal expertise.

• Underpricing risk: Pricing your IP too low can undervalue your product.

Practical tips for success:

• Research industry benchmarks to price your licenses effectively.

• Create clear contracts outlining permitted uses and restrictions.

• Offer tiered licensing options to attract a range of clients.

7. In-App Purchases

In-app purchases allow users to buy additional features, content, or virtual goods directly within your app. It’s a highly effective product monetization strategy for mobile games, productivity apps, and digital tools.

This technique capitalizes on product engagement by offering convenience and instant gratification, which drives revenue without requiring a large upfront cost.

Examples of good fit:

• Mobile games with cosmetic items or extra levels.

• Apps offering premium features or additional tools.

• Content platforms unlocking exclusive material.

Pros:

• Engaged user base: Active users are more likely to make purchases.

• High revenue potential: Microtransactions can generate significant income.

• Flexible pricing: Small amounts lower the barrier to entry for spending.

• Scalable: Increases as the user base grows.

Cons:

• Push notification fatigue: Excessive prompts for purchases can alienate users.

• “Pay-to-win” perception: Gamers or app users may dislike an unbalanced product experience.

• Regulatory challenges: Certain regions have strict rules for in-app transactions.

Practical tips for success:

• Use non-intrusive prompts and highlight the value of in-app purchases.

• Offer bundles or discounts to incentivize larger purchases.

• Continuously release new content to keep users engaged.

8. Marketplace Fees

Marketplace fees monetize products by charging users for transactions or listings on a platform. It’s a popular strategy for platforms that facilitate buyer-seller interactions.

Marketplace fees align revenue generation with user activity, creating a sustainable model as the platform grows.

Examples of good fit:

• E-commerce platforms like Etsy or eBay.

• Freelancing sites like Upwork.

• Peer-to-peer service platforms like Airbnb.

Pros:

• Revenue scales with activity: More transactions equal more income.

• Alignment of incentives: Platform success is tied to customer success.

• No upfront costs for users: Fees are only charged when value is delivered.

Cons:

• Competition: Platforms with lower fees may attract users.

• Complexity: Managing disputes and fraud on a large scale can be resource-intensive.

• User trust issues: Transparency in fee structures is critical to maintaining trust.

Practical tips for success:

• Clearly communicate fee structures to users upfront.

• Offer premium memberships or features for added revenue streams.

• Use data to identify and promote top-performing sellers.

9. Data Monetization

Data monetization involves generating revenue by using or selling insights derived from user data, typically in anonymized and aggregated forms. It’s a powerful product monetization strategy for businesses with large product data sets and established data product strategy.

This model unlocks hidden value in the data your platform collects. It provides actionable insights to third parties or improves your own offerings.

Examples of good fit:

• SaaS tools collecting user behavior data.

• IoT devices monitoring usage patterns.

• Retail platforms with extensive customer data.

Pros:

• High-margin revenue: Data monetization has minimal production costs.

• Valuable insights: Data-driven insights are in high demand across industries.

• Diversified revenue: Complements other monetization techniques.

Cons:

• Privacy concerns: Misuse of data can damage trust and attract legal penalties.

• Regulatory challenges: Compliance with data protection laws like GDPR or CCPA is essential.

• Dependence on data quality: Poor data limits monetization potential.

Practical tips for success:

• Hire a Data Product Manager to organize a solid strategy

• Anonymize data to protect user privacy while maintaining insights.

• Partner with industries that can best leverage your data.

• Regularly audit data collection practices to ensure compliance.

10. White-Labeling

White-labeling allows businesses to sell your product under their brand name, effectively outsourcing their product needs while giving you a scalable revenue model.

This model leverages your existing product’s capabilities. It lets partners handle marketing and distribution while you focus on core development.

Examples of good fit:

• SaaS platforms offering customizable solutions.

• Content platforms providing branded marketing assets.

• Manufacturing products like private-label cosmetics or electronics.

Pros:

• Scalability: Partners handle distribution, freeing your resources for innovation.

• Cost efficiency: Requires little to no additional investment in marketing.

Cons:

• Brand visibility loss: Your product may be overshadowed by partner branding.

• Competition: Your white-labeled product might compete with your branded version.

• Control risks: Partners’ performance can affect your reputation.

Practical tips for success:

• Create customizable options to appeal to a wider range of partners.

• Offer detailed training and support to ensure successful partner rollouts.

• Negotiate non-compete clauses to protect your own product’s market share.

11. Consulting or Customization Services

This monetization strategy involves offering tailored solutions or expert advice alongside your product. It adds value for clients with specific needs.

Why it works:
Consulting services align your expertise with clients’ unique challenges. It creates a deeper relationship and justifies higher revenue per engagement.

Examples of good fit:

• SaaS tools that require custom integrations.

• Hardware providers offering tailored installations.

• Professional services like project management or data analysis.

Pros:

• High margins: Personalized services command premium pricing.

• Client relationships: Builds trust and long-term partnerships.

• Differentiation: Customization sets you apart from competitors.

Cons:

• Labor-intensive: Scaling requires additional skilled resources.

• Inconsistent revenue: Relies on project-based income.

• Scope creep risk: Unclear boundaries can lead to over-delivery.

Practical tips for success:

• Define clear deliverables and pricing upfront.

• Create standard packages for common customization requests.

• Upsell ongoing maintenance or support contracts.

12. Crowdfunding

Crowdfunding gathers funds upfront from a community of supporters in exchange for early access, perks, or rewards. It’s ideal for new product launches or creative projects.

This strategy validates demand while reducing financial risk, letting you test concepts and gather capital simultaneously.

Examples of good fit:

• Innovative tech gadgets.

• Creative projects like films or games.

• Early-stage startups with limited funding options.

Pros:

• Market validation: Proves demand before production.

• Community building: Engages loyal customers early.

• No equity loss: Fundraising without giving up ownership.

Cons:

• Marketing dependency: Requires significant effort to attract backers.

• Uncertain funding: Campaign success isn’t guaranteed.

• Delivery pressure: Meeting deadlines is crucial to maintain trust.

Practical tips for success:

• Craft compelling campaigns with clear goals and visuals.

• Offer tiered rewards to cater to backers with different budgets.

• Communicate progress consistently to maintain engagement.

13. Tiered Pricing Model

Tiered pricing allows businesses to offer multiple pricing levels. Each level has its own set of features or usage limits, catering to diverse customer needs and budgets. It’s a flexible monetization strategy that helps maximize revenue by appealing to different segments of your audience.

This model thrives on the principle of offering increasing value with higher tiers. Subsequently, customers can upgrade as their needs grow. 

However, a modern trend shifts from locking premium features behind higher tiers to enabling access to all features but capping usage at lower tiers. This approach ensures users can experience the full potential of your product before committing to a higher plan.

“They used to say to users: If you want to use a certain feature, you need to pay more, which had certain logic to it. However, now we're seeing more success in companies that say no — you still can use all the features on the first pay tier. However, there's a limit to the usage, so we still can give you value and show you our full potential before you decide to commit.”

— Alvaro Morales, Cofounder and CEO at Orb, on The Product Podcast

Examples of a good fit:

• SaaS platforms like HubSpot or Notion with tiered feature access or usage limits.

• Cloud services offering different storage or processing limits, such as AWS or Dropbox.

• Creative tools like Canva or Figma, where usage caps (e.g., exports or collaborations) distinguish tiers.

Pros:

• Revenue optimization: Attracts a broader audience by catering to different willingness-to-pay levels.

• Upselling opportunities: Encourages customers to upgrade as their needs expand.

• Value communication: Demonstrates clear distinctions between tiers, making the product's worth more tangible.

• Customer segmentation: Helps identify and serve varying user needs effectively.

Cons:

• Complexity: Managing multiple pricing tiers can complicate product messaging and billing systems.

• Decision fatigue: Too many options can overwhelm potential customers.

• Churn risk: Users in lower tiers may churn if they feel their plan doesn’t meet evolving needs.

Practical tips for success:

• Keep the tier structure simple and ensure each tier delivers clear, incremental value.

• Leverage product analytics to identify when users are ready to upgrade and guide them seamlessly to the next tier.

• Offer generous usage caps in lower tiers to build trust and demonstrate the full potential of your product.

• Use free trials or entry-level tiers to lower the barrier to adoption and create a natural progression toward paid plans.

The Most Common Challenges of Product Monetization Strategy

Each of these challenges highlights the balancing act product teams face — delivering value to users while driving sustainable revenue growth. It’s a constant process of aligning business goals with user needs.

• Choosing the Right Monetization Model
  Deciding how to monetize products isn’t one-size-fits-all. Product teams often struggle to balance revenue goals with customer expectations, market demand, and the product’s unique value. Choosing the wrong model, like using ads in a productivity tool where users expect a distraction-free experience, can alienate your audience.

• Balancing Revenue with Product Experience
  Monetization strategies like in-app purchases or ads can risk diminishing the product experience if overused. Product teams must find a sweet spot where the monetization model generates income without frustrating or losing users. This is especially tricky when users feel monetization methods prioritize profits over their needs.

• Pricing Challenges
  Determining the right price point is complex and highly context-dependent. Too low, and you may undervalue your product; too high, and you risk losing customers to competitors. For product teams, product pricing often involves ongoing experimentation, customer feedback, and alignment with overall product positioning.

• Churn and Retention Management
  Subscription-based monetization models heavily rely on keeping customers engaged and renewing. Teams must tackle user retention challenges like reducing churn by continuously delivering value, addressing feedback, and enhancing features. High churn can destabilize recurring revenue streams and signal deeper issues in product-market fit.

• Market Saturation and Competition
  In industries like SaaS or e-commerce, monetization strategies often compete in crowded markets. It’s hard to stand out when competitors offer similar products at competitive prices or even free tiers. Product teams must emphasize differentiation and innovate constantly to attract and retain paying customers.

• Transitioning from Free to Paid Models
  Monetizing a previously free product or introducing premium features can be risky. Users often resist paying for something they once accessed for free, and product teams must navigate the backlash by clearly communicating value and justifying the shift. A poorly executed transition can lead to an exodus of users.

• Compliance and Ethical Concerns
  Monetization methods like data monetization or in-app purchases can raise ethical questions and regulatory challenges. Product teams must ensure compliance with privacy laws (e.g., GDPR, CCPA) and avoid practices that might exploit or mislead users. Failing here can damage your reputation and cause legal trouble.

Make Sure You Avoid These Mistakes When Monetizing Products

Even the most well-intentioned monetization strategies can go awry when product teams overlook key pitfalls. These mistakes often stem from misaligned priorities, poor execution, or a lack of understanding of the target audience. 

Avoiding these missteps can mean the difference between a thriving product and one that struggles.

• Failing to Validate Monetization Assumptions
  Assuming a monetization model will work without testing it with real users is a recipe for failure. Teams often overlook the importance of early market research, pricing experiments, or prototype/MVP testing. Without validation, a strategy might miss the mark entirely and leave revenue on the table.

• Ignoring Early Adopters’ Feedback
  Early adopters are invaluable for identifying what resonates — and what doesn’t — in your product adoption. Ignoring their feedback can result in missed opportunities to fine-tune pricing, features, or premium offerings. This mistake can lead to a disconnect between what users want and what the product delivers.

• Overcomplicating Pricing Structures
  A confusing array of plans, tiers, and add-ons can overwhelm potential customers. Product teams sometimes believe more options mean more revenue, but this can lead to decision fatigue and churn. Simplicity in pricing often wins, especially when it’s paired with clear, tangible benefits for each option.

• Neglecting the Lifetime Value of a Customer (LTV)
  Focusing only on immediate revenue, such as one-time purchases, without considering the customer’s long-term value can stifle growth. Teams that don’t prioritize upselling, cross-selling, or retention strategies miss out on compounding revenue opportunities. Building a monetization model that nurtures customer centricity is key.

• Underestimating the Need for Communication
  Launching new pricing models or features without clear, transparent communication creates confusion and backlash. Users need to understand what they’re paying for and why it’s worth it. Poor communication can erode trust and lead to negative sentiment about your product or brand.

• Not Accounting for Regional Differences
  A one-size-fits-all pricing model can alienate users in different regions with varying purchasing power. Product teams often forget to adapt pricing, payment methods, or features for global markets. Localizing your monetization strategy can significantly boost accessibility and adoption.

• Focusing on Monetization Too Early
  Prematurely prioritizing revenue can undermine user acquisition and engagement. For new products, especially startups, building a loyal user base often needs to come before monetizing. Teams that push monetization before solidifying product-market fit risk alienating potential advocates.

Closing the Loop on Product Monetization Strategies

Navigating product monetization requires picking a revenue model and running with it, sure. However, it’s also about understanding your audience, aligning strategies with your product’s value, and adapting to your market segment. 

By leveraging proven monetization strategies, avoiding common mistakes, and addressing these challenges, you set your product up for both financial success and lasting customer loyalty. 

Remember — the key lies in striking the right balance between sustainable revenue growth and delivering exceptional value. Take the time to choose wisely, test thoroughly, and always keep your users at the center of your decisions.

Product Growth Certification (PGC)™

Get certified in growth strategies to drive revenue and scale your product!

Learn more