I spent five years working on free-to-play mobile games, and I've seen it all: games that made millions from 1% of players, games that alienated everyone with aggressive monetization, and the rare gems that made money while players actually loved them. The difference wasn't luck—it was understanding the craft of F2P monetization.
Mobile gaming is a $90+ billion market, and the games at the top have mastered the delicate balance between extracting revenue and delivering value. This guide breaks down what they do and how you can apply these lessons.
The Three Monetization Models
1. IAP-Focused (In-App Purchases)
Revenue comes primarily from players buying virtual goods:
- Best for: Mid-core and hardcore games with deep progression
- Examples: Clash of Clans, Genshin Impact, Candy Crush
- Key metrics: ARPPU, payer conversion, purchase frequency
2. Ad-Focused
Revenue comes primarily from advertising:
- Best for: Hyper-casual games with broad audiences
- Examples: Subway Surfers, Helix Jump
- Key metrics: eCPM, ad impressions per DAU, fill rate
3. Hybrid
Combines IAP and advertising strategically:
- Best for: Casual and mid-casual games
- Examples: Coin Master, many match-3 games
- Key metrics: Total ARPDAU, ad/IAP revenue split
IAP Strategy Deep Dive
The IAP Store Structure
Successful IAP games typically offer:
- Hard currency: Premium currency (gems, diamonds) for flexibility
- Consumables: Boosters, energy, lives
- Permanent upgrades: Characters, equipment, expansions
- Bundles: Package deals with perceived high value
- Battle passes: Subscription-like progression rewards
Price Point Psychology
The right price ladder converts more players:
- Starter offers: $0.99-$2.99 (80% off to convert first purchase)
- Small packs: $4.99-$9.99 (impulse purchases)
- Medium packs: $19.99-$49.99 (main revenue)
- Whale packs: $99.99+ (high-value players)
The First Purchase Is Everything
A player who makes one purchase is 10x more likely to make another. Optimize aggressively for first purchase conversion with starter packs, limited-time offers, and removing friction from the payment flow.
Conversion Triggers
When to present IAP offers:
- Failure moments: "Need more lives? Buy now to continue!"
- Progress walls: Content gated behind premium currency
- Time pressure: Limited-time sales and seasonal events
- Social triggers: Keep up with friends, leaderboard competition
- Collection drives: Complete sets, unlock characters
Ad Monetization Strategy
Ad Format Selection
- Rewarded video: Highest eCPM, best user experience
- Interstitials: Good eCPM, use carefully to avoid churn
- Banners: Low eCPM, minimal disruption
- Playable ads: High engagement for game advertisers
Optimal Ad Placements
For rewarded video:
- Extra lives/continues after failure
- Reward multipliers after level completion
- Daily rewards enhancement
- Free premium currency
For interstitials:
- Between levels (natural break points)
- After X sessions (avoid first session)
- Before unlocking rewards
Frequency Optimization
Balance revenue against user fatigue:
- Cap interstitials at 2-3 per session
- Cool-down periods between ad shows
- Reduce ads for paying users
- A/B test frequency limits continuously
The Hybrid Model
Hybrid monetization is increasingly dominant because it:
- Monetizes non-payers (95%+ of users)
- Doesn't cannibalize IAP when designed correctly
- Provides smoother revenue curves
- Allows more generous F2P economies
Segmentation Strategy
- Non-payers: Full ad experience, rewarded videos prominent
- Light payers: Reduced ads, focus on IAP offers
- Whales: Minimal or no ads, VIP treatment
Revenue Split Benchmarks
- Hyper-casual: 90-100% ads
- Casual: 50-70% ads, 30-50% IAP
- Mid-core: 30-50% ads, 50-70% IAP
- Hardcore: 10-20% ads, 80-90% IAP
Live Operations (LiveOps)
LiveOps keeps players engaged and spending:
Event Types
- Seasonal events: Holiday themes, limited-time content
- Challenge events: Time-limited goals with rewards
- Sales events: Discounts and special offers
- Content updates: New levels, characters, features
Battle Pass Strategy
Battle passes combine subscription predictability with IAP mechanics:
- Free tier for all players (keeps engagement)
- Premium tier with better rewards
- Time-limited (creates urgency)
- Progress-based (encourages daily play)
The FOMO Engine
Successful LiveOps creates Fear Of Missing Out. Limited-time events, exclusive rewards, and expiring offers drive urgency. But overuse breeds cynicism—players learn that "limited edition" items always return. Balance is key.
Economy Design
Currency Systems
Most games use dual currency:
- Soft currency: Earned through play, spent on basics
- Hard currency: Premium, bought or earned slowly, spent on premium items
Sink-Source Balance
Healthy economies balance currency inflow (sources) and outflow (sinks):
- Too much currency = inflation, devalued IAP
- Too little = frustration, churn
- Monitor economy metrics weekly
- Adjust sources/sinks based on player behavior
Analytics for Monetization
Key Metrics to Track
- ARPDAU: Average revenue per daily active user
- ARPPU: Average revenue per paying user
- Payer conversion: % of users who make any purchase
- Purchase frequency: Purchases per payer per period
- Time to first purchase: Days from install to first IAP
- Ad engagement rate: % of users watching ads
- Ads per DAU: Average ad impressions per user per day
Cohort Analysis
Track monetization by user cohort:
- Do newer cohorts monetize better?
- How does monetization evolve over user lifetime?
- Which acquisition sources drive best LTV?
Common Monetization Mistakes
- Pay-to-win: Destroys competitive balance and community
- Too aggressive too early: Monetizing before hook creates churn
- Deceptive dark patterns: Damages trust and triggers refunds
- Ignoring non-payers: 95% of users still drive word-of-mouth
- Static pricing: Not testing price points and offers
- Ad overload: Too many forced ads destroys retention
The games that win long-term are the ones where players feel like spending is a choice, not a requirement. The best monetization is invisible—players buy because they want to, not because they have to. That's the art behind the science.
Optimize Your Game's Revenue
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