Hybrid monetization means combining subscriptions and additional ways to earn money from users — think in-app purchase (IAP), consumables, ads, or partnerships.
But before we go much further, I want to emphasize something: the goal isn’t to replace subscriptions. It’s about complementing them. As different users discover, use, and leave your app, hybrid monetization captures as many of them as possible.
Why hybrid monetization? The limits of subscription-only models
I’ve been advocating for hybrid monetization for a long time because acquisition is essentially a business model competition: more ARPU = a better position in the paid auctions, faster payback, and more margin to invest in retention, onboarding etc. So while subscriptions are great, they come with a fundamental flaw: a high floor, low ceiling nature (more on this in a moment).
Subscriptions are binary: pay, or don’t.
But real demand is not binary — it’s distributed across willingness to pay.
Based on the graph above (from the State of Subscription Apps 2025), it’s expected that 90% of users won’t convert, and for a number of verticals, regions, and non-iOS platforms, it gets even worse. Last year, I saw an app attract over a million users in one country, only to get less than 1,000 paying subscribers!
The problem is that a single recurring price assumes that most users have roughly the same willingness to pay. But in reality, some users are happy to pay a premium, others get occasional value but can’t justify a recurring commitment, many will never subscribe at all.
This creates two common blockers:
The high-ceiling problem
A single offer presents too much friction for low-intent users. You can try to discount it or shorten the subscription length, but some users (such as Android users in developing countries) still won’t engage.
Many will never subscribe. They still generate value (attention, data, virality), and some may be willing to be something — if offered differently (enter in-app purchases, for example) or at a lower price point.
Problem: you’re leaving revenue on the table from low-intent users. Users who value the app, but won’t cross the psychological or financial barrier of a subscription.
The low floor problem
Maybe even worse than a high ceiling… The majority of subscription models have no ‘whales’ (aka, mega spenders). Gaming apps, who pioneered hybrid monetization (typically IAP + ads), can see a handful of users accounting for a large share of revenue, even if other users contribute less. For example, I once saw numbers from a large ‘match three’ game showing that <2% of its 2% payers (i.e. 0.04%) actually generated more than half of revenue. Subscription-only apps lose this possibility.
Problem: you under-monetize high-intent users, as your subscription price can’t move higher without hurting conversion of other users.
At its core, hybrid monetization is about matching price granularity to demand granularity.
Adapting to the demand curve
Most apps serve users with very different levels of intent, frequency, and urgency. A single subscription price flattens those differences.
Visually, you can think of your audience as a demand curve:
- On the left: users willing to pay more for power, speed, or convenience
- On the right: users who won’t pay anything
- In the middle: users who want value occasionally, but resist subscriptions=
Hybrid monetization places the correct monetization lever at the ideal point on that curve, for every user, and avoids forcing everyone into the same choice.
The demand curve of app monetization is extreme, and could be represented this way:
By choosing a single point on the line, binary subscriptions models are leaving a lot of money on the table:<