Ever Wondered how do your favorite apps make money? Like Xender, facebook, Youtube

1. Ads
2. In-app purchases
3. Paid app purchases

   

   
   

   
   
   
   
   
   
   
   Ads
   
   Now, all 3 of these are not suited for every form of app. An app with an extensive user base will reap enough PPC (Pay per click), I'm taking into consideration only Google AdMobs here. There are tons of other services which provide ad based monetization. Here's most of them named - AdMob alternatives.
   
   So, what does pay per click mean? This means that you will be paid only if a user clicks an ad and not for viewing an ad. Now this will be meager on an app that has around 10,000-50,000 users. However, on an app that's used by at least a million people - like Clash of Clans which has several million downloads the ads would make a major part of the revenue.
   
   We now have interstitial ads - these are ads which cover up the entire screen of the phone and can be exited by the user after the media content has finished playing or after a timer has elapsed. Interstitial ads make a considerable dent when compared to regular banner ads. Here's the overview: Why developers use interstitial ads to monetize iOS and Android apps.

In-app purchases

In-app purchases are ostensibly the best path for making money with an app. They do not require as big a base as ads do to make an impact. However, there is one critical factor: the feature should be lucrative enough for people to buy. Taking the example of Clash of Clans again, they sell gems for real money - gems are used to help speed up progress in the otherwise slow game. You might think who out there is going to spend $50 for 10,000 worthless gems, but I shit you not, there are gamers aggressive enough to beat the competition at any costs.

Another example would be Greenify for Android. It isn't a game, doesn't have as many downloads as Clash of Clans but still definitely makes a good amount of money. Why? It offers something "worth the money".

In conclusion, in-app purchases are suited for all apps. However, they won't work unless the feature stands out.

Paid app purchases

This is a moribund route for making money ever since in-app purchases were introduced. The only difference being you'd have to download another "app" which contains the exclusive features.

Honorary mention - Donations

Making an app out of self interest or for whatever reason and you want to publish it but don't want to besmirch it with ads? Well, then donations are usually the way. This is probably the worst way to monetize. Very few people are magnanimous enough to make donations for an application they can use to its full extent for free. This is probably chosen by devs who don't really care about the money, but won't deprive the opportunity for some altruist soul out there