What is software monetization, and 9 ways to do it

Software monetization is the strategy companies use to generate revenue from software products. It's an approach that blends pricing, delivery, user behavior, and value creation to turn digital tools into scalable, sustainable businesses.

9 types of software monetization models

What is software monetization?

Software monetization is the process of converting software products into revenue streams. It’s not limited to pricing, as it encompasses software monetization models, billing systems, customer acquisition, and product value alignment.

Unlike pricing, which answers “how much?”, monetization answers “how do we get paid, and what does the business look like around that?” Here’s what software monetization includes:

• Delivery models: Do you sell access monthly, per user, or per feature?
• Payment flow: One-time purchase? Subscription? Pay-as-you-go?
• Customer alignment: Is your audience individual users or businesses? Is your product mission-critical or optional?
• Strategic packaging: Are you bundling features, or selling them piecemeal?

The right software monetization strategy lets businesses align their value delivery with how users want to pay. Whether you want to monetize new tools or are looking for a more scalable software monetization plan, choosing the right strategy makes or breaks long-term wins.

How to choose the right software monetization model

Every software monetization model comes with trade-offs. Here are some key factors to consider when choosing one:

• Understand your users: B2B clients often want feature control, invoicing, and reporting. B2C users prefer simplicity and instant access.
• Align with product use: Is your software used once per month or every day? High-frequency tools benefit from subscriptions or usage billing.
• Watch market patterns: Freemium and app monetization software dominate mobile and casual markets, while the best SaaS monetization software leans toward usage-based or subscription tiers.
• Protect your intellectual property: Licensing-based models rely on legal frameworks. If you’re offering APIs, SDKs, or libraries, IP management helps enforce pricing.
• Forecast revenue effectively: Usage-based models offer potential, but require robust monetization software to accurately track, bill, and report.
• Get feedback early: Customer input helps fine-tune your model to actual product value.

Remember: Choosing the wrong strategy can stall your growth. But the right software monetization solution helps balance pricing flexibility, billing precision, and user expectations.

A closer look at each software monetization strategy

1. Perpetual license

A perpetual license model grants customers lifetime access to your software for a single upfront fee. This approach is ideal for products that require minimal ongoing support or updates, making it a go-to choice for desktop software monetization. You should use it:

• When your software doesn’t require regular updates or maintenance.
• If your users are cost-sensitive and dislike subscriptions.
• When you want to generate revenue upfront to fund further development.

Example

Affinity Designer by Serif is a perfect case. It offers professional-grade design tools with a one-time payment, making it attractive to designers who want feature-rich software without ongoing costs. 

Serif also provides discounted bundles to encourage full-suite purchases, maximizing revenue from committed buyers.

Considerations: Perpetual models are great for immediate cash flow but can hinder long-term growth unless supplemented with paid upgrades or support packages.

2. Subscription

The subscription model involves charging users a recurring fee for continuous access. It’s the most popular choice among SaaS companies because it supports consistent revenue and product evolution. You should use it:

• For cloud-based platforms or services that evolve over time.
• If you offer ongoing support, updates, or content.
• When targeting enterprise clients who expect SLA guarantees.

Example

Adobe’s shift from perpetual licenses to Creative Cloud subscriptions changed its business. Users now pay monthly or annually for access to the latest design tools, and Adobe gains a predictable revenue stream to invest in innovation.

Considerations: Subscription fatigue can lead to churn. Mitigate this by adding value through new features, education, and proactive customer support.

3. Usage-based (pay-as-you-go)

This model charges users based on how much they consume. It’s ideal for cloud infrastructure and developer APIs (for example, data warehouses and communication APIs). It’s best to use this model:

• When your cost scales with usage.
• If your product handles large or inconsistent volumes of data.
• When pricing by consumption delivers fairness and transparency.

Example

Amazon Web Services (AWS) only bills customers for the exact resources used, like compute, storage, bandwidth, etc. This approach gives startups a low barrier to entry and allows scaling as their needs grow.

Considerations: You’ll need robust software monetization solutions like Orb to meter usage accurately and prevent revenue leakage.

4. Per seat/user

In this model, customers pay per individual user who accesses the software. It's common in app software aimed at organizations with growing teams. It’s best if you use it:

• For team collaboration tools, CRM systems, or HR software.
• When each additional user represents added value.
• When your UI or workflow depends on user-level customization.

Example

Slack charges based on the number of active users per workspace. Businesses only pay for those actively engaging, which helps justify the cost and scale predictably.

Considerations: To prevent account sharing, clearly define your terms of service and monitor login patterns.

5. Prepaid model

Customers purchase credits upfront and use them over time. This model offers predictability for both sides and fits solutions with variable usage like SMS, translation, or API calls. Go with this strategy:

• If your usage patterns are unpredictable but frequent.
• When users prefer not to commit to ongoing payments.
• When international billing complexity makes subscriptions hard.

Example

OpenAI’s API lets teams purchase prepaid credits and set auto-recharge when the balance is low. This setup gives predictable spend for users and upfront revenue for the provider.

Considerations: Offer auto-reload features and reminders before credits expire to avoid frustrating users.

6. Freemium

Freemium gives away core features for free, monetizing only advanced functionality. It’s ideal for content software and viral app tools. Freemium is best:

• When your product has a broad appeal and a low onboarding cost.
• If your value prop improves significantly in the paid tier.
• When you can build strong upgrade incentives.

Example

Canva provides a powerful free version for casual users and offers Canva Pro as an upgrade. The model has helped them achieve massive scale while converting a healthy portion of their base into paying customers.

Considerations: Make sure your free tier is useful but limited enough to nudge upgrades. Too much free value can reduce conversion rates.

7. In-app purchases

Users pay to unlock premium content, features, or currency inside the software. It’s a staple in app software and desktop software for games, productivity tools, and creative apps. This approach can be used:

• If your app encourages daily engagement.
• When users benefit from customization or faster progress.
• If you're targeting mobile platforms.

Example

Duolingo offers in-app purchases for ad-free learning, bonus lessons, and progress boosts. Having such a mix of free value and paid accelerators keeps engagement high while generating revenue.

Considerations: Avoid "pay-to-win" dynamics that frustrate users. Provide balanced value for both paying and free users.

8. In-app ads

Ads within software help generate revenue from free users. This model works best in app software built for mass-market, high-frequency usage. In-app ads are great:

• When you have a large, free user base.
• If your product usage is frequent and habitual.
• When you can segment audiences for targeted ads.

Example

The Weather Channel app uses ads to monetize millions of daily users while keeping the service free. Ad relevance and frequency are optimized to minimize disruption.

Considerations: Offer an ad-free upgrade path to improve user experience and monetize more deeply.

9. Affiliate marketing

In this model, you promote partner products or services and earn commission on referred sales. It works best for cross-audience monetization and creator platforms. This monetization style is ideal:

• When your users trust your recommendations.
• If you serve a niche audience that values expert tools.
• When you want a low-effort monetization layer.

Example

HubPages lets writers include affiliate links to books or tools they discuss. Readers gain value through recommendations, and both the writers and HubPages earn revenue through tracked referrals.

Considerations: Make sure affiliate products align with your brand. Overuse can erode trust and cheapen your product experience.

9 tips for implementing monetization

Successfully monetizing software involves more than picking the right model. These nine tips help bring your software monetization strategy to life:

1. Integrate monetization early: Plan your software monetization solutions from the start to avoid reengineering later. Align product and revenue development from day one.
2. Personalize offers: Use behavioral data to tailor your upsells and pricing tiers. It increases conversion and enhances perceived value.
3. Simplify payment flows: Remove friction from checkout. The best app monetization software supports instant payments, flexible currencies, and mobile-friendly UIs.
4. A/B test pricing: Don’t guess. Run tests to find which price points and feature bundles resonate with each segment.
5. Benchmark against competitors: Watch what pricing and models others in your niche use. This provides context and highlights market expectations.
6. Value-based pricing: Charge according to the impact your product delivers, not just costs. This is a cornerstone of how the best companies monetize software.
7. Support multiple models: Over time, you may blend freemium with affiliate or usage-based with prepaid. Use software monetization solutions that can scale with hybrid models.
8. Make billing transparent: Show real-time usage, billing history, and cost breakdowns to build trust and reduce churn.
9. Stay compliant: Global software must adapt to tax rules, data laws, and regional billing regulations. Use billing and tax tooling that supports VAT/GST, e-invoicing, and country-specific requirements, and document processes for audits.

FAQs

How to monetize software easily?

The easiest way to monetize software is by launching a freemium model with optional in-app purchases or upgrades. This lets users try the product risk-free while creating a built-in upsell path.

What is cross-audience monetization?

Cross-audience monetization is when you earn revenue from secondary audiences, like advertisers or partners, rather than just your core users. It often includes affiliate marketing, in-app ads, or partnerships that align with your user base. 

How to monetize a platform vs. software?

Platforms are typically monetized through transaction fees, third-party integrations, or marketplace commissions, while software is monetized through subscriptions, licensing, or usage-based pricing. The difference lies in whether you're enabling others to build or offering a direct-use product.

What tactic can prevent loss of potential ad revenue?

To prevent ad revenue loss, optimize ad placement and frequency to avoid disrupting the user experience. A/B test formats, prioritize relevance, and offer an ad-free upgrade to balance monetization with retention. 

How Orb powers your software monetization strategy

Now you know all about software monetization and the different models you can implement according to your specific software capabilities. But this is just the beginning of your journey.

One of the first hurdles you might encounter is simplifying your billing process. Thankfully, there’s a reliable and flexible billing platform that can do it for you and go beyond what regular monetization software solutions can do.

Enter: Orb.

Orb offers a full suite of tools designed to turn raw usage data into revenue. Here’s how Orb supports your software monetization strategy:

• Flexible pricing: Orb ingests raw usage events so that you can define your own billable metrics (using SQL or a visual editor) and implement subscriptions, usage-based, and hybrid models.  
• Accurate invoicing: Orb reduces billing errors by calculating charges directly from raw usage data and generating clear, compliant invoices; even for complex plans.  
• Reporting with easy integrations: Sync billing with your CRM, ERP, and finance tools for audit-ready analytics.
• Built for non-technical teams: Evolve pricing without engineering thanks to Orb RevGraph, which decouples usage data from pricing logic.  
• Model changes safely: Orb Simulations uses your historical data to simulate how different pricing models affect your revenue.

Orb helps SaaS and GenAI companies to monetize software with agility, accuracy, and extensibility, and helps you grow faster by decoupling billing from engineering. Explore Orb’s pricing plans and build a future-proof software monetization plan.