5 AI App Monetization Models Compared
I Tried Them All—Here's What I Found
A few months ago, I was helping an AI startup choose their monetization model. The founder asked me: "Which one actually works?"
I realized I didn't have a great answer. So I spent the next few months studying what's actually working in the market.
Here's my honest breakdown.
Quick Overview
| Model | Best For | Avg Revenue | UX Impact |
|---|---|---|---|
| Subscription | High-value daily tools | $10-50/mo | Low |
| Freemium | Viral growth plays | $1-5 ARPU | Medium |
| Usage-Based | B2B, APIs | Variable | Low |
| AI-Native Ads | Free apps, high traffic | $0.01-0.05/query | Low |
| Affiliate | Niche verticals | 5-15% commission | Medium |
1. Subscription Model
What I've seen work: Subscription crushes it when users get clear, daily value. ChatGPT Plus users pay $20/month because they use it constantly.
What I've seen fail: Apps that charge for "more features" without clear differentiation.
2. Freemium Model
What I've seen work: Freemium works when the free tier is genuinely useful but leaves users wanting more.
The trap: Making the free tier too limited. Users who can't experience real value won't convert.
3. Usage-Based Pricing
What I've seen work: The dominant model for B2B AI tools. OpenAI, Anthropic, Cohere—all usage-based.
Downside: Revenue is unpredictable, and billing gets complex fast.
4. AI-Native Advertising
This is the model I've gotten most excited about recently.
Traditional banner ads don't work in chat interfaces. But AI-native advertising is different. It monetizes at the query level, matching relevant commercial content to user intent.
🎯 Why this works for AI apps
When someone asks your AI "what's a good CRM for startups?", there's clear commercial intent. AI-native advertising surfaces relevant sponsored options naturally within the response.
Platforms like TokenForge handle the complexity—intent detection, ad matching, and settlement—so you just integrate an SDK and start earning.
5. Affiliate Model
What I've seen work: Shopping assistants, travel bots, product comparison tools.
Limitation: Only works for certain verticals.
How to Choose
| Your Situation | My Recommendation |
|---|---|
| Less than 10K users | Focus on growth first |
| Free app, 10K-100K users | AI-Native Advertising |
| High daily engagement | Subscription |
| B2B or API product | Usage-Based |
| Shopping/recommendations | Affiliate + Ads |
đź“Ś TL;DR
Five models work for AI apps: subscription, freemium, usage-based, AI-native ads, and affiliate. For most consumer AI apps, I'd start with AI-native advertising through TokenForge—lowest friction and fastest to revenue.
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