Game monetization models and the metrics behind them

A game earns money in one of six ways: players buy the game, buy more content for it, buy items inside it, watch ads, pay a subscription, or buy a season pass. Most games combine two or three. This guide covers how each model earns, where it fits, the metrics that show whether it works, and the events your game needs to send to measure them.

Game monetization models at a glance

Premium: one price to buy the game

Players pay once to own the game. It is the standard model on PC and consoles, and it fits games with a clear end or a fixed amount of content.

The store keeps a share of every sale. On Steam it is 30% of a game's revenue up to $10 million; how much Steam takes covers the tiers and what comes out before the cut. The Epic Games Store lets developers keep all of the first $1 million of net revenue per product each year, then takes 12%.

What to measure:

• Store page conversion: the share of store page visits that end in a wishlist or a purchase. Steamworks reports store page visits, wishlists, and sales.
• Refund rate: refunds as a share of sales. A spike after an update or a sale is a sign the game didn't match what players expected.
• Revenue after the cut: to estimate a game's sales and what the developer keeps, use the Steam revenue calculator. To estimate launch sales from wishlists, use the Steam wishlist calculator.
• Retention: players who stop early leave reviews and ask for refunds. Measure it the same way as in a free game, with D1, D7, and D30 retention.

DLC and expansions

DLC sells more content to players who already own the game: new levels, characters, story, or cosmetics. It extends a premium game's revenue after launch without changing its price.

The main number is the attach rate: the share of owners who bought the DLC. Measure it per DLC and per version, and compare revenue per owner across releases to see whether larger expansions earn more than small, frequent ones.

In-app purchases

Players install the game for free and buy items inside it: currency, cosmetics, characters, boosts, or extra lives. Most mobile games use this model, and many PC and console games use it with free-to-play.

Purchases fall into two groups. Consumables, such as currency and boosts, are used up and bought again. Permanent items, such as skins and characters, are bought once. Cosmetics don't change how the game plays, so they keep competitive matches fair.

What to measure:

• Payer conversion: the share of active players who paid. In most free games, only a small share of players ever pay.
• ARPPU: revenue divided by the players who paid.
• ARPDAU: revenue divided by daily players, which is payer conversion multiplied by ARPPU. ARPDAU, ARPPU, and ARPU for games has the formulas and a worked example, and the ARPDAU calculator calculates them from your totals.
• ARPU by day 7 and day 30: the revenue a group of new players has brought in by that day. Compare it with what you pay for each install.
• Revenue by item: which items sell, and to whom. A store where one item makes most of the revenue depends on it.

Ads

The game shows ads, and the ad network pays for them. Ads earn from players who will never pay, so they suit casual and hyper-casual mobile games with many players.

Ads come in three common formats:

• Rewarded ads: the player chooses to watch one for a reward, such as currency or an extra life.
• Interstitials: full-screen ads between levels or matches.
• Banners: small ads that stay on screen.

What to measure:

• Ad impressions per daily player: how many ads each player sees a day.
• Ad revenue per daily player: the ad part of ARPDAU. Ad networks report revenue per impression, so record it on each ad impression event when the network's SDK provides it.
• Retention and session length: more ads earn more until players leave. Compare retention between versions that show more or fewer ads, not just total ad revenue.

Subscriptions

Players pay a monthly or yearly fee for access to the game, a catalog of games, or perks such as bonus rewards, no ads, or extra storage. Subscriptions suit games that players come back to for months, such as MMOs and games with a steady stream of new content.

What to measure:

• Subscriber conversion: the share of active players who subscribe.
• Churn: the share of subscribers who cancel or don't renew each month.
• Renewals: subscribers who renew, by month since they first subscribed. A subscription only beats a one-time price if players stay long enough.

Battle pass and season pass

A battle pass is a track of rewards for one season, usually a few weeks or months. Every player can earn the free tiers, and players who buy the pass also earn the paid tiers by playing. It is common in competitive and live-service games, because it rewards playing regularly without selling power.

What to measure:

• Pass purchase rate: the share of active players in the season who bought the pass.
• Tier progress: how far players get by the end of the season. If most buyers can't finish, the pass feels like a bad deal. If most finish in the first week, the season runs out of goals.
• Next-season purchases: the share of last season's buyers who buy again. It shows whether the pass felt worth it.
• Retention during the season: compare the players active each week of the season with the same weeks of the previous season.

Hybrid models

Most games combine models. A free mobile game can earn from purchases and rewarded ads, a premium PC game can sell DLC and cosmetics, and a free competitive game often sells a battle pass and skins.

With more than one source of revenue, track each one separately and also add them up. Rewarded ads can lower purchases if they hand out what players would otherwise buy, and the only way to see that is to compare purchase and ad revenue per daily player between versions.

How to choose a monetization model

• Platform: premium is the norm on PC and consoles, and free games with purchases and ads are the norm on mobile.
• Genre: competitive games need fair matches, so they sell cosmetics, characters, and battle passes. Single-player games with a clear end suit premium and DLC. Casual mobile games with short sessions suit ads.
• How long players stay: subscriptions and battle passes need players who come back for months. Check your retention before building one.
• Who your players are: if most players will never pay, ads or a low price reach them. If a small group plays a lot, purchases and passes let them spend more.

Whatever you choose, compare each version of the game with the versions before it. Published benchmarks mix genres and platforms, and a change in your own numbers after an update tells you more.

Check that paying doesn't win matches

In a competitive game, players notice quickly if bought items win more. Check it with your own match data:

• Characters for sale: record the character each player used in every match with a win value of 1 or 0, as in tracking character win rates, then compare the win rates of bought characters with free ones.
• Items or upgrades for sale: record whether each player in the match had the item as an attribute, and compare the win rates of players with and without it.
• Compare by version: a change in a balance patch can make a paid item stronger without anyone noticing. Check the same report after every update.

A paid character with a win rate several points above the rest is a balance problem and a pay-to-win complaint waiting to happen.

Events to record

Each model needs a few events. Record amounts in one currency, such as US dollars, and refunds as negative amounts:

• Purchase: the item or product, price, currency, the store, and where in the game it was bought.
• Ad impression: the format (rewarded, interstitial, or banner), the placement, and the revenue if the ad network's SDK reports it.
• Subscription: start, renewal, and cancellation, with the plan and price.
• Battle pass: purchase, and the tier each player reaches.
• Match: the result for each player, plus any paid character or item they used.

Revenue reports in Game Stats AI

In Game Stats AI, a revenue report adds up one or more revenue sources. Each source is an event and the attribute that holds its amount in US dollars, such as purchases, subscriptions, or ad revenue. The report shows daily revenue, ARPDAU, payer conversion, ARPPU, and ARPU by day 1, 7, and 30 for each group of new players. Payer conversion and ARPPU only count the sources players pay for directly, so a player who only watches ads is not a payer. Negative amounts count as refunds.

Game Stats AI is built for competitive and match-based games, so the same account also has win rates by character and by match attribute for the pay-to-win check. Events go to a REST API from your game or server, so it works with any engine and platform. You can also ask Claude about your revenue through MCP, for example Did ARPPU change after the last update?

Frequently asked questions

What is the most profitable way to monetize a game?

There is no single answer. It depends on the platform, the genre, and how long players stay. Premium works for PC and console games with a clear end, in-app purchases and ads for free mobile games, and battle passes and cosmetics for competitive games. Most successful games combine more than one.

What is the difference between free-to-play and freemium?

They mean almost the same thing: the game is free to download, and it earns from purchases or ads inside it. Freemium is more often used for apps where paying unlocks premium features, and free-to-play for games.

How do you know if a game is pay-to-win?

Compare the win rates of players who bought an item or character with those who didn't, in matches between players of similar skill. If paying players win clearly more often, the item gives a gameplay advantage.

Are rewarded ads better than interstitial ads?

Players choose to watch rewarded ads, so they interrupt the game less. Interstitials earn without the player choosing to watch, but too many can lower retention. Test both in your own game and compare retention and ad revenue per daily player.

What is a good payer conversion rate?

There is no reliable public benchmark. Payer conversion depends on the genre, the platform, and the countries your players come from. Compare it between versions of your own game, together with ARPPU.

How much does Steam take from a game's sales?

Steam takes 30% of a game's revenue up to $10 million, 25% from $10 million to $50 million, and 20% above that. How much Steam takes covers what counts toward the tiers.