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I decided to make my application for free but introduce donation button. For this I would use paypal. What are the advantages of this monetization model and what are other models to consider? My application is kinda educational so that's why I am thinking to make it free as I will try to send it to schools.

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Whoever down voted this question should explain why, it's not really helpful at all to just -1, and let them assume they made no mistake. I recommend you add more detail though, I believe that's why you got a -1 :P. Try talking about what kind of app it is, and what reasons you have thought of to make it free or cost money etc. – FullyLucid Dec 18 '11 at 6:41
up vote 8 down vote accepted

Nothing wrong with a donate button, but don't forget ads. You should include other options than Paypal like Amazon or Google Checkout since some people don't use Paypal.
Good answer of ads in android applications:

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+1 for linking to a helpful SO post. – FullyLucid Dec 18 '11 at 0:05

I'd include ads and make sure they're in a part of the screen where you don't have controls, as well as a "Do you hate ads?" Button where they can download a full version without adds for maybe 2$ or so. Donations work too, it's rare that people will donate, but when they do I can guarentee you'll be happier to see the "well I've got 10$ to spare" people than 4 sets of $2. ($2 less only,) When it's a larger number it makes a bigger difference. It's all about whether you want the app to cost money to begin with or not though.

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I would recommend using ZooZ, it's an In-App payment SDK for iOS and Android. ZooZ offer excellent conversion rate and variety of payments methods.

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If you're advertising your product here, please be at least honest about it and mention that in your answer. – bummzack Dec 18 '11 at 11:26

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