Subscriptions and ad-supported free tiers solve the same monetization problem from opposite directions: one asks a smaller group of users to pay more, the other asks a larger group to pay nothing and tolerate ads instead.
When subscriptions tend to win
Apps that deliver ongoing, recurring value — content libraries, productivity tools, health tracking — are well suited to subscriptions, since users can clearly see what they're paying for on a monthly basis. Subscription revenue is also more predictable than ad revenue, which fluctuates with fill rate and advertiser demand.
When ad support tends to win
Apps with a low willingness to pay, a large casual audience, or infrequent usage patterns often can't sustain a subscription price point that users will accept. An ad-supported free tier removes the payment barrier entirely and can still generate meaningful revenue at scale, especially when paired with an optional ad-free subscription upsell.