Struggling with IP geolocation accuracy for my new tool, help?

hey everyone, just launched my first little web tool, an 'IP Lookup Tool - Geo-locate Any IP Address & Get Details'. it's been exciting but i'm already hitting a wall with something super critical: IP geolocation accuracy.

• The Big Problem: my tool's IP geolocation data is often off. users are complaining that it shows them in the wrong city or even state, especially for mobile IPs or residential ones. this is a huge bummer cause it undermines the whole point of the tool.
• What I've Tried So Far (and Failed):
  • i started with some free IP databases, like MaxMind's GeoLite2. it's okay for general regions but not precise enough.
  • i even tried cross-referencing with another free IP geolocation API, but that just added latency and didn't really boost the accuracy much.
  • i've looked into basic caching but that doesn't fix the underlying data quality.
• My Specific Questions for the Pros:
  • how do the big guys (like Google, major VPN providers, or even other online IP lookup tools) achieve such spot-on IP geolocation? are they building their own databases from scratch?
  • are the expensive, paid IP geolocation databases or a premium IP geolocation API actually worth it for a small tool like mine? if so, any recommendations on which ones offer the best balance of accuracy and cost?
  • are there any clever techniques or open-source projects i should be looking at to improve the accuracy without breaking the bank? maybe some sort of triangulation or data enrichment i'm not aware of?
  • how do you deal with VPNs, proxies, and dynamic IPs to still get a reasonably accurate location?
• Closing: this IP geolocation thing is really stressing me out, and i want my tool to be genuinely useful. any advice or pointers from folks who've tackled this before would be a lifesaver. help a brother out please...