How Do Free Apps Make Money?

How Do Free Apps Make Money?

Have you ever wondered how money is made from free apps?

The majority of the time, you simply download an app from the store and begin using it. Naturally, developers that provide free programs expect to be compensated in some way. If you’re considering making an app but aren’t sure how it is possible with free money-making apps, the following information will help.

In this post, we look at how well-known free apps made money, offer tips on how to establish an app monetization plan, and discuss which software development services and technologies to use.

In a nutshell, free apps to earn money through one of the eight most common monetization strategies:

  1. Advertisement (via banner, video, native ad, interstitial ad, incentivized ad).
  2. Marketing Through Referrals (Amazon).
  3. In-app purchases and a freemium model are both available (PokemonGO).
  4. Model of Subscription (Wall Street Journal).
  5. Sponsorship is available (Weather Channel).
  6. Crowdfunding is a method of raising funds from a large (Hello Earth).
  7. Marketing via email (NY Times).
  8. E-commerce and App Merchandise (Angry Birds).
global downloas of mobile apps & games for first-half 2021

Freemium Apps vs Premium Apps Market.

Our smartphones are used for almost everything nowadays. We can speak across great distances, order pizza, and find a way in an unfamiliar location with the help of a certain app. The number of apps with advanced features is increasing every year, resulting in fierce rivalry among app developers.

The App Store had 957,390 gaming apps in 2020. In comparison, the store had 3.42 million non-gaming apps accessible at the moment. The Apple App Store had 180 billion apps downloaded as of June 2017.

The number of available apps in the Google Play Store was most recently placed at 2.89 million apps, after surpassing 1 million apps in July 2013.

Users have become selective in recent years, with only 4-9 applications active on a daily basis.

On average, 5 to 10% of users are willing to pay for an app, but only if it is of excellent quality, performs well, and has a specified role. As a result, the free app segment accounts for the vast majority of downloads and income (98 percent).

Furthermore, according to Gartner Research Group, 24% of consumers would prefer to connect with premium apps over in-app purchases. Users are more likely to undertake additional in-app transactions, purchases, and unlock extended features once an app has shown its worth.

Read more: How to Convert a Website into Mobile App

number of mobile app downloads worldwide from 2016 to 2020

Free vs. Paid Apps: What’s the Difference?

Apps that are available for free:

Since most of us are aware, free apps attract more clients because they are easy to use and do not require payment. A user may simply download the app, try it out, and then determine whether or not it is valuable to them. Isn’t this something we’ve all done before? Consider the following scenario: For a photo collage, we download three to four of the highest-rated apps and experiment with each one. We keep the one we like most and then uninstall the rest. Customers have three options here: one is to stop using the app, another is to keep using the free version, and the third is to pay for the upgrade or premium version.

  • More Customers
  • More Reviews
  • Lower Customer Expectation
  • More Downloads
  • More Visibility

PS: You can also make money from free apps

Paid Apps

As the name implies, you must pay to download and continue to use the app. You don’t have to think too hard about how to generate money with apps for this type of app. The revenue concept for these apps is straightforward: pay now and use later. In the first place, the likelihood of a client picking the paid app is extremely low. Either the user will not use the software or will pay you to use it. These apps are only paid for by loyal consumers. Revenue rises as the number of downloads rises. Because you pay for the program, you won’t see any of the obnoxious advertisements, thus your user experience will be excellent throughout.

Listing down the benefits of the paid app:

  • Loyal customers
  • Revenue system
  • No ads
  • Less competition
  • Better Engagement

Let’s say you want consumers to be able to use the apps without any restrictions initially. Free money making apps is the sensible approach here. However, while you’re making your software free, don’t lose sight of the ultimate purpose of your concept, namely, income. You might be surprised to learn that free apps can actually generate revenue. Yes, you read that correctly.

Free Apps Can Be Used To Make Money In The Following Ways:

1. Promotional material:

In basic terms, advertising is when a user sees ads while using a free app via a third-party app. The majority of free money making apps generate revenue by displaying advertisements. Your inquisitiveness prompts another question: how do free apps make money? The best money making apps make money in the following ways:

Cost – per –impressions: If your app displays an advertisement to 1000 distinct users, you will be paid a particular amount. Cost–per–mile is another name for it.

Cost – per-installs: If the user to whom you’re presenting an ad installs the app, your goal has been met. If the customer downloads the app that your app promotes, you will earn money.

While enabling advertisements to play in your app, you can charge your advertiser for the number of views you provide.

Cost-per-click: These are often for display advertisements, and you will be paid if your user clicks on the advertiser’s display ad campaign. You can set a certain amount of money for every click and that’s all.

Ads can be in a variety of formats. Banner ads, video ads, native ads, and interstitial ads are common. They all have set positions and only appear in those locations.

2. Sponsorship:

Another fascinating way to get money is through sponsorship. In this case, the app owner must locate an appropriate platform to launch your app on. What is the best way to monetize a free app? To answer this frequently asked question, the app owner must discover a specialized platform that is similar to the apps. Launching the app under the brand identification of a well-known company with a large consumer base is a fantastic concept.

You can now simply collaborate with influencers and ask them to create content for your app in their own unique manner. People follow influencers because they are more like average people who give content based on their own experiences. The importance of their experience and reviews is far more than that of a celebrity. Determine which Influencers are relevant to your brand and contact them for a shoutout.

Read more: How To Submit App To the App Store in 2021

3. Email marketing:

An email has become an integral component of our daily life. It’s also a wise move to use a platform that users frequently visit. But, soon after that, you’re probably wondering how applications generate money via email. Email marketing is used to do this. All you’ll need for this is some cream and verified data, as well as some fantastic material to enjoy. It’s a terrific idea to keep the subscriber up to date on the latest specials and offers. If your company has a lot of new features, goods, rewards, or app updates to share, go for it.

4. In-app purchase model:

It is a strong means of earning money if you have a freemium software strategy. For the user, the software provides an internal deal breaker. For example, it may urge you to purchase various currencies in order to unlock further features, or you may purchase health points that can be redeemed in the future. All of these transactions are handled by the app store. Offering internal objectives and benefits might help you make apps that give you money. There are two types of offerings in the ‘In app purchase model.’ One is consumable (an offer that is only valid for a limited time) while the other is non-consumable (The offer that lasts long)

5. Crowdfunding:

Now, the latest question on everyone’s mind is: how do applications make money through crowdfunding? The term “crowdfunding” is the newest buzzword in town. Here’s how an app with a brilliant idea, a Nobel Prize, and amazing features gets funded all across the world. Simply put, this refers to a modest quantity of money provided by a huge number of people. There are numerous crowdfunding websites that connect investors with entrepreneurs. This is typically done for philanthropic events, non-profit organizations, and small businesses.

6. Affiliate Marketing:

Let’s take a closer look at this to see how you might profit from a free app. Affiliate marketing requires two people to be effective. One must act as a mobile advertiser, while the other will act as a mobile affiliate. Mobile affiliates market-relevant items, services, or events to the app’s target audience in a way that does not appear to be a promotion. The money is generated by actions such as clicks, installs, and views. Another method of Affiliate Marketing is to use a percentage model. In this case, the Affiliate offers a set percentage of the money generated by the advertisement.

Read more: How to Publish App to Play Store?

7. Subscription: 

A new user will not pay for a trial version of the app. They normally download the app, skim through the features, and see if it is useful to them. If this is the case, people will begin to use the app on a regular basis. So, how are you going to earn money with a free app? Simple: provide some intriguing features for free so that customers find it innovative and fascinating, and then lock the more interesting and premium features. Once they’ve decided they want to explore the most fascinating and premium services further, ask them to upgrade by paying a monthly subscription. In subscription, you usually charge for some premium features that users want to use.

To unlock a specific feature, you urge your users to upgrade the software from the free version. A subscription is a good option if your app’s engagement is high. Payment is made using a third-party app such as PayPal.

Subscriptions are further divided into two types:

  • A subscription is valid for a set amount of time (for example, three months or a year) and must be renewed when it expires.
  • After the free trial period has expired, your subscription will be automatically renewed. After you upgrade the app, it will ask you to try it for free, but you will need to provide your credit card or debit card information. The sum is then deducted in accordance with the monthly charges.

Let’s wrap up

The popularity of mobile apps will continue to rise in the near future. Even behaviors that demand our physical presence are changed to virtual presence during this covid epidemic. Artificial intelligence, virtual reality, and cloud storage, as well as apps based on these capabilities, are making our lives easier. Money making game apps generate billions of dollars in income through mobile apps, while other apps have yet to reach their revenue goals.

Finally, there are a plethora of ways for the best apps to make money. All you have to do now is figure out your preferred method and the activities that go along with it.

Have a project in mind?