How Do Free Apps Make Money – A Descriptive Guide.

Last updated on June 23rd, 2022 at 04:25 am

The world of today is dominated by mobile apps. Mobile apps have made our lives much easier than before. There are two types of mobile apps either paid apps or free apps. While using free mobile applications have you ever thought of how free mobile apps make money? The free app has, after all, always outnumbered the paid ones (in terms of profits and download numbers). Most of the time, you download the app from the store and simply start using it. The mobile app industry is estimated to cross the mark of 407.31 billion US dollars by 2026.

The app development world is a lucrative market and many businesses today are currently to step in and make the most out of the current trends. The development of a top-notch mobile app requires a lot of time usually several months and, more importantly, money.

According to sensor tower, a total of $39.7 billion was spent on mobile apps and games by google play and app store users combined. If you think that it’s the paid apps that bring the lion’s share of this huge revenue, then you might be mistaken. The top-grossing mobile applications (including games) in the Google play store and the apple app store are all free.

The use of free apps is increasing day by day, which is resulting in huge profits for app development companies. It is a fact that 98% of worldwide revenue generated in the app development world comes from free apps. To make the most out of the current trend of technology it has become really important to develop free apps for an android or an iPhone application development company.

To make you more familiar with how free apps make money we will shed some light on the ways you can have a permanent revenue stream for your business.

Advertising:

It is probably the most common and easiest method when it comes to a free app making money. According to a report by Statista, advertising generated revenue of $190 billion in the year 2019 and is expected to generate $280 billion in the year 2020. App monetization is very simple, the only thing that is required to display commercials inside your mobile apps and get paid from the ad networks. You can get paid every time the ad is displayed, per click on an ad, or when a user installs the advertised app.

There are different types of ads that are displayed by the app providers for monetization. As an app owner, you have to monitor your targeted audience if they are finding these ads entertaining or simply blocking them.

1.    Interstitial ads:this type of app advertisement is full-screen pop-ups that are displayed at specific time frames. This ad can be closed by a close button at the upper left or right corner.
2.    Banner ads: These ads are displayed in different sizes and are the top or bottom parts of the app screen. These ads displayed are generally less obstructive and users can easily use the app without any hindrance.
3.    In-app video ads: These ads are displayed automatically and generally used as a reward video in exchange for some in-app rewards.
4.    Native ads:Native ads are manifested to promote a product or a mobile app. They are integrated to appear as a natural element in the app.

Subscription:

Subscriptions are also quite a useful monetization strategy. App publishers can choose to offer free content in their apps for a limited amount of time and then charge users a subscription fee that will allow them to access full content without any restrictions. This model is mostly used in cloud services, audio, and video content providers (Spotify, Google music), and digital news portals. Consumers can have access to the content according to their chosen subscription plan.

In-App Purchases: 

In-app purchasing is a very popular strategy and is directly made from within the free mobile apps. They’re typically used to access special contents or features such as powerups, restrictive levels, or additional features. The best free game apps like Clash of Clans, Angry Birds, have enhanced their user experience by providing users with in-app purchases. According to Forbes, applications having in-app purchases options equipped generates a higher number of profits.

It won’t be wrong to say that the monetization strategy will dominate in the coming years. According to a survey conducted by Fyber, “Among ad agencies and brands, there are several brands, approximately 77%, which have asked their agencies to invest in the in-app purchases inventory.” Overall, this is an interesting model for converting non-paying app users into paying users without being too intrusive.

Referral Marketing:

Referral marketing refers to promoting a third-party product or service in order to develop permanent revenue streams. Important information about a particular company is displayed on the app and based on clicks and installs, the developers receive rewards. These rewards are known as cost per action (CPA).

Just like Referral marketing the term affiliate marketing refers to:

• CPM (cost-per-mile, cost-per-impression):you receive payments based on the number of impressions. Advertisers using this method are charged after every 1000 clicks.
• CPC (cost-per-click):Companies receive payment based on the number of clicks on the ads displayed on the app.
• CPV (cost-per-view):Revenue is generated on the number of views on the videos displayed on the application.
• CPI (cost-per-install): Revenue is generated when another app is installed through the ad displayed on the particular application.

Sponsorship:

Sponsorship is another way to earn money through free mobile apps but it is not commonly used if compared to other methods. This model is mostly used for developed apps that already have loyal users. Sponsorship benefits can be used by those apps having a specific niche. Thus, sponsors within the same niche of an app can be approached to promote their products and services or mobile applications through your app to generate revenue.

Two primary sponsorship deals:

• Equally, divide revenue from the app.
• Set a monthly sponsorship fee.

Crowdfunding:

Another way to make money from free apps is the method of receiving funds through users around the world. Crowdfunding is relatively new in the app development industry. industry. Making most out of this method, startups and companies share their idea on different platforms like Kickstarter, Crowd Supply, Patreon, Fundable, Indiegogo, and Chuffed in search of donations to fund the development and promotion of the application. But Running a crowdfunding campaign takes a lot of time and it might fail in the end.

To sum up: 

Till now you must have a clear idea that free apps hold the power to earn a lot of money. Comparing to other methods to earn money through free mobile applications, In-app ads are the most used and most successful method. While in-app purchases and subscription models are among the other highest earning revenue models. While using these methods you must keep in mind with having pros these methods also have some cons. Before using the strategies to earn money you should question yourself. What value will it bring? What is the target audience? Are there any competitive products? The mobile app industry will evolve further, only time can reveal the further transformation of the industry.