How Do Free Apps Make Money? — 12 App Monetization Strategies
A mobile app is created as an addition to an existing business or as a separate source of income. Most large firms have apps that complement their physical or digital product ecosystem to build added value. Even if no purchases are made in such applications, they generate revenue for the company indirectly. For example, through increasing loyalty and involvement. But let’s look at options for how app devs make money.
What is Mobile App Monetization?
Free application monetization — a way for the dev (owner) to get income during the use of the software product by the target audience. Some monetization methods allow you to start earning immediately after the publication of the product, while others will bring income only as a result of its growth in popularity.
How do Free Apps Make Money?
If you want to design an app and don’t know what to start with, you should start with a business plan. After that, you can hire devs to create an app for both iOS and Android.
But first, you need to think over the methods you can use to generate revenue. For example, a free app.
- The user base of the free apps is large
- Users will download a free app than a paid one
- With the right business strategy, you will make a profit
97% of apps in Google Play are free. Free apps attract more users to businesses and increase loyalty to the product. So customers are more willing to buy additional services and tolerate ads.
How Much Do Free Apps Earn?
On average, 25% of iOS app devs i and 16% of Android apps earn around $5k per month with free applications. We can conclude that only 20% of the apps are of high quality and produce revenue, while 80% aren’t so effective. This is implemented for free apps with ads.
An app monetization strategy helps you generate income. These approaches convert your app users’ interactions into revenue. However, your strategy must be flexible to fit your goals, product, market, and users as they change over time. Effective app monetization strategies convert the user without breaking the user experience.
Ads
Mobile advertising is currently the most common monetization method used in making money from Android apps. The income of the developer (owner) is formed from affiliate deductions for showing ads for various goods, services, and other software, clicks on ads, and completed purchases. In this case, you earn money by disabling ad impressions for users who have paid for it.
The owner of an application will be able to make money on ad impressions only if the product is sufficiently popular and mass-produced since users have already developed “banner blindness” and are willing to close advertising windows.
Don’t abuse advertising in niche apps used to solve immediate issues, for example, in navigators, and taxis. For such software products, it is better to provide other monetization ways.
Niches that advertisers prefer to cooperate with:
- games for mobile devices,
- online dating,
- app software for smartphones,
- food delivery,
- travels
Affiliate Marketing
Affiliate App Enrichment stands as an alternative strategy for app monetization, entailing the promotion of third-party offerings to unlock streams of revenue potential. Within this approach, app proprietors have the avenue to vend or endorse the services and products of affiliates, gauged against install count or clicks. Leveraging pop-up ads, one can amplify the visibility of your partner’s application or spotlight various merchandise.
Freemium
Freemium is a way to monetize apps that provide free access to basic features and charges for additional features or functionality. The approach allows you to gather a user base in a relatively short time. It’s important to strike a balance. If you initially provide access to the most requested functionality, then the likelihood of purchasing additional features is minimal. But, too limited access is unlikely to give new users the right impression of the application’s potential.
In-App Purchases
In-App Purchases are a monetization strategy based on the sale of virtual goods, and game currency inside apps. This business model is typical for the gaming industry. Also, app catalogs take a portion of the virtual goods sales revenue.
Physical Purchases
eCommerce and startups use free apps for selling their products or physical goods via developed apps on the app store. Free mobile apps can increase the profit from branded products. The approach helps to make convenient profits with the lowest risks.
Selling Merchandise
Another quite new method is to sell merchandise. Often eCommerce businesses build free apps to sell physical products. These goods can be sold directly to the app.
To encourage app owners to use this approach, Amazon has launched a service Merch by Amazon which allows app owners to upload artwork to the platform and promote their goods. To simplify the process, Amazon takes care of the payments and delivery of items.
Subscriptions
Subscribe is a method of monetization of applications, a subscription based on the gathering of a periodic subscription fee for access to regularly updated content of an app. User is willing to buy a subscription not only for the quality of the content but also for the comfort of using it. A subscription can provide a stable flow of funds to the product owner, which allows you to plan the development process.
Collecting and Selling Big Data
Everybody knows that apps gather a lot of users’ data. So those who do that can sell it to companies who display their ads to relevant audiences. Such info is also useful for the research of behavioral data.
Crowdfunding
Another way how do free apps make money is crowdfunding, which is quite new. So, startups and companies share their idea on platforms like Kickstarter, Patreon, Crowd Supply, Fundable, Indiegogo, and Chuffed for donations to fund the app development and promotion.
Non-gaming mobile apps are the most preferable in crowdfunding, According to Mobile Growth Stack.
Transaction Fees
The best way to make money on free apps is through transaction fees. It is especially convenient with apps that involve a platform, where transactions are regularly. If your mobile app gives the opportunity to third parties sell their products and purchases can be carried out online, you can take transaction fees. A small fee for every transaction within your app can make a lot of money.
Sponsorship
The sponsorship strategy in free apps that makes money includes finding a sponsor relevant to your niche and building a compensation structure. For monetary compensation, an app can advertise its products, and the sponsor’s brand, or send users to the site of the sponsor.
For example, if you have built an app for calorie intake, you should look for nutrition brands for a deal. It is not so easy to enter into a contract for a sponsorship deal, that’s why most apps prefer other monetization strategies.
Influencer Marketing
Influencer marketing is also a way of sponsoring, but you will deal, with an individual opinion leader, who is well-known within your audience. With this strategy, an opinion leader will talk about your application and attract new relevant users. The influencer can become an ambassador for your product, which is a good strategy among brands.
How to Pick the Best App Monetization Strategy
The foundational approach to generating revenue typically takes shape during the initial design phase of a mobile app. Even if the aspiration for income isn’t immediate upon product launch, specific functionalities may be necessary down the line. Hence, it’s crucial to anticipate and accommodate their inclusion or exclusion without cumbersome limitations, ensuring swift implementation.
Variety is the spice of income streams, and there’s no need to confine yourself to a solitary source. Fusion of diverse monetization methods can be orchestrated — such as presenting advertisements within the basic free access version and offering a paid upgrade that eliminates ad displays. As an intermediary app gains traction among end users, a prospect emerges to institute compensation for suppliers, securing prime positions atop the catalog listings.
When contemplating how to extract earnings from your app, delve into the attributes of your target demographic. Gauge the genuine financial capacity of the majority of users engaging with your product. How probable is it that they’d be inclined to pay for added features or elevated app experiences, as opposed to settling for unfettered access?
Prudence is key in advertiser selection. Advertisements should, at minimum, align with the application’s theme, and ideally, resonate with the interests of your intended audience. Ill-suited and overly intrusive adverts can diminish the user base of your product.
Tips for Getting More Users and How to Make Money from Free Apps
1. Review your in-app promotions and user acquisition goals. You may already be seeing a decrease in conversion rates in IAPs (in-app purchases) and in-app promotions. If this happens, you probably need to rethink your in-game price targets and start actively discounting.
You can also change the content of promotions. You can A/B test in-game total discounts and promotions (in-game bundles), keywords you use in special offers, or tweak other aspects of in-app bundles to make the offer more attractive to users.
2. Refresh your App Store Pages to Increase Organic Downloads
This month, some mobile games and apps are updating their product pages on the App Store.
The app description in the App Store is the easiest thing to change. Add information about updated in-app events and promotions, or reach out to new users. Your main competitors have probably already updated their product descriptions. Check out their app pages and think about how you could improve your app description.
3. Update the app to increase organic growth
When you decide to upgrade your mobile app and launch a new version with new features, you will be attracting new organic users at the same time.
4. Proudly promote your app on social media
People relate to social networks in different ways. Some of them inspire and motivate others to action, while others are exhausted. But there is no difference. If you’re an app developer, being active on social media is your #1 rule.
5. Start the domino effect
Get at least one well-known publication to review your application. Then use the post to get more free reviews.
6. Use mutual advertising to promote your app
If you are starting from scratch and on a minimal budget, be creative and reach out to everyone you know. Find out if you can work on barter — you advertise the partner’s application, and they promote yours accordingly.
7. Use Soft Launch to Promote
65% of users forget about the app on the second day after download, and 95% within the first week. Demo users are three times more likely to purchase the paid version.
Use the fact: let the user try all the premium features of the application before buying. To do this, generate a promo code with a short expiration date or limit the demo version in time.
Bottom Line
Devs build apps with various goals such as helping people or creating a positive user experience, but generating revenue is often the primary goal. However, some owners are struggling to find effective ways to make money with their apps. We’ve looked through app monetization strategies that definitely will generate income.
Start working with a reliable app development company, and take the app structure and market research into account before choosing the monetization method.
Originally published at https://stfalcon.com.
