How Do Free Apps Make Money? Proven Monetization Strategies

 

Recall those ads that seem when you are watching videos on Youtube or banners that is pop up while visiting an online store? These are instances of how organizations adapt their sites — similar works for, paid as well as free mobile applications.

Free applications dominate the application market, with 96% in Google Play and 90.3% on App Store driving $71.3 billion in income. Be that as it may, those applications are free, so how do applications make money?

 

In spite of following a similar mobile application development process to make money in android/ios applications, not every business is enjoying the fortune of getting billions of dollars being moved to their accounts.

 

If you have or want to develop a free mobile application and need to get familiar with application adaptation strategies, this article is ideal for you.

Beneath, we clarify how to make money from an application, and how to pick one that will function for your application.

 

How Do Free Apps Make Money

 

How Much Money Do Free Apps Make?

 

Today, the business owner of a mobile device uses 7-8 applications every day. Simultaneously, just 5-10% of mobile application users are prepared to purchase a paid application, and around 98% of benefits and downloads come from free mobile applications.

Most mobile application users like to use free applications, and this number is consistently rising. In the primary portion of 2019, the number of free application downloads in Google Play expanded by 16,4% and brought $41,9 billion up in income.

 

How truly do free applications make money: The most popular monetization strategies

Depending upon your business industry and application type, you can apply one monetization model or several at once. The list of application monetization models includes:

 

  • Advertising and affiliate marketing
  • In-application purchase
  • Paid subscriptions
  • Freemium
  • Sponsorship
  • Crowdfunding

 

Presently, we should see them in more detail.

 

Advertising and affiliate advertising

Seven out of ten free applications create money from running advertisements and advancing different businesses. To apply this most well-known method of free application monetization, you can charge:

 

  • Cost-per-mile (CPM) or cost per impression. You get the payment for every 1,000 views on the promotion
  • Cost-per-click (CPC). You get paid when the application users click on display ads.
  • Cost-per-view (CPV). You charge sponsors for the number of promotion sees or the number of collaborations
  • Cost-per-introduce (CPI). You are paid each time your application users introduce the application you promote

 

As may be obvious, there are various sorts of in-application ad fees as well as techniques for showing advertisements to application users. There are five different ways you can show advertisements to your application clients:

 

  • Banners Ads or Display Ads. The banner ads appear at the top or lower part of the mobile device screen so the application user can openly use your application. However, the engagement rate of such advertisements is very low (0.1%).

 

  • Video Ads. Such ads appear during normal stops of application utilization and last 10-30 seconds. This ad category likewise includes rewarded video promotions when the application user is compensated for watching a full promotion video.

 

  • Native Ads. Native advertisements, including sponsored content or videos, are integrated into the application layout and don’t occupy application users. Subsequently, clients consider Native promotions less bothering contrasted with different kinds of advertisements.

   

  • Interstitial Ads. This sort of ad seems to be full-screen pop-ups shown when the user opens or closes the application. In this manner, the user can either close the advertisement or click on it to learn about the promotion.

 

Sponsorship and Influencer advertising

This kind of application monetization is like advertisements. However, the thing that matters is deeper integration into the application.

Let us explain. Aside from simply running ads, you can put a sponsor’s logo or icon on the splash screen, or footer, or integrate sponsored content with special offers right to your application.

Find sponsors with the same target audience to make this kind of monetization model more beneficial. For example, on the off chance that you have a fitness application, you can find sponsors among wellness centers, fitness coaches, or healthy diet websites.

 

Influencer marketing is a bit different approach to sponsoring since you will deal, not with the business, but rather with an individual opinion pioneer, notable inside your ideal target group.

Along these lines, such an opinion leader will promote your application to fans and draw in new customers to your application.

You can also ask an influencer to turn into an ambassador for your application, which is a prevalent system among renowned brands.

How Do Free Apps Make Money - In-App Purchases

 

In-App Purchases

With this application monetization model, you can sell various kinds of things, including:

 

  • Consumable things that the user can use inside the application, for example, health points or digital currencies.
  • Non-consumable things that could be used forever, like new games, maps, or as blocking.

 

In-application increases user engagement rates and has users on the screen. This monetization method includes integrating native application store payment gateways since application stores charge 3% from each in-application buy.

 

Subscriptions

You can try making money on free applications using paid subscriptions. Notwithstanding, this model works for just 5% of applications with high user commitment, like efficiency or instructions, music, or video streaming applications.

This type of payment requires integrating third-party payment gateways like Stripe or PayPal. Hence, application stores charge no commission. The application membership works in the following manner:

 

  • After downloading a free application, the user gets a time for testing, normally a month, to attempt your application.
  • At the point when the time for testing closes, in the event that the user keeps using the application, they should purchase a membership.

 

There are two sorts of subscriptions:

  • Non-renewing subscriptions when the client purchases an application membership for a specific period, as in one, three, or a half years. After the finish of the membership time frame, the customer should purchase another membership manually, so there will be no unexpected bills. This sort of application monetization functions well for occasional applications like cultivating, game, or hunting.

 

  • Automatically renewing subscriptions implies the application consequently charges customer feed every month, a half year, or one time per year.

How Do Free Apps Make Money - Freemium App

 

Freemium

You can make money from a free application using the freemium model, which is like the membership model.

The main distinction is that the application user can use the free application version with basic features with no time limitations. Yet, to get an advanced feature-rich application form, users should pay month-to-month or yearly charges.

 

Sponsorship

Sponsorship is yet another method of making an earning from a mobile app. This model is usually incorporated with those applications that already have regular users, and is suitable when connecting with brands from the same market niche.

When discussing in detail how apps make money via this monetization strategy, there are two deals to go with –

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

 

Crowdfunding

Crowdfunding, another funding model to consider this year, is also one of the beneficial ways of monetizing applications for free.

 

Here, you exchange your application idea or distribute an MVP version on platforms like KickStarter, CrowdFunder, Indiegogo, and Fundable to raise funds and do the needful in the field of marketing.

 

End Note

Free mobile applications have a more significant market share of the overall industry contrasted and paid applications. There are many techniques for free mobile app monetization, and every one of them has an alternate user engagement rate and will create an alternate measure of pay.

We suggest choosing the monetization model based on your application niche, its motivation, and your ideal target audience.

 

To make your free application much more profitable, you can combine different monetization methodologies:

 

You can run ads and offer users a paid advertisement-free application version, which is a mutually beneficial arrangement for yourself as well as your clients.

 

You can likewise combine in-application buys and memberships, or advertising and memberships.

If you find this article valuable, I’ll be happy if you’ll share it with your friends.

 

Maulik Pandya Author
Maulik Pandya
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Maulik Pandya is a lifelong Analyst, Founder of Evince Development & Eatance. He has good knowledge in Coding, Business Analysis, Providing Enterprise Solutions, Project Management, Sales Consultation, Marketing, Operation Management, Talent acquisition, Mentorship, and Leadership.

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