Do you agree that the word “Free” always has a hidden mystery behind it? Of course, it doesn’t cost you anything but knowingly or unknowingly you pay them in one way or another. And that’s how it should work as nobody would like to work on something and not get something out of it right?
Now that we’re on the “Free” topic, have you ever wondered how do free apps make money? Or Free online games? Or free-to-download softwares? Well, every business has a business plan, revenue stream, and certain criteria to take it towards success.
According to reports, there are millions of free apps on all the platforms out there. One might doubt the reason behind making free apps. No developers are free to invest their time in making something that is not fruitful for them and to answer this, let us see how do people make money off a free app.
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How Do Free Apps Make Money?
Free apps are the most downloaded mobile applications since forever and this pattern will continue to follow in the coming years as well. Let us see how this can be beneficial to the developers and profitable for the development companies.
There are a lot of ways to earn money from free apps and various monetization strategies like In-app Purchases, Subscription and majorly through Advertisements.
There are a lot many reasons why free apps are downloaded more than paid apps. Even low priced apps make less money and achieve less download count. In-app purchases will be one of your answers to how free apps make money. By this feature, you can acquire users through the free downloads and then offer them the in-app purchases which are optional. With this, you offer your clients on-going purchases which prove to be profitable over a longer period.
How do app developers make money through affiliate programs? Well, like affiliate marketing, the affiliate program on apps works in the same manner. The free app can promote other related apps which could bring them some serious income. It generally works on a CPA model i.e. Cost Per Action. To understand the affiliate business in detail, have a look at our “Affiliate Business Model” blog.
The easiest answer to how apps make money is Ads. This is the most common way to make money off free app. There are several types of publishing ads on an app.
- On the top or bottom of the page as a Banner Ad.
- A video ad that lasts for 20-30 seconds on obvious pauses while the user is using the app. If it is a gaming app, one can embed video ads for giving away rewards as well.
- Native ads are naturally integrated ads that are more popularized due to their less irritating nature and plays a major role in monetization among app providers.
- Interstitial ads are pop-up ads that show up in the app on a specific time like while closing the app or opening the app.
The free apps can also earn money through email marketing. One can receive the email ids of the app users through various ways without directly asking them for the input, for instance through a facebook login feature. But there should always be a turn off mail notifications to avoid spamming and make your app more credible.
Merchandise industry has reached its peak with the online buy-and-sell platforms. There are several platforms that provide all the facilities starting from designing tools to packing, production, and delivery. For instance, Teespring – a platform that allows you to design merch from t-shirts to mugs and takes care of the rest.
In a similar fashion, Amazon allows the app owners to create and sell their products within the app with their merch tool. The best example of this can be Angry Birds that earned a whopping amount of $1m from their plush toys standalone.
This way there are many such small and big invigorating ways that answer all your questions to how do free applications make money.
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Freemium Vs Paid Apps
Let us take a look at the question “How do free apps make money?” from a developer’s point of view. The major dilemma that most app developers face after the completion of their app development is whether to allow the app download for free or charge some amount for downloading the app. If it is their first project, they would, of course, question how to make money off a free app.
Let us first clear the distinction between the freemium and paid apps. The freemium apps are not really free, so now the question really lies in how do free apps make money. To answer this, you need to be well aware of the Freemium business model.
The freemium apps do not charge money for downloading the app but provide another paid version that has more features that are locked in the free version. This could be offered through in-app purchases, for instance, it is free to download YouTube but if you want to enjoy videos without ads, you need to pay for the YouTube Red.
One needs to pay for downloading the paid apps. It does not have any in-app purchases in most of the cases. But it could work on a subscription basis, the best example would be Netflix. This could probably answer all your questions about how do apps make money.
Key Points to Note:
- Most of the gaming applications follow the freemium model with in-app purchases for revenue generation.
- One can also enable partnerships with other related apps that target a similar audience base. This could help you to build a referral revenue stream on your free app.
- Subscription could be offered when you know you can attract users simply through your content and you’ll get paid.
There are n-number of answers to how do app developers make money, you just need to find out a proper revenue stream and decide between the Freemium and Paid model.
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User Experience Matters More Than Revenue
Now that you know all the options to how to make money off a free app, it is possible that in order to generate more and more revenue you ignore your customer retention. User experience is the most important factor of any app which should always be taken care of.
To make it more eye-catching and maintain the mobile app retention, you need to keep in mind your target audience and make the app more user-friendly. Avoid opting for too many ads as that could be annoying to the users. Interacting with your users can also be helpful to retain the users. And lastly, following the current trends, make your app social! Social integration can help you have exposure to millions of potential users.
Tips on How to Make Money With a Free App
- Contemplate your Business Goals. Before diving deep into the revenue generation, you must consider your business goals for App development.
- Focus on your Target Audience. This could help you choose the right revenue stream. Imagine if you’re making a gaming app, you could install in-app purchases.
- Research your Competitors. This could help you to know what you’re getting into and you could also learn from their failures.
- Never ignore your User’s Inconvenience. You need to keep your user’s convenience as the top priority. Avoid overusing the monetization strategies, make them as subtle as possible.
Now that you’ve read all about “How do free apps make money”, it’s also important to know how apps make money. There are a lot of monetization methods available to answer all the questions about how free apps make money that we discussed above. But, there are pros and cons of each and everything and one should not forget that.
If you have an idea for an app and need help strategizing and evaluating your counterparts, NCrypted Websites can help you with your mobile app development. We have a team of domain experts as well as technical experts that can help you to turn your idea into a mobile application!
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How well did you understand “How do free apps make money?” Let us know in the comments section below if we missed out something.
Thanks 🙂, this is the first introduction I’ve seen that I actually understand.
Good to know about app making