How Do Free Apps Make Money | Different Monetization Strategy

Difference Between Free Apps And Paid Apps

You will be amazed to know that there are more free apps as compared to paid apps. As per the data provided by play store statistics, there are 2, 589, 804 free apps and 1, 25, 894 paid apps.

There are a maximum number of free apps and their user base is also higher than paid apps.

The number of free apps download is comparatively higher than free apps downloads.

We hope these stats must have helped you to understand the difference between free apps and paid apps. And this also proves that if you develop an app and provide free services to your users, that can get you a better user base and great revenues.

The biggest reason why people go more and more for mobile app development is that it provides good revenue to them. This might look expensive in the beginning but results in huge returns. One just needs to know the right monetization strategy and should know the right approach for “how do free apps make money.”

Monetization Strategies For Free Mobile App

Now, you have seen the value of free apps and how much users are loving to use such apps. It is time to decide the right monetization strategy for your free apps.

There are several ways which you can use for earning money from free apps. We have discussed all the possible strategies below, hopefully, they will be helpful for you.

• Advertising

Whenever it comes to making money from free mobile apps, and promoting apps for free, advertisement is considered one of the easiest and best ways. We all are aware of the word “Advertisement”, we have seen this on many apps. Where other commercials or products are displayed and through the ads the app owner gets paid. 

App owners can run ads related to the app or ads provided by third parties. This is the smartest way to earn money from free apps. 

Whenever you come across this question “how do free apps make money”? The simplest and best answer is through Advertising. This is the best monetization strategy to promote an app for free. 

If your app has a good user base then definitely you will get many clients who would love to run their ad on your website.

App owners get paid whenever the ad is displayed. 

Always remember one thing, do not overdo it. The advertisement should be done in such a way that it should not cover the content required by the user. A maximum number of ads can sometimes irritate the user. 

There are different types of ads, that are given below:

Interstitial ads

Banner ads

In-ap video apps

Native ads

Rewarded videos

• Selling Merchandise

App owners can sell physical things to the users through their free apps. It is similar to selling merchandise to increase the popularity of the app and also to generate revenues.

Many e-commerce companies sell their products like toys, shoes, t-shirt, etc through the apps. 

To attract the attention of app publishers, Amazon also introduced Merch By Amazon. So that people can create their product, upload it on the platform and promote their products for a better user base. 

• In-App Purchase and Freemium

In-app purchase is another smart way to earn money from free apps. This is used to provide users with advanced and upgraded services of the app. The users can get access to special features and contents such as level up-gradation, power-ups, etc. 

In simple words, the in-app purchase model enables app users to sell different types of virtual items directly through the apps. It can be best understood through examples like the clash of clans, angry birds, Pokemon Go. These apps have a huge user base because of this in-app purchase model. Users get access to different gaming levels and other important updates through this monetization strategy. 

It is highly used by gaming apps. Where the user does not pay the actual amount but still buys virtual things through gems, coins, etc. This is an amazing monetization model one can consider while making money from free mobile apps.

• Subscription

This monetization strategy is trending these days. Many apps like Netflix, cab booking apps, e-Learning apps like Coursera or Byju’s even many other apps use this strategy to make money. 

In the beginning, you might get the app services for free but later users need to pay for premium services. This is also considered the best way to earn money from free apps.

Initially, when your app does not have a very huge user base, you can keep the app free for users but once you get the popularity you can start charging your users for premium services. This strategy is adopted by many popular apps nowadays, you can also think of this and know how do free apps make money. 

• Sponsorship

Again one of the great monetization strategies for free apps. This type of model is best for those apps that already have a huge user base and provide services to particular market niches. 

This enables app owners to connect with the sponsors belonging to that industry. 

Sponsors pay a good amount of money to the app owners for sponsoring their services. It is a very great and easy way to earn money from free apps. 

• Referral Marketing

This model involves promoting the products and services of third parties and in return to optimize the revenue opportunities. 

App publishers can promote their services and products depending upon these factors: the number of clicks or installs. 

Pop-up ads are the right example for this model. One can use pop-up ads to promote the ads of the third party. There are even other different types of referral marketing models that you can use are:

Cost Per Action or Cost Per Acquisition 

Cost per click

Cost per view

Cost per install

• Collecting And Selling Data

We all know a lot of data is collected by using the apps. One can know about a user’s behavior or the usage of other apps. All such data is highly required by researchers in different fields.

That means free apps can collect the data of the user through any survey or questionnaire and later sell it to the researchers in exchange for money. Make sure there has to be only basic data, leak of any confidential data can be dangerous. This can’t be used for fintech apps or healthcare apps.

• Freemium Upsell

If we are talking about how do free apps make money, then this freemium upsell model has to be there in this list. 

Many popular mobile apps use this monetization strategy for their app. e-Learning apps, OTT apps, and other apps use this model.

The app owner allows you to download the app for free but users need to pay when it comes to special features and premium services. 

This allowed users to download the app for free in the beginning and later if the user liked the content of the app, then they can purchase the pack to get access to that content. 

• Email Marketing

Email marketing has competed for a very long time. As email is an important part of every mobile app development company and app marketing industry for promoting mobile apps. 

Companies collect the email addresses of the people and then send corresponding marketing material. 

There are different ways from where you can get the email address of the users:

1. Ask users for their email addresses and give them rewards( coins, bonus) in return.
2. Get data from a third party.
3. Encourage users to sign in through their Facebook or other social media accounts.

• Pay Per Download

This monetization strategy is not so popular but still worth mentioning because it can benefit you if your app is very popular. This allows users to download the app and at the time of download users need to pay for the services. 

It will only work for those apps which are already popular or if the app is very unique. You can try this but the chances of success are less as compared to other marketing tools. 

• Crowdfunding

Crowdfunding is the practice where a large number of people provide funds for a project. There are different types of crowdfunding like:

Donation

Debt

Rewards

Equity

Some examples of crowdfunding sites are:

Kickstarter

GoFundMe

LendingClub

Indiegogo

Common App Monetization Mistakes To Avoid

You can make mistakes while deciding the right monetization strategy for your free app.

When it comes to how do free apps make money there are several options available. You just need to decide the right one for your needs. 

As a beginner, many app owners commit a few mistakes which they can avoid with these simple solutions. You just need to consider the following points:

Not Analyzing The Target Audience Correctly 

Instead of taking big steps, in the beginning, it is better to take small yet effective steps that make a difference. 

You need to understand the need of the user. Your app doesn’t need to be popular in all the places equally. Some users might like your app too much, while some might show less interest. 

To handle this issue you need to understand the market demand and niche. Therefore to decide the monetization strategy for a free app, you need to know your target audience and market very well.

Selecting The Wrong Model

When it comes to knowing how do free apps make money, it makes app owners a little curious. And in all the curiosity and tension, some app owners overlook choosing the right pricing model for their app.

For example, if app owners are offering services for $5 to the app users. This amount seems reasonable for the US audience, but not for the users from other countries. 

So make sure you do the right analysis of your audience and choose the monetization strategy accordingly.

No Strategy For Common Users

Your strategy must be acceptable to all the users from all geographical areas. If you know how do free apps make money then you should also know which monetization model will be the best for your app.

For example: if you are offering in-app purchases for $1 or $5 in a gaming app to the users. This amount might be reasonable to the US users but the users from other developing countries might not accept this.  As per them, this might be costly. And your monetization strategy can completely flop. 

You can also get in touch with the app development experts for advanced technical issues.

Conclusion

Above we have mentioned all the possible monetization models that can help you to earn money from your free apps. Usually, app owners worry about how do free apps make money? And therefore they get a little conscious when it comes to mobile app development.

Most people want to develop an app for their business but are little conscious about how to make money out of it. 

We believe now it will be really easy for you to understand how you can make money from your website or app. Still, if you have any doubts regarding app development and how to make money from free apps. You can contact the best mobile app development company. Who knows the current app development market and needs of the market.