Remember those ads that appear when you are watching videos on Youtube or banners that pop-up when visiting an online store? These are examples of how businesses monetize their websites — the same works for, not only paid but free mobile apps. Free apps are dominating the app market, with 96% in Google Play and 90.3% on App Store driving $71.3 billion in revenue. But those applications are free, so how do apps make money?
If you have or plan to develop a free mobile app and want to learn more about app monetization strategies, this article is right for you. Below, we explain how to make money from an app, and how to choose one that will work for your app.
Today, the average owner of a mobile device uses 7-8 applications daily. At the same time, only 5-10% of mobile app users are ready to buy a paid app, and around 98% of profit and downloads come from free mobile apps. The vast majority of mobile app users prefer to use free apps, and this number is continually rising. In the first half of 2019, the number of free app downloads in Google Play increased by 16,4% and raised $41,9 billion in revenue.
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Being more popular among users than paid apps, free apps have the potential to generate a significant profit. But how to choose the monetization model for your particular app? Let's look at tips and find out.
To select the most profitable and effective strategy for mobile app monetization, you need to consider:
Business goals. Every mobile app has its business goal, i.e., the way it solves a user's problem. App business goals impact the monetization model since users interact with them in different ways for different reasons. For instance, in-app purchases would not perform as well as a subscription for a mobile music app or, a subscription mobile is not the best option for educational apps with a lot of custom content. Thus, you can get the most profit if you apply the in-app purchases model, combined with ads.
Target audience. Knowing and understanding your target users, especially paying users, known as the money spending core, will give you a clear picture of the best monetization model. To achieve this, create a portrait of your app users, think about the functionality they might need, and try to forecast how much time they would spend in the app.
Competitors. As we said, each app solves a particular problem for the user. Thus, to select a suitable way to make money from free apps, take a closer look at competitors and other apps in your niche. There's a chance that the monetization strategy, used by other apps from your industry, will suit your business as well.
Wondering how free apps make money? Let's see what strategies you can apply to earn money from your free app.
CROWDFUNDING FOR YOUR APP DEVELOPMENT
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HOW MUCH DOES IT COST TO MAKE A MOBILE APP?
Depending on your business industry and app type, you can apply one monetization model or several at once. The list of app monetization models includes:
- Advertising and affiliate marketing
- In-app purchases
- Paid subscriptions
- Transaction revenue
Now, let's look at them in more detail.
Seven out of ten free apps generate income from running ads and promoting other businesses. If you want to apply this most common way of free app monetization, you can charge:
- Cost-per-mile (CPM) or cost per impression. You receive the payment for every 1,000 views of the ad
- Cost-per-click (CPC). You receive payment when the app users click on display ads
- Cost-per-view (CPV). You charge advertisers for the number of ad views or the number of interactions
- Cost-per-install (CPI). You are paid each time your app users install the app you promote
HOW TO MONETIZE AN APP
As you can see, there are different types of in-app ad fees as well as methods of showing ads to app users. There are five ways you can display ads to your app users:
- Banner Ads or Display Ads. The banner ad appears at the top or bottom of the mobile device screen so the app users can freely use your app. However, the engagement rate of such ads is quite low (0.1%).
- Video Ads. Such ads appear during natural pauses of app usage and last 10-30 seconds. This ad category also includes rewarded video ads when the app user is rewarded for watching a full ad video.
- Native Ads. Native ads, including sponsored content or videos, are integrated into the app layout and do not distract app users. Thus, users consider native ads less irritating compared to other types of ads.
- Interstitial Ads. This type of ad looks like full-screen pop-ups displayed when the user opens or closes the app. Thus, the user can either close the ad or click on it to learn more about the promotion.
This type of app monetization is similar to ads, but the difference is deeper integration to the app. Let us explain. Apart from just running ads, you can place a sponsor's logo or icon on the splash screen, footer, or integrate sponsored content with special offers right to your app. To make this type of monetization model more profitable, find sponsors with the same target audience. For instance, if you have a fitness app, you can find sponsors among fitness centers, personal trainers, or healthy diet websites.
Influencer marketing is a bit different way of sponsoring since you will deal, not with the business, but with an individual opinion leader, well known within your target audience. In this way, such an opinion leader will promote your app to fans and attract new users to your app. You can also ask an influencer to become an ambassador for your app, which is a prevalent strategy among famous brands.
With this app monetization model, you can sell different types of items, including:
- Consumable items that the user can use within the app, such as health points or digital currencies.
- Non-consumable items that could be used permanently, such as new games, maps, or as blocking.
In-app purchases increase user engagement rates and have users glued to the screen. This monetization method includes integrating native app store payment gateways since app stores charge 3% from each in-app purchase.
HOW TO MAKE A MOBILE APP
You can try making money on free apps using paid subscriptions. However, this model works for only 5% of apps with high user engagement, such as productivity or educational, music, or video streaming apps. This type of payment requires integrating third-party payment gateways such as Stripe or PayPal. Thus, app stores do not charge any commission. The app subscription works in the following way:
- After downloading a free app, the user receives a trial period, usually a month, to try your app.
- When the trial period ends, if the user continues using the app, they must buy a subscription.
There are two types of subscriptions:
- Non-renewing subscriptions when the user buys an app subscription for a particular period, as in one, three, or six months. After the end of the subscription period, the user must buy another subscription manually, so there will be no unexpected bills. This type of app monetization works well for seasonal apps such as gardening, sport, or hunting.
- Automatically renewing subscriptions means the app automatically charges user fees every month, six months, or once a year. To ensure that app users will buy a subscription after a trial period, users receive access to the app only after typing in their credit card details.
You can make money from a free app using the freemium model, which is similar to the subscription model. The main difference is that the app user can use the free app version with basic features without any time restrictions. But, to receive an advanced feature-rich app version, users must pay monthly or annual fees. Statistics show that only 0.5-2% of app users buy a premium app version. On the other hand, a free version of your app will reach a broad audience and make your app viral.
Crowdfunding is particularly popular among startups and has proven to be an effective way of raising money. In North America alone, crowdfunding generated over $17.2 billion during 2018. If you need to attract additional funding for app development or marketing needs, you can use one of more than 400 crowdfunding platforms where any platform user can donate money. The most popular crowdfunding platforms for raising funds to mobile app projects are:
To launch your crowdfunding campaign, you need to complete the following steps:
- Create fundraising goals for your campaign. Consider that your goals should be SMART- specific, measurable, attainable, relevant, and time-based.
- Craft your story to tell others what your app is about, how you decided to develop it, and what problem it solves. In this way, you will show your app's potential.
- Create a compelling video, since video content is the most engaging means of storytelling.
- Design a campaign page where you provide investors with a detailed description of your project.
- Use social media to drive potential investors to your campaign.
You can charge transaction fees for making money with free apps if your mobile app belongs to the marketplace segment where users transact money. This niche includes not only e-commerce apps but also:
- Flight and hotel booking apps
- Dog walking apps
- Meal ordering apps
And others where there are buyers and sellers. For charging transaction fees, you need to integrate a third-party payment gateway API to your app. This task requires experience in coding, so we recommend hiring mobile app developers.
Works best for
Things to consider
Any type of app, except for branded apps (e.g. e-commerce)
Maintain a balance between free and premium accounts
Free mobile apps have a more significant market share compared with paid apps. There are many strategies for free mobile app monetization, and each of them has a different user engagement rate and will generate a different amount of income. We recommend selecting the monetization model on the basis of your app niche, its purpose, and your target audience.
To make your free app even more profitable, you can combine different monetization strategies:
- You can run ads and offer users a paid ad-free app version, which is a win-win situation for you and your users.
- You can also combine in-app purchases and subscriptions, or advertising and subscriptions.
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How do free apps make money? Several monetization options are available for free mobile apps: In-app advertising, the possible formats including banners, interstitial, native, offerwall, video ads, and push notifications. Affiliate marketing.How do free ad free apps make money? ›
Purchase of the digital products in the app. Often apps make money by having a paid and a free version. Users have free access to some features but have to pay if they want all of them. Usually, basic features are free, and more advanced tools are open after payment.How can an app make money? ›
- Advertising. Well, Advertising can be defined as one of the finest to make money from the apps. ...
- Subscriptions. Subscriptions can be counted as the most useful and finest app monetization strategy. ...
- Selling Merchandise. ...
- In-App Purchases. ...
- Freemium Upsell. ...
- Transaction Fees.
App monetization is the means by which app developers and publishers generate sustainable revenue via the user base of an app. Simply put, it's how an app makes money.Why are free apps better than paid apps? ›
If your app is free, users won't lose anything by downloading it and users generally will have lower expectations. Hence, there is a greater chance of getting a good review for the quality of the app and a lesser chance of getting a bad review, simply because users didn't lose any money on the app.Do free apps make more money than paid? ›
By now, you should have noticed the obvious trend – that free mobile apps just happen to generate much more revenue than their premium counterparts. If you take a look at the top-earning charts across the Apple Play Store and Google Play Store, you'll notice that they're both dominated by free apps.How to make money for free? ›
- Sell your skills on Fiverr. ...
- Work as a virtual assistant. ...
- Become a JustAnswer expert. ...
- Write on Medium. ...
- Join a focus group. ...
- Review a mock trial. ...
- Become an online researcher. ...
- Take online surveys.
Free with Advertisements
Rather than monetizing through IAPs, some F2P games make their money from advertisements. Unlike freemium games, which rely on a small percentage of players to make money, games that monetize with ads earn a small amount of revenue from every player.
How much money do apps make per download? The average revenue per app download varies significantly but the average is $0.60 to $1.20.How can I create my own free app? ›
- Go to appypie.com/app-builder/appmaker.
- Click on “Create your app”
- Enter your desired business name and click on Next.
- Pick the category that your business fits best in.
- Choose the color scheme that you love.
- Select the device for your test app.
- Customize the look and feel of your app.
The way most 'free' services make money is not by selling advertising. What they sell is access to you, and information about you to advertisers, marketers and researchers, and others. Your information is the commodity that drives the internet economy.What is an example of monetization model? ›
A monetization model is a method by which you earn money from a product, service, creation, intellectual property, or even your personal brand. For example, if you were creating an app, you could choose to add in-app purchases, charge for downloads, include advertisements, or all of the above.What are monetization strategies? ›
A monetization strategy is a plan that aims to generate revenue via your platform, audience, content, or other sources. There are a lot of different monetization strategies. Some of the most common include selling access to the platform, selling ad space, in-app purchases, and more.What are the most common app monetization strategies? ›
- In-App Advertising. ...
- Free and Paid App Versions. ...
- Free App with in-app Purchases. ...
- Free App with Subscription (Freemium) ...
- Paid App. ...
- Partnership Model. ...
- Affiliate Marketing. ...
- Email Lists for App User Retention.
Free Apps generally receive more downloads than paid Apps. Leading on from this, free Apps make it easier to get tons of more users. This is particularly important for network-based apps, but beyond that, having lots of users for any App is certainly a good thing!What are the advantages of free app? ›
- No risk expectations. The user assumes no risk because the mobile apps are free to download. ...
- Minimum standards. Users' expectations for free apps are substantially lower than those for paid or premium apps. ...
- High visibility. ...
- More downloads.
What's the Difference Between Paid and Free Apps? First question: what is a paid app? With paid apps, customers pay upfront to download the app from the App Store or Google Play. Free apps are free to download and typically make money through advertising, in-app purchases, or paid subscriptions.Do people prefer free apps? ›
This is because consumers like free apps. Or, to state it more accurately, they really, really like free apps. In a 2011 Harris Interactive study, 95 percent of U.S. adults said that they prefer free apps to paid apps. Even more affluent consumers said that they prefer free apps.Are free apps really free? ›
Here's an explainer. Just because an app is free to download doesn't mean it will not cost you. Remember the small line of text next to the app listing that says “In-app purchases”. Apps in all categories on the App Store and Google Play have in-app purchases.What free game pays the most real money? ›
- Bubble Cash. Bubble Cash for Samsung Devices. ...
- Bingo Bling. Bingo Bling for iOS. ...
- Bingo Tour. Bingo Tour for Samsung Devices. ...
- Bingo Cash. Bingo Cash for Samsung Devices. ...
- Bingo Clash. Bingo Clash for iOS. ...
- Blackout Bingo. Blackout Bingo for Samsung Devices. ...
- PCH+ PCH+ for Android. ...
It seems to imply that there are games on the market that do not require any spending at all and thus bring no or little profit to their developers. However, if you ever try one of these games, you instantly realize that nothing can be further from the truth. Currently, over 78% game revenue falls on to f2p games.How can I make money online by watching videos for free? ›
- Swagbucks. Founded in 2004, Swagbucks is a well-known rewards site. ...
- Slicethepie. Slicethepie pays you for reviews. ...
- Netflix Tagger. ...
- InboxDollars. ...
- Nielsen Computer. ...
- Kashkick. ...
- SuccessBux. ...
- Provide Proofreading Services. ...
- Combine a Few Small Side Hustles. ...
- Become a Virtual Assistant. ...
- Get Paid to Play Games With Blackout Bingo. ...
- Write and Publish an eBook. ...
- 6. Make $100 a Day By Renting Out Your Car. ...
- Share Your Home with Airbnb Guests. ...
- Become a Freelance Writer.
- Take part in research (up to $150/hour) ...
- Get paid to take surveys. ...
- Get paid to watch videos online. ...
- Answer questions for money. ...
- Get paid to play games online. ...
- Download this app and make money by going online. ...
- 7. Make an extra $100 pet sitting. ...
- Become a shopper.
- – Bubble Cash.
- – Mistplay.
- – 8 Ball Strike.
- – Swagbucks.
- – Rewarded Play.
- – Solitaire Cube.
- – Dominoes Gold.
- – 21 Blitz.
If you don't have permission from the owner, downloading music, games, movies or TV shows for free that you would normally pay for can break the law – it is illegal downloading.How much does it cost to create an app? ›
The cost of developing an app can range from $40,000 to $300,000 and up. Many factors influence the price, depending on the complexity of the app development, at 40$ per hour, the average cost will be: Simple App Development Cost – $40,000 to $60,000. Average App Development Cost – $60,000 to $150,000.How do social media apps make money? ›
Social media companies primarily make money from advertising revenue. Some platforms, such as Twitter, are experimenting with other ways to make money, such as subscription services. However, most social media users expect their accounts to be free.How much does it cost to develop an app? ›
Simple app development price tag – $16,000 – $32,000. Medium complexity app development price tag – $32,000 – $48,000. Complex app development price tag – $72,000+ Cost of hiring a US app developer ~$105,000 / year.Do I get paid if someone visits my website? ›
Another easy way of monetizing your existing traffic is by running Google AdSense on your website. When a user clicks on those ads, you get paid a set fee. It's that simple. To add AdSense to your website, you'll need to create a Google AdSense account.
- Add an affiliate link. ...
- Accept sponsored posts. ...
- Use Google Adsense. ...
- Open an e-commerce store. ...
- Sell ad space. ...
- Offer online courses, digital products or memberships.
TRAFFIC NEEDED FOR A 6-FIGURE BUSINESS
For example, if you sell your products or services for $100, you will need to sell 1,000 units during the year to generate a 6-figure profit. Assuming your conversion rate is the average 2%, you need to generate 1,000/0.02 or 50,000 monthly visitors to your site.
There are many different types of monetization strategies, including: Selling ad placements, including display, native, affiliate, and text ads. Launching sponsored content, written or produced on behalf of a brand partner. Offering paid membership subscriptions, such as for a monthly or yearly fee.What are the three data monetization models? ›
Data monetization can be monetized in a few different ways. These include data as a service, analytics-enabled platform as a service, and insight as a service. To ensure businesses make the most of their data, it is important they first understand its role and value.How do you monetize digital content? ›
- Gathering data about your audience preferences and behaviors.
- Choosing the strategies that best match their user experience.
- Building unique audience segments for targeting.
- Automating monetization strategies with partner platforms.
Instagram Monetization Tools are a part of Meta's Facebook Monetization Tools that let creators, influencers, and certain select profiles earn money out of their content.Which monetization is best? ›
|TikTok||Level: Beginner Best for: Short, trendy content clips.|
|Vimeo OTT||Level: Intermediate Best for: All video creators.|
|Brightcove||Level: Beginner Best for: Integrating videos to a WordPress site.|
|VlogBox||Level: Beginner Best for: Connected TV content.|
Real-world data monetization examples include Google and Facebook. They use data to target advertising to specific demographics, while companies like Netflix and Amazon use data to make personalized customer recommendations.What are the four main ways to monetize in platform business? ›
Monetising a platform
These generally fall into four buckets: access to value creation, access to the market, access to tools and curation.
Free apps and paid apps
Many apps are free to download onto your phone or tablet, but some will cost money. Paid apps usually cost between $1 and $10, although some specialised apps cost more. In most cases, however, you can find a free app able to do the same things as a paid app.
FreePrints makes money through advertisements, shipping fees, and upselling customers with premium services. FreePrints, like many other online retailers, charges other companies to then be able to feature their advertisements to whoever is frequenting the website.How much does a 1,000 app download make? ›
$0.002 – this is average revenue per 1 daily app usage that was created using AppsGeyser app maker. For 1000 daily usages, this is $2 per day. Generally 1 app download is at least 2 usages. So 1000 downloads is $4.How much do people make from free apps? ›
How much money do apps make per download? The average revenue per app download varies significantly but the average is $0.60 to $1.20. How much money do dating apps make?What is the downside of free apps? ›
Users' expectations for free apps are substantially lower than those for paid or premium apps. There are minimum standards that users thought will become at risk by little apps because they do not give more expectations. The likelihood of negative ratings and reviews is lower among users of free apps.What percentage of apps make money? ›
According to Gartner, less than 0.01 percent of all consumer mobile apps will become financially successful throughout 2018—yet apps continue to be a common development goal and product focus for new and aspiring entrepreneurs. Why are the odds of success, at 1 in 10,000, so low?Does FreePrints own your photos? ›
The Bureau of Engraving and Printing produces United States currency notes, operates as the nation's central bank, and serves to ensure that adequate amounts of currency and coin are in circulation.Is like printing your own money? ›
' (Ron Finley) This statement is at the very heart of our Care for the Planet programme. It's also at the very heart of improving the lives of people in impoverished communities.Do you get paid if someone downloaded your app? ›
Neither Google Play nor Apple App Store pays for app downloads, even though there are millions of users who completed this action. Instead, stores take some share from an app's earnings (30% from in-app purchases). Thus, to receive money from a free app it is necessary to set up revenue streams.What is the highest paid apps? ›
|Candy Crush Saga||502|
- Swagbucks: This app allows you to earn money by completing surveys, watching videos, and shopping online. ...
- Ibotta: This app lets you earn cash back on your grocery purchases. ...
- Foap: If you have a knack for photography, you can sell your photos through the Foap app.