If you are an ordinary user, most probably you have used a free app. But you also know that nothing is truly free. There must be a way that free apps make money. This blog post explores this question: “How do free apps make money” and some of the most effective app monetization models. We will talk about:
- Paid vs free apps
- App Monetization Strategies
- How Much Money Can Free Apps Make?
Paid vs free apps
Let’s look at the advantages and disadvantages of paid and free apps. This will help developers choose the right app monetization model and help users make informed decisions.
Paid apps allow users to access the app’s full features. Here is what makes paid apps attractive.
Ad-free experience: ads may be annoying and with paid apps users enjoy an uninterrupted experience.
No in-app purchases: unlike free apps, users don’t have to spend more to have access to all features.
High performance: Since the maintenance is more consistent with paid apps, they ensure high-quality performance, and customer support is more responsive.
However, paid apps have drawbacks both for developers and users.
Not all users want to spend money. They may have access to a lot of features without pay. This restricts its reach. Developers may also need to offer free trials or demos to attract users. Paid apps are also hard to sustain in the competitive market.
Having said that, free apps have also their drawbacks. The features offered are limited and users have to pay for additional services. Ads may also be annoying. So, often times it’s a hard choice and the decision depends on the value of the app. Even with all their drawbacks, free apps are a good way to attract new users and it’s always good to offer at least some free features.
App monetization strategies
Whether a free app or a paid app, all apps are after revenue. How do free apps make money? What are the most popular app monetization strategies? I will list the most popular ones but the mobile app landscape is changing every day. So, more innovative approaches may come up.
Freemium model
This is one of the most popular models. The app owners allow users to use basic features for free. However, to access premium features, they need to upgrade to a paid version. The trick here is to keep the balance. This means that the app owners need to provide enough free features to keep the interest of the users while providing them incentives to upgrade to a paid version.
In-app advertising
Developers are being more and more creative when using in-app advertising. The key here is not to interrupt user experience and risk losing users. Sure, app owners earn revenue from ad impressions and clicks but the users should not feel bombarded with ads. Alternatively, they can change to premium if they don’t want to see any ads.
In-app purchases (IAPs)
This model allows users to buy virtual goods, upgrades, or additional content when using the app. A good example is gaming apps. They offer players the chance to unlock new levels or power-ups for a fee. Like with the freemium model, it is essential to keep a fair balance to avoid alienating non-paying users.
Sponsorships and partnerships
This is a mutually beneficial strategy for brands or businesses and app owners. Brands gain exposure to a targeted audience, while app owners gain money from sponsors. The only must-to-do requirement is to align the app content with the sponsored content. Otherwise, you risk losing users since they don’t want to be annoyed with unrelated content.
Data monetization
When monetizing data, app owners collect and anonymize user data that they sell to research companies for market research and analysis purposes. It is essential that the users be aware that the data is being collected. It is equally essential that developers prioritize user privacy and company with relevant data protection regulations.
How much money can free apps make?
The myth that free apps make no money is already uncovered. Through various monetization strategies like in-app purchases, the freemium model, advertising, and sponsorships, app owners can generate revenue. So next time you download a free app, know it is not totally free.
When it comes to making money, there are a number of factors that play a key role, like providing a seamless user experience, offering valuable features, and considering the target audience’s needs and expectations.
Let’s take the example of ads. Most apps follow the cost-per-click (CPC) model. Whenever a user opens an ad, some money goes to the app owner’s pocket. On average it’s $0.10 per click for banner ads.
In general, statistics suggest that free apps can generate up to $5K on average per month, but this figure may vary. An important factor is where you stand in App Store charts. As an example, the famous “Flappy Birth” app earned on average $50K per day just because it topped the App Store charts.
The average revenue per app download varies significantly but the average is $0.60 to $1.20.
So, these figures should give you a sense of what to expect from your free apps. As I said free apps are not totally free as the name suggests. But before you just to app development, explore also “how much does it cost to build an app”.
Wrapping up
It's very tempting to opt for a free app. But the aim of the app owner is to make money. How do free apps make money? It’s up to the app developer to make the app attractive enough so that the users choose the paid version. Even if they don’t, the ways to make money out of free apps like ads, in-app purchases, data monetization, sponsorships, and partnerships are many. Since free apps can make up to $5K per month even with modest features, they are a lucrative business for many app owners.
Top comments (1)
Great article! It's fascinating to see how the landscape of free apps and their revenue models continue to evolve. As the mobile app market becomes more competitive, developers are exploring innovative ways to generate income, such as in-app ads, freemium models, and affiliate marketing. The insights provided in this post are invaluable for anyone interested in the app development industry.
If you're interested in exploring more about app development and the tech industry, check out this blog post: (agicent.com/blog/how-do-free-apps-...) It provides further insights into the latest app monetization techniques and trends that are shaping the industry in 2023.