How Does Free App Make Money?

Published by Sumayya Siddique on December 05, 2019

How Does Free App Make Money?

There are 1000’s of apps uploaded to Appstore and Playstore every year. You can see there are paid and as well as free apps among them. Ever wondered how free apps make money? Or how you can become profitable by investing in building a free mobile app.

This post is can guide you understand the monetization techniques that are used in Free apps. Here we have covered how free apps have been making money and also look into the potential ways by which you can earn money by building a free app in 2020.

The free App Stats

As of now, 96% of apps uploaded to the Playstore are free. And there are studies which says by 2023 the revenue generated by the apps is going to be over 935 billion US Dollars. You might be thinking that the bulk of this revenue is from paid apps. Fortunately it is not. Free apps including Games, entertainment apps are one main revenue booster. A key factor for this stat is the app downloads. Without app downloads, the apps are never good for earning money. and when millennials are the fan of apps, the stats can never experience a drop.

And the key factor that directly affects the App revenue is the app downloads. With Millenials being the fans of mobile apps of various category including healthcare, entertainment, and games, The free apps will long reigns.

The stats are all good, next is how you can create a free app an earn money from it. With our experience in delivering B2B and B2C mobile apps, we have done immense research in mobile app monetization techniques. Read on to see top proven techniques that can help you monetize your mobile app in 2020.

Mobile App Monetization Techniques

With no surprise, Mobile advertising is a famous technique for how free apps make money. But that’s not just it, besides mobile advertising, there are few more app monetization techniques that can help you make money from free apps.

Here are some top app monetization techniques adapted by top money-making free apps.

1. Mobile Advertising

Let’s kick off from this model. Mobile Advertising is the first technique that you might have come across while researching ways to make money from your app. Well, This is a technique that anybody can implement in their mobile apps using a third party such as Google Ads.

The concept is displaying Ads of other businesses or commercials. Now you will be having concerns regarding, who’s Ad you will display, or from whom you will get paid and what kind of Ad that you should displays. Here is How.

The first step is integrating your app with mobile advertising companies such as Google Admob or facebook audience network. And yes there are alternatives for these, But Google Admob is mostly used by Android apps (and yes it’s free!).

Once you have integrated you can set priorities about the Ads displayed in your app including category, Ad display area and so on. Even though your app loses a little of its beauty, the performance of the app won’t be affected due to Ads.

Mobile Advertising

2. Freemium Services

This technology is like Wildfire. Entertainment giants including Youtube adapted the freemium models. This model can help you generate revenue from up to 2% of your app users.

What exactly are freemium Services?
Normally freemium apps are free to download and charges are included for some feature up-gradation which is optional. Not all users opt-in for this feature upgradation. Just like enjoying free services there are users who would appreciate enhanced services and it is from these users freemium app gains revenue besides other app monetization techniques. Before implementing premium services, There are certain points that you’ll need to lookup. One is the current service that you offer for free users. This has to be valuable so that you have a consistent user base and the enhanced features should be optional. For example, you can include features such as Ad-free experience, and HD downloads it is a video/audio streaming app.

Freemium Services

3. Subscription

Subscriptions are the next popular method that works best for earning money from apps. Apps with subscription plans work as the following. The users can download the free app and enjoy all the services for a certain period of time (mostly 1-3 months). And this is how the users get to learn and experience all the features offered by the app. Then after a time period, the user is either restricted to certain services or the whole service. And the services will be renewed once the user subscribes it by making payments.

The money made from subscription-based apps are more reliable and this model works best that is based on services and contents. Moreover, subscription models are least effective if you are having an eCommerce app or game apps.


4. In-App Purchases

When it comes to in-app purchases, you can see there are 2 types. Namely consumable and Non-consumable. Consumable in-app purchases are normally implemented in gaming apps, where the users spend their money in purchasing gaming currencies or virtual currencies. On the other hand, consumable In-app purchases include purchases related to Google Account or Apple account where the users have to make payment to get access to the full app and its features.

More than 50% of apps use In-app purchases to earn money from apps.

In-App Purchases

5. Sponsorship

Among the app monetization models, sponsorship is considered the most profitable model. Even though, finding a sponsor for your app is challenging as the investors should find your mobile application interesting.

The sponsorship model works in many ways, once is the revenue is divided among the sponsors and this works well if you have multiple funders. Or you can charge a recurring sponsorship fee.

On the other hand, once you have an impressive number of userbase, you can approach a sponsor and offer deals like promoting their business, by displaying banner, powered by badge or even changing the theme that matches your funder’s business.


Which Monetization Method should you adapt?

One main factor that is affected due to app monetization is the user experience. So definitely I don’t suggest implementing all these monetization techniques at once. As it can adversely affect the user experience. So what you can do here is consider your app purpose and adapt the best monetization method that suits your app. For Example, In-app Purchase is more suitable for gaming apps and the freemium models are best practices for video/audio streaming apps.

Also while considering the target audience, their interest and your existing market can give you more insights about choosing the right app monetization technique for your free app.

Got Issues in implementing your free app Idea with the right monetization model, Talk to free app experts and launch your free app in no time.

Talk to the app experts who have helped ideas turn into reality!