How Do Free Apps Make Money: Top 8 Proven Tactics & Cases

Have you ever wondered how exempt apps make money ?
Most of the time, you download an app from the shop and just start using it. naturally, developers who offer apps for free expect wage in some other form. If you are thinking of developing an app and are uncertain how a free app brings profit, the play along article provides clearing .
In the article, we check out how celebrated complimentary products made money off their apps, offer advice on how to choose an app monetization scheme, and check out which software development services and tools to integrate .
In a nutshell, free applications make money from one of the following 8 most well-known monetization strategies :

  1. Advertising (via banner, video, native ad, interstitial ad, incentivized ad)
  2. Referral Marketing (Amazon)
  3. In-App Purchase & Freemium Model (PokemonGO)
  4. Subscription Model (Wall Street Journal)
  5. Sponsorship (Weather Channel)
  6. Crowdfunding(Hello Earth)
  7. Email Marketing (NY Times)
  8. App Merchandise & E-commerce (Angry Birds)

Freemium Apps vs Paid Apps Market

Our smartphones are used for basically everything. With the help oneself of a particular app, we can communicate across hanker distances, holy order pizza, or find a route in an strange city. The measure of apps with rich functionality is growing annually, resulting in coarse app market competition among developers .
As of 2018, there are 3.8 million apps on Google Play and 2 million in the App Store. The commercialize is huge and cosmopolitan app gross is expected to increase to about $ 190 billion by 2020. According to Statista, the circus tent gross apps are all barren of charge .
Graph: Number of Free and Paid Mobile App Downloads Worldwide 2011-2017
graph : Number of Free and Paid Mobile App Downloads Worldwide 2011-2017

These days, users have become finical and normally have only 4-9 daily active agent applications .
On average, 5 to 10 % of users are uncoerced to pay for an application, but only one with high choice and operation, and particular functionality. therefore, the majority of downloads and profits ( 98 % ) occur from the absolve app section.
additionally, Gartner Research Group states that 24 % of users would interact more via in-app purchases rather than paid apps. Once an app proves its rate, the users are prone to conducting more in-app transactions, purchases, and to unlock extended functionality.
The chart illustrates the gross of each app monetization model in 2017 where :

  • Game apps in general generate more revenue (top 8 out of 10 grossing apps in Google Play Store are games: Pokemon GO, Candy Crush Saga, Clash of Clans, etc.)
  • Advertising (36% of non-gaming ad revenue) and M-commerce (21%) channels generated the most profit in 2017

Graph: Distribution of Worldwide Mobile App Revenues in 2017
graph : distribution of Worldwide Mobile App Revenues in 2017

To sum it up, developing a dislodge app for your business is a wise action to pursue. The future decision is to choose your exempt app monetization scheme correctly .

App Monetization Strategies

Neither the Google Play nor Apple App Store pays for app downloads, even there are millions of users who completed this action. rather, stores take some share from an app ’ south earnings ( 30 % from in-app purchases ) .
therefore, in order to receive money from a barren app it is necessary to set up gross streams. Based on the statistical data, the most effective monetization method acting in 2017 was the use of reward television ads. This is a win-win scheme for both the app supplier and customer, as once the drug user watches an add, they receive points and app bonuses .
Graph: Most Effective Monetization Methods for Mobile Apps, 2017
graph : Most effective Monetization Methods for Mobile Apps, 2017

Now, let’s take a closer look at how to make money from mobile apps:

1. Advertising

These days, mobile ads are the easiest and most common manner to receive money from a release app. Currently, 7 out of 10 apps has embedded commercials that generate payments per its display ( per impression ), per pawl, or per install .
There are 5 different ad variants to utilize in a mobile app:
Types of Apps Advertisement
Types of Apps Advertisement

  • Banner Ad

These ads are placed at the top or buttocks of the mobile device blind. In general, these are less intrusive, as users are inactive able to use the mobile app normally. On the other hand, banners have lower engagement rates ( CTR- click-through rate ) and these ads are dependent on brand recognition .
case : flush with some of the downsides of banners, Flappy Bird was successful with this tactic and received on average of $ 50k per day while being in the top app charts .

  • Video Ad

A television ad, lasting 10-30 seconds, is placed within the app where it plays mechanically when there are natural pauses. A subset of television total class is a reward television ad, where consumers receive some perks ( app currency, extra points, etc. ) after watching the video ad until the end .
exemplar : A great example of a television ad is a VSCO photo-editing app ad. It was presented on Instagram as a 15-second video using bright colors to grab attention from the identical starting signal .

  • Native Ad

These ads are intended to be naturally integrated into an app. These add elements can be sponsored contentedness or videos used to promote a finical brand or product. As a result of their integration, these apps are acknowledged as irritating and tiresome the least, so it gets more popularize as a monetization model among app providers .
model : In association with the New York Times ’ T Brand Studio, Airbnb created a campaign for Ellis Island. It played a great function in history and was a way for immigrants to enter a happier life in America. This completely coincides with Airbnb ’ s value of giving their customers a great welcome anywhere they travel .

  • Interstitial Ad

These ads are full-screen pop-up book shown in a specific moment within an app. These are typically displayed when the app is opened or closed. The exploiter has 2 taps to choose – either close the ad or check out the promote message .
case : Emirates Airlines efficaciously incorporated an interstitial ad resulting in over 5,000 clicks to the web site and 170,000 complete video views. Emirates promoted their modern address, New York – Dubai, by showcasing their full-screen ad to travellers in the NY airport once connected to WiFi .

  • Incentivized Ad

Everyone likes rewards and hates ad. With the help of a tool fix, it is possible to provide users with rewards for a specific in-app action or date like : fill out a poll, capacity sharing, etc. These app bonuses can increase app loyalty and exploiter date. The profit from this tactic is gained via in-app currencies and sponsorships .
What is important is that these rewards should be positioned wisely, as a part of the app ’ s engagement .
exercise : The RunKeeper app, used for personal natural process traverse, was among beginning to use incentivized ads. It offers the unlock of extra app functionality and acknowledge of rewards without disturbing use of the app .
Disadvantage of the advertising model
App ad is the most democratic app tax income current. however, it is no wonder that this has begun to annoy and irritate customers. This prolific function of ads has become ineffective, as less than 20 % of users click on them. arsenic well, this monetization strategy can be effective entirely with apps that have a big draw of users, not for a startup project .

2. Referral Marketing

Network Illustration
Network Illustration

referral market is closely connected with the former model of in-app ad to monetize your app. There is even a separate steering in marketing – affiliate market. Informational content about an affiliate company is placed in the app and, based on clicks and installs, you receive rewards. These rewards are based on a cost-per-action ( CPA ) model or tax income share .
The referral market model can be used in the comply ways :

  • promote another application
  • in-app advertisement
  • advertise products or services via in-app-store

There are besides many affiliate network companies ( AdMob, Flurry ) that specialize in finding a desirable consort for your application. There are different software programs and tools that can help to integrate this model .
The like as with the advertise exemplar, campaigns used in consort market admit :

  • CPM (cost-per-mille, cost-per-impression)- you receive payments based on the number of impressions, the advertiser is usually charged every 1,000th time (mille, in Latin, is one thousand)
  • CPC (cost-per-click)- you receive payment based on the number of clicks on a displayed app
  • CPV (cost-per-view)- you receive payment based on the number of video views or other ad interaction
  • CPI (cost-per-install)- you receive payment each time the promoted app is installed via its ad in your product

example : Amazon is a great example to show how consort selling works. Select a product you would like to advertise in your app and receive advertise fees based on each redirect buy .
absolve apps are besides making money without ads. Check out 6 more monetization tactics, namely :

  • In-app purchase & freemium model
  • Sponsorship model
  • Subscription model
  • Crowdfunding model
  • Email marketing
  • App merchandise & e-commerce

3. In-App Purchase & Freemium Model

Freemium App Monetization Model Illustration
Freemium App Monetization Model Illustration

In-app buying is a very popular strategy used in the freemium app model. It is possible to sell virtual or physical items, offer premium functionality or bonuses, forget ads, or open new app content. All these transactions are managed by the app memory and the owner gets a commission from every trade .
In-app purchase strategy has three categories :

  • Consumable: these items are used once, mostly in mobile games. Example: digital currencies, health points
  • Non-consumable: these are features used permanently. Example: ad blocking, extension in-app functionality
  • Subscription (described in more detail below)- this allows one to unlock additional content and features for a particular amount of time. Example: monthly or annual service subscription

model : Some apps have received huge amounts of gross by implementing this model. The Clash of Clans game earned $ 1m per sidereal day on purchases, and Pokemon Go users bought in-app purchases for $ 1.5m daily. Within 2017, Pokemon Go ’ s tax income crossed over $ 1 billion making it the top gross game in history .
Another exemplar of a freemium app model is MX Player, a well-known video recording musician on Google Play with ads for the free version. MX Player Pro is offered as the ad-free version for a small load .
Disadvantage of the in-app purchase model
The mannequin is merely plausible and lucrative for top apps in the segment that have many users. This system is harder to implement due to the complex payment system development and integrations. As well, a downside to this model is the high deputation fee ( 30 % ) taken by app stores. In a freemium app model there are two app variants – inner light and full, and a exploiter may only use the loose interpretation.

4. Subscription Model

As mentioned, the subscription model sets up tax income streams from the hebdomadally, monthly, or annual fees for a specific service provided by the complimentary app. This model is largely used in cloud services, audio and video content providers ( Spotify, Google Music ), and digital news portals. Consumers welcome access to the content according to their chosen subscription plan .
exercise : The most dominant newspaper apps, Wall Street Journal and New York Times, gained 1 million customers with a subscription model .
Disadvantage of the subscription model
It is necessary to have resources and detailed content strategies to provide fresh, up-to-date materials to keep up with competitors and guarantee a high charge of subscriber services.

5. Sponsorship Model

Getting a sponsorship is a profitable model to follow to make money from a rid app. This model is normally available for build up apps that already have regular users. The most benefits can be gained by applications with a specific market recess. thus, you may contact sponsors in the same diligence to match their stigmatize with ads, information in the app, or adapt the app design to the mark .
Two primary sponsorship deals :

  • Equally divide revenue from the app
  • Set a monthly sponsorship fee

model : A commodity sponsorship monetization exercise is seen through the Weather Channel app. The app placed an animize background for Home Depot, a retailer in the sphere of construction and family goods .
Disadvantage of the sponsorship model
This exemplary works well in case you have a specific niche and unique app mind. And, even with the right app and niche, it is however challenging to find a proper presenter.

6. Crowdfunding Model

App Idea Monetized with Crowdfunding
App Idea Monetized with Crowdfunding

This one is reasonably a new way to monetize an app for release. Custom software developers may use the following platforms to raise funds for app development and marketing needs : Kickstarter, Indiegogo, CrowdFunder, and AppsFunder .
case : In general, apps of another category than games receive fund. In 2017, In any scenario, in order to receive net income from your free app,138 app ideas were crowdfunded and raised $ 10k- $ 100k on Kickstarter. As an exception, the Hello Earth game with a democratic cat fictional character, generated $ 148k .
Disadvantage of the crowdfunding model
These are thousands of applicants and can become very unmanageable to be crowdfunded. It is necessity to show the respect of the product and that theme that is deserving taking a risk and investing.

7. Email Marketing

Email selling has constantly been a profitable strategy in any diligence, which is a good drill for restaurant app development .
This is an old technique of collecting exploiter data, largely emails, and sending corresponding selling materials to heat up the subscribers ’ matter to in a product or a overhaul. It is helpful when your drug user retention indices dangle or when used to notify about new features, rewards, app newsworthiness, etc .
It is possible to collect e-mail addresses in respective ways :

  • ask for the email with a pop-up message by offering something in return (app coins, bonus)
  • via Facebook SDK for a user to sign up where it collects emails
  • through third-party tools for easy email collection

In any situation, do not forget to inform, ask license, and state the aim of using personal drug user data. This is a concern particularly if your target hearing is in Europe, according to the GDPR ( General Data Protection Policy ) .
exercise : The New York Times, The New Yorker, ad The Washington Post generate web traffic and hook their subscribers with pieces of tasteful content in their electronic mail distribution. The respite of the data is received once paid .
Disadvantage of the email marketing model
Email selling, due to its broad use, has become less effective today. The biggest advantage is for the top branded apps, while for a inauguration it is less potent.

8. App Merchandise & E-commerce

The e-commerce industry is blooming and more and more consumers are joining the on-line buying community. Most physical items are sold with the aid of free mobile apps .
Amazon offers the opportunity to earn a net income from this app model with the aid of its Merch instrument, an easy course of study allowing app owners to create and sell their stigmatize items within their apps. All the logistics are managed by Amazon : product, deal, payment, and manner of speaking, while you get a plowshare of the net income .
Example : Among the first successful free app merchants was the angry Birds game. The game earned a tax income of $ 1m each month from lavish bird toys alone, not counting the T-shirts, stickers, and backpacks .
Disadvantage of the app merchandise model
This option is only available for the acme apps with a large audience. Another alternate would be to develop a rid app for your regular business and sell any other items with its help.

Our team has a wide expertness in building e-commerce mobile apps. An exercise is GoPuff, an on-line ordering & delivery service in the US .

How Much Money Do Free Apps Make?

Pie Chart: Revenue from Mobile App Startup
Pie Chart : tax income from Mobile App Startup

According to the recent statistics, approximately clear 25 % of io developers and 16 % of Android developers make up $ 5k on average each calendar month with their free apps. This can serve as a benchmark in the diligence. This besides means that only 20 % of the applications on the market bring a profit based on their high quality and know how to make a profit from their spare apps wisely. The 75-80 % of apps are not needed .
The majority of the top barren apps use in-app buy and/or advertise monetization models. The sum of money each app makes per ad depends on its gain scheme. For exemplar, in advertise, the general gross per stamp from :

  • banner ad is the lowest, $0.10
  • interstitial ad is moderate, $1-3
  • video ad is the highest, $5-10

Most app advertisements use the CPC model where optimum RPM ( gross per mile ) is 1.5 % -2 % .
Ad Revenue= Impressions ( Clicks ) x RPM
For exercise, if you have 50,000 banner ads displayed per day, your average number of clicks is 750, while the tax income comes out to $ 75 ( 750 x $ 0.10 ) .
AN of clicks= ad number x ( 1.5/100 )
furthermore, unblock apps besides make money by hiding ads from those who pay to improve their exploiter experience. other microtransactions of 1 to 5 dollars are aligned to coins – accessories that increase the exploiter ’ mho level and make them more competitive. By adding all of these and reproduce by the numeral of users, it is clear now that game owners receive great gross .
In dating apps, such as Tinder, users can purchase premium functionality. The unlock of paid functionality ( unlimited like possibility, dateless right-swiping ) is the most common monetization scheme for dating apps. other variants include : in-app ad, subscription to the premium design, and unlike packages of seasonal worker bonuses, stickers, icons, etc .
In terms of app categories, absolve app games make far more than any other app segment. According to App Annie, the top gross app, in the US as of August 2018 are spare games like Fortnite and Pokemon Go on io and Android platforms, respectively. The leading Android apps cosmopolitan are Pokemon Go and Candy Crush, which have earned $ 71.03m and $ 41.6m in 2018, respectively .
Graph: Top Grossing iPhone Mobile Gaming Apps in the USA, 2018
graph : circus tent Grossing iPhone Mobile Gaming Apps in the USA, 2018

According to the App Annie, the Top Grossing Apps on io and Android in the USA as of October, 2018 are :
Top Grossing Apps on iOS and Android in the USA, 2018
acme Grossing Apps on io and Android in the USA, 2018

This does not mean you should just jump into a game class, as there are distinctive apps in each airfield. For example, the top gain non-game app, Netflix, generated about $ 560m in 2017, which is more than double its income from the former year .
According to SensorTower, the top non-game apps with the highest sales tax income in the USA in Q1 of 2017 ( iOS/Android combined ) were :

  • Netflix
  • Pandora
  • Tinder
  • Spotify
  • YouTube
  • Hulu
  • Match
  • Google Drive

Spotify, Netflix, HBO, and Hulu are all services with a subscription. kindling and Pandora radio consumption freemium models and offer the ability to unlock premium functionality .

Do you want to monetize your existing app with growing popularity?

If you already have a make digital business or a complimentary app interpretation, you are welcome to ledger an hour consultation with our Business Analyst for free. experience advice on what monetization model to choose for your product and how to increase your occupation tax income .
Book your consultation now

How to Make Money with Mobile Apps

 Make Money with Mobile Apps
Make money with Mobile Apps

At this stage, we have selected the best tools and tips to make your spare app profitable .
There is a little opening between how app developers and app consumers see the value and gross generation. Hence, app developers should examine how to earn money from apps from different angles. Try to examine the possibilities of a shuffle monetization model – not merely by using ads and in-app purchases, but by seeking to enhance exploiter feel based on target hearing needs .

How to Really Make Money From Mobile Apps

It is presently quite hard to make money from mobile apps, as the grocery store is oversaturated. The best advice is – you need to displace the existing drug user behavior .
presently, WhatsApp is worth $ 19 billion, following an acquisition deal with FB in 2014. Mark Zuckerberg notes that WhatsApp is a intersection with the lapp floor of engagement as Facebook itself. This cross-platform messenger is free across the globe and has gained colossal popularity .
But, how does WhatsApp make money ? For a period of fourth dimension it was a paid app and monetary value $ 1 per download on io. then, it cost $ 1 per year for every device, not even for every customer. even with such ambiguity, this advanced communication tool has 450 million users global. The company now decides more definitively what monetization model to follow, as there is batch of room for larger earnings .
Another free app now worth billions, Snapchat, is known for disappearing messages and makes money from ads, sponsored lenses, a fall upon section, and through the application of post geofilters. The app displays ads in core places, similar to its chief competitors Facebook and Instagram. however, due to harsh competition, Snap Inc. has experienced downturns and lost $ 443m in Q4 of 2017. Despite the mentally ill state of Snapchat, it is predicted to gain $ 2b in tax income based on the increase of its drug user floor by 221m in 2018 .
To summarize, monetary gains with a release mobile app lie in invention and reinvention. Each of the aforesaid apps, all deserving billions, provide something unique and create a new experience for the user .
Uber is a big example here. The party offered a great cab solution for fare which with the aid of an app and shifted people ‘s behavior. This allowed Uber to gain gross gross of $ 37b in 2017 .
There are 67 Human Universals that characterize all common needs to all homo societies .

“ These comprise those features of culture, company, terminology, behavior, and soul for which there are no know exceptions ”
Professor of Anthropology, Donald E. Brown

thus, there many options to consider for your alone app in ordain to make people in truth want what you are offering and to earn money .
Human Universals
human Universals

4 Steps to Define the Best App Monetization Model

step 1 – research the Market for Competitive Products
Step 2 – Determine Your Target Audience
Step 3 – Create an Innovative App Concept/Idea
Step 4 – Identify a successful App Monetization Strategy

In any scenario, in holy order to receive profit from your absolve app, you need to have a great app concept and implement a high-performing and exploiter friendly merchandise .
It is critical to conduct deep market research or turn to business psychoanalysis services provided by MLSDev. This way, you can check out what apps are already available, their successes and failures, and their monetization strategies. normally, these products have a unique sport – offer solutions for peoples ’ pain points .
Get to know what inspires potential app users and/or irritates them. Based on this information, you can define how to earn money from the app and which model ( s ) to choose. The exemplar should be natural, american samoa well as relevant, to your aim consultation .
furthermore, in order to attract target users, the free app you develop should have accurate app presentation with :

  • Catchy App Name
  • Clear and Specific App Description
  • Great App Previews (demo video, app screenshot, other visuals)

here you may besides check out the complete guide about How to Make Your App Successful .

Best Tools for Revenue Streams for Free Mobile Apps

hera, we created a list of tools that can be helpful for a detached app monetization scheme .

In-App Advertising Monetization Tools

AdMobCreated by Google with integration of Google Analytics, allow understanding of TA, improve ads, acquire new customers.
InMobTool for creating the best user experience (UX) within an app. Get market insights about TA and provide user engagement with better ads.
Facebook’s Audience NetworkOffer ad placement inside your application with accurate targeting.
Apple’s AdApple also has some recommendation regarding ad integrations of your app to get discovered.
Amazon’s AdRewards you per impressions (CPM) for advertising Amazon brands and products.
TapjoyTool with analytical predictions for the market and peak performance of world’s top brands.
AppsfireSelects the best ads based on the app design.
StartAppHelps to increase CTRs and prioritize ads.

Freemium Model of App Monetization

Android In-App Building ToolDeveloped by Android platform, has instructions for this feature integration.
Apple In-App Building ToolSame for iOS platform, allowing to create extra content and features, subscriptions, etc.
AdWorkMediaOffers a combination of various monetization models.

In-App Video Advertising

InneractiveOffers detailed documentation to create innovative ads with reports, user analysis, and analytics.
YuMeGreat tool with innovative functionality and algorithms for ad campaigns.
AdcolonyProvides Instant Play HD technology with zero buffering.
VungleProvides SDK (software development kit) for iOS, Android, Windows.

Leading Trends in App Monetization

Flying Coin in the Sky
Flying Coin in the Sky

  • In-app advertisement remains a popular method for how to get paid for your app, but with changing priorities

User experience is taking a dominant character. The right ad, at the correctly clock time, for the right hearing defines app monetization success .
But eminence : do not overuse advertise and make certain that the promote sword has a positive impression and coincides with your app ’ s purpose .

  • Freemium app model popularity increases

The majority use free apps, so the freemium model is a healthy solution, as it gives the chance to educate your users, provide a great exploiter know, and offer premium features. Consumers are nurtured to exchange these options and make transactions .

  • Growth of in-app purchases model

Again, focus is shifted to the best drug user battle. Having this estimate in mind will decidedly push a drug user to buy items. once done, users will likely continue to pay you .

  • Subscription method adoption

This monetization model will besides grow in 2018. Apple made it available for all app categories. Earlier, it was limited to media, entertainment, and swarm services. therefore, the subscription dashboard allows for the datum analysis in ordering to define the best-selling products .

  • Native ad placement

With the progress of machine eruditeness and contextual signs, the ad will become more natural for consumers .

  • Free app monetization models in emerging markets

previously described monetization models are effective in develop markets. high purchasing power and usage of functions of mod smartphones allow you to make a lot of money from the app .
New app users are expected to appear in the emerging markets. here, access to the more advance smartphone features is limited and the average income is low .
thus, it is suggested that you create a “ crowdsourced by-product model. ” App providers offer an app that solves some of the users ’ pain points for barren. In fall, users are a pool of labor movement that can generate in-app product that the company can sell. For case, DuoLingo receives tax income by selling translation services to businesses like CNN and Buzzfeed in 2014. Their news articles were used as translation materials for students and this in-app product was transferred back to the news program portals .

To Sum Everything Up

As of now, in-app ads even hold the top side as a successful method acting, while in-app purchases and subscription models are among the early highest earning tax income models .
Each method has its pros and cons, making it necessary to understand the product you would like to develop in the foremost place .

  • What value will it bring?
  • What is the target audience?
  • Are there any competitive products?

Based on some commercialize analysis, it is possible to create a well-planned commercial enterprise strategy including the tax income pour from the application and using a few different monetization strategies simultaneously. Customer atonement and monetary gains go hand in pass .

Our team is ready to assist you with building a intersection people want from A to Z and help to apply the suitable app monetization scheme .
Just contact us

Frequently Asked Questions:

🎯 Best tools to create gross streams for loose mobile apps
multiple tools can be used for building a free app monetization scheme. Among those are AdMob, InMob, Tapjoy, Appsfire, and StartApp, which helps to increase CTRs and prioritize ads. Facebook Audience Network, Apple ’ second Ad, and Amazon ’ s Ad are tools to place advertisements inside your application successfully .
💵 What is the general tax income per impression in free apps ?
The total of money each app makes per ad depends on your earning scheme. For model, in advertise, the general tax income per depression from banners is the lowest, $ 0.10 ; interstitial ad is centrist, $ 1-3 ; video ad is the highest, $ 5-10 .
😲 Why do 98 % of profit arrive from the free app segment ?
The top-grossing apps are all spare of charge. only 5 to 10 % of users are bequeath to pay for an lotion, but only with high quality, operation, and specific functionality. frankincense, the majority of downloads and profits ( 98 % ) do from the free app segment.

🔥 5 most common ways to use ad in mobile apps
There are 5 ad variants to use in a fluid app. In your strategy, you may include a streamer ad, video recording ad – lasting 10-30 seconds, interstitial ad – representing wide app screen door pop-ups, incentivized ad via in-app currencies and sponsorships, or native ads, which is integrated naturally into an app .

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Category : App Mobile

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