How does a free app make money?
Free App Make Money
A total of 105Bn app downloads were made across both Google and Apple stores, as a result of which the desktop internet usage is falling.
The average revenue generated from mobile apps is projected to reach $188.9 Bn by 2020, which was around $88.3Bn in 2016.
A whopping 98% of the revenue mentioned above comes from free apps as only a few customers are ready to pay for the apps.
If these statistics are anything to go by, then you need to know where the free app make money from, and how do these apps earn their profits.
The first thing you need to discuss before developing an app is whether you want to go with a free app or, you want to develop a paid mobile app for your business.
There are various options available for increasing profits with the free mobile app.
Here we will discuss the paid vs free app statistics and advantages.
Paid vs Free Apps
As with the Paid vs Free Apps debates, the paid apps will obviously generate higher average revenue as against the free app solutions. The loyalty, as well as the perceived value for these apps, is higher as compared to the free apps. The reason is quite simple, you have paid for these apps.
However, if you are a new business and planning to get customers on-board, then you should go with free apps. The reason being, it will help you win over the customers, and eventually, you can build your brand and its reputation.
The reason for allowing people to download your apps for free is generally when you don’t have a database or the user base that you need for selling your business products or services.
Now that we have touched the base with both free and paid apps, let’s start with how free apps generate revenue.
Revenue from Advertising Other Brands
Remember how you were listening to a song, and an ad popped up immediately after the song ended. That’s how most free apps tend to earn their money. The in-app advertisement is a huge revenue-generating option. In fact, in 2016 alone, 7 out of the 10 apps opted for this model.
It is almost like TV or radio ads. The ads take up a certain spot on your mobile app, and then you tend to run them for those seconds. In the case of apps, you can allow the user to skip certain ads after a certain time period.
For every ad that is displayed on your app, a certain amount is generated as the revenue. If someone clicks on the ad and enters the third party website, you are paid for that as well.
When it comes to advertisements, there are a total of four types that you can choose to go with. All four have different revenue-generating options, and each one is likely to get you a good amount of profits if you play them well.
- In-app Advertisements: When you are playing a game, and you are stuck with minimal lives, the in-app advertisement is one way of getting one more life. That’s how this system works. You get the user to watch the ad, give them a reward for that, and earn some revenue from the third party. It is a win-win situation for all three of you. some users may not watch the ad, as they believe it will interrupt their experience. In some cases, you can give the option of skipping the ad after a point but then they have to watch a few seconds of the ad for you to generate the revenue. The latter type of advertisement is something you are likely to experience with Youtube.
- Banner Ads: The ads are displayed as banners along the top or bottom part of the app. It will not obstruct your experience but, there are chances that you might view the app and want to click on it to see the products.
- Interstitial Ads: They can be static or dynamic depending on how the brand wants you to focus on the advertisement. For instance, a full-page display of the products between two songs could also be counted as an interstitial ad type. You can also use this ad format to show videos of the brand that you are planning to advertise within the mobile app. These ads can hinder the experience but, they will gain more traction
- Native Ads: They are used to promote a particular product or a mobile app. These ads are included as part of the app, which means it will not hinder the viewing experience.
Subscribe to Unlock Features
This format allows users to understand the free app, and engage with it. Once the users know how the app feels, then you ask them to pay if they want to unlock the hidden features. The subscription fee is determined for a month as well as a yearly basis.
In this case, the user is already interested in the app and will want to pay for the extra features that they find useful. The reason for the success of this model can be attributed to the fact that the users are given some amount of time with the app before they are asked to pay. This has been used by the many streaming services, as it helps them generate a good user base.
Pay for In-app Goodies
This is a popular revenue model, according to the Android app development company, for gaming apps. You allow them to play the game for free but ask them to pay for the powers and lives that will help them stay within the game. If the user is not ready to wait till they get all their lives, then they will pay.
In-app purchases are a good way of generating revenue for your app. In fact, this app monetization model has generated payments from those who are generally not ready to make the payments within the apps.
Get Someone to Sponsor your App
If you want to earn a good amount of money from your app, and also want to get a good user base, then you need to work your way through app sponsorship. You need to develop the app for the right niche, and then work on partners within the niche who have got a good user base. Ask them to sponsor your mobile app. In case of a partnership, your app will be strategically placed within their app, which will allow them to cross-sell your app with their product. In case you are into paints, then you should find a sponsor who deals with renting out homes, and together you can generate the user base and sell your products.
These are the four main strategies that will help free apps generate a good amount of money. However, there are strategies that you can work on apart from them. referral marketing and freemium upsell are some of the prominent revenue-generating strategies to opt for.
You should ideally choose the platform, either yourself or have the Android app development company do it for you. Once the platform is ready, write down the features that you plan to include, and define the revenue-generating model before you start working on the pre-launch and launch checklist for the app.