How Do Free Apps Make Money & How to Generate Revenue From Apps

How Do Free Apps Make Money? Got the answer! If you have conceived to create a mobile application and make money off an app. A really good and useful application. Maybe it will be a brilliantly thought-out game or useful program for a niche audience. Now, you need to figure out how to promote it to the top of Google Play and the App Store and how this app will generate revenue.

In this article, we focused on the process of monetization, from the point of view of distribution channels (Apple Store and Google Market). We will help you to determine whether you need to create an app and make money from one market or for several markets. We also described the classic schemes of how apps make money if it's free and singled out all the pros, cons of main methods.

High-quality mobile and web application development - this is one of the main tasks of the mova.io. We provide consultations, development and related services for our Clients on the required level. Professionally, quickly and individually.

Table of contents
  1. Why are mobile applications so in demand?
  2. How to make money from apps?
  3. Distribution channels
  4. How to generate revenue from apps?
  5. Adding advertising to a free app
  6. Subscription
  7. Freemium Model
  8. Market inside the apps
  9. Sponsorship
  10. What model of monetization to choose in 2019?
  11. One market or the more the better?
  12. Android target audience
  13. Apple Target Audience
  14. Conclusion

Why are mobile applications so in demand?

Take a look. We are surrounded by people, who are immersed in their smartphones. 68% of smartphone users are in entertainment, news and sports applications, and when it comes to social networks (YouTube, Twitter, FB, Instagram etc.), then they are generally used by 90% of all people accessing the Internet from mobile devices. The average user spends 3 hours a day on his phone, and analysts predict that in four years this figure will at least double!

There are more and more smartphones in the world, users practically live in their mobile devices and that is why the market of mobile applications is growing so fast.

Application development is expensive, and every developer or publisher representing a developer would like to at least cover production costs. And ideally, make money from free apps (the game or utility). That is why it is so important to be able to monetize your applications.

free apps make money

How to make money from apps?

App monetization is an important and urgent issue for many developers. Each startup wants to know how to monetize a mobile application and make it a source of income. It is important to consider the monetization strategy even before the development of the application begins, in order to organically fit it into the UX and provide opportunities for further development.

It is no secret that a properly developed marketing strategy makes it possible not only to fill the costs of creating an application, but also to earn money, climb to the top of the App Store, and conquer the whole world with your project. However, if only it were so simple, we would all live in a perfect world.

Just let us know if you want to know how to make money from a free app and if you would like to make mobile app for restaurant ordering.

According to studies, by 2020 the global income of mobile application owners will reach approximately 190 billion dollars. Today there are many ways to make money off apps. So which one is better to choose?

Mobile apps make money

Distribution channels

The great App Store and its main competitor Google Play, of course, are leaders today; everyone wants to go there, and for good reason. App Store success is taken for granted because it is reliable, you can safely entrust yourself and your money. 93% of applications on this leaderboard download monthly. The App Store is so successful, not because Apple users only allow applications that they deem worthy and will not disappoint their users, as they say. The cruelty of the App Store is that it generates more revenue per user compared to the Android Market.

Google Play beat the App Store in the number of available applications, but in terms of revenue per developer, it still loses. The large size of Google Play is not surprising, because Android has conquered the market with its numerous devices. Android devices attract customers. There is plenty to choose from, and on what to test one small app, because all Android devices are different, and you have to lay out all kinds of screens.

How to generate revenue from apps?

How do apps make money?” - is a common question for any novice developer. Monetizing an application is a series of actions that lead to the ability to make an application profitable.

In order to determine the business model that will allow you to monetize applications, you need to get answers to a number of questions, namely:

  • What are the advantages of the application?
  • What is the uniqueness of the application?
  • How apps make money when they are free?
  • Which way of monetization will be the most effective for your application?

There are two ways to introduce the monetization process. The first of them is to release the application, gather your audience, and then apply one of the monetization options, and the second - release the monetized application initially, and gradually expand the audience.

In every possible way, our specialists work every day to increase the sales of Mova.io Clients. Together we will consider the most popular ways of monetization.

1. Adding advertising to a free app

This method aims to gather your audience (the more users, the better). Collect information about them and their behavior in the application, to analyze the collected data. Then offer advertising placement in the application to advertisers, for example, using the CPI-grid.

For earnings on advertising, you can connect to the affiliate program (Google Adwords, Mobile 10, Admitad, Tapclick, Mobile-Click, Adcash, and so on). The terms of connection can be found on the official websites of the above services.

What they pay for:

  • Views (e.g. video);
  • Clicks on advertising;
  • Advertising formats;
  • Banner;
  • Popup;
  • Native (natural, merges with content in the application);
  • Notifications (push up advertising in the notification area on a smartphone).

Pros

  • The method is effective when using targeted advertising;
  • High popularity and offer in the placement of mobile advertising;
  • Wide audience reach;
  • Quick payback;
  • Users are happy to download the free application;
  • Loyalty is not reduced if the audience shows relevant advertising messages.

Cons

  • Negative user attitudes (There will always be users who will remove the application because of annoying ads).
  • Does not work for programs that perform a limited number of functions.

Successful examples

  • Facebook
  • CM Security

Summary

The developer receives income from placing ads in his application. He adjusts the manual or uses automatic optimization. However, the user is not satisfied.

Generate revenue from apps

2. Subscription

This method helps free apps make money without ads. It consists in the fact that paid content is created inside the application. To access the content, people need to subscribe, which is made for a certain amount of time. Some of the content is free, but if the user wants more information, then he needs to pay for it.

Pros

  • This method allows you to get a stable income for a long period.
  • The user is loyal because he gets access to the content free, and if he wants to, he can do it for an additional fee.
  • Subscriptions are renewed, often automatically.

Cons

  • This method is not suitable for all types of applications.
  • It can be quite difficult for a developer to independently determine the moment and place in the application where it needs to be done.

Successful examples

  • Netflix
  • NYTimes

Summary

With proper implementation, this method will allow you to receive a stable income. Moreover, users have the opportunity to test the application before paying.

Money from an app

3. Freemium

This method provides the basic version of the application for free. The main idea is to attract users with a free set of basic functions. Nevertheless, additional features will be paid.

Six out of ten mobile application publishers choose monetization ads. This is an easy way to make money with an app for all owners. However, even personalized advertising is annoying, and Google and Apple are increasingly trying to protect users from annoying advertisers.

Freemium is much more profitable than "paid download", it allows you to "touch" the product before you buy it. According to a recent GLOBE NEWSWIRE survey, more than 60% of application developers recommend using freemium. This model is already successfully used: Evernote, Dropbox, MailChimp, and many others.

How to make money from apps

Pros

  • This method allows you to gather your audience in a relatively short period of time.
  • Can be used in various types of applications. Can be combined with other ways.
  • Users can try the free version of the application, and if they like it, it will be easier to convince them to buy advanced features.

Cons

  • Due to the small number of free features, rapid outflow of users is possible.
  • In addition, users can leave because of the large number of paid features.

Successful examples

  • Evernote
  • LINE
  • VSCO

Making money with free apps

Types of products using the freemium model

  • Social networks (Facebook, Twitter, etc.) make money with apps by showing ads, paying users in games and applications, buying various gifts and stickers by users
  • Games - computer, mobile, and platform earn money from users buying game levels, leveling the character and its inventory, additional modifications.
  • Online dating apps earn money by purchasing additional premium features by users: increasing their position among users, sending gifts, meeting VIP people.
    Dating apps will always be popular with users, and they will undoubtedly bring great profit. The rapid success of the application served as a basis for many businesspersons who want to create something similar, but with their own characteristics.
These ambitious ideas told us that it's time to tell how to start a dating app.

Summary

A practical way to monetize. However, without experience, it is difficult to determine the necessary ratio of paid and free functions.

4. Market inside the apps

In the application, the user is offered to purchase real or virtual goods. It can be a game currency, inventory or real goods: clothes, accessories etc. For sales, this is an additional platform, and for the developer, this is a convenient way to make money from an app.

You can sell virtual and real products or services, even access to content or new features within the application. Since Apple introduced the in-app shopping model in 2009, more and more companies have taken the approach to help apps generate revenue. This monetization model accounts for more than 50% of mobile revenues for 2017.

Pros

  • Flexible business model, suitable for eCommerce and mCommerce.
  • Large profits from this type (since you do not need to pay rent and incur other costs).

Cons

  • Part of the income goes to the owners of trading companies.
  • In some countries, application owners are required to provide detailed information about in-game purchases - this is done to protect the rights of users

Successful examples

  • Amazon Shopping
  • AliExpress Shopping App
  • Postmates
  • Uber

Summary

  • A convenient additional way to sell products
  • Virtual currency and goods bring 100% of the net profit

Make money on an app

5. Sponsorship

A relatively new model, whose popularity is still growing. This is a combination of freemium and advertising. Advertisers buy from you awards for users to commit actions in the application. For example, a user watched a commercial and received five items. Virtual currency, downloaded the partner application - earned another 50 units. The essence of sponsorship is that the advertiser encourages the user to perform actions in the application, while the owner of the application receives a percentage of the reward.

Pros

  • This approach not only brings you money but also is beneficial for users and may even increase their loyalty, unlike regular advertising.
  • Working with proven partners, you can be sure that the products advertised are of interest to your audience.
  • Conveniently track results and conversions.

Cons

  • The method is still not sufficiently tested in practice
  • The results in the applications may vary significantly

Successful examples

  • RunKeeper
  • Sing!

Summary

  • Sponsorship fits most mobile apps
  • User loyalty after reward increases
  • Suitable for popular applications with a large number of users.
  • The model is new, which means it has not yet been tested by time, less predictable.

Making money on free apps

What model of monetization to choose in 2019 to make money with free apps?

According to Gartner's forecasts, in 2019, users will listen to friends, social networks, advisory services, and advertising, instead of looking for an application on the Play Market or on the Apple Store. Even if your solution is much better than the competition, users will not waste their time looking for it among millions of applications. This fact should be taken into account when choosing a monetization strategy and promotion of a mobile application.

In general, in the coming year, mixed monetization models will be popular. The main fact that remains unchanged - the application must solve the problems of users, to be valuable. In 2019, applications will be even more focused on intuitive gestures and user experience. Ease of use will become the main trend and the application monetization model should consider this.
Make money off apps

One market or the more the better?

In the App Store, following the money is most reasonable, although who knows, maybe it’s just lucky on Google Play. You can try two markets at once + everything else on the list, if you are an ardent supporter of popular wisdom “the more the better”. If you look at the application with a realistic look, we see that it is new and still quite green, no one knows about it, and you have zero data on metrics. Do you want to cover all the markets at once? But does it make sense?

A reasonable approach to generate revenue from apps, which minimizes the risks, material costs and time, is as follows: Select one market –> collect metrics data –> analyze –> improve –> analyze over and over again –> conquer other markets.

Android target audience

It is believed that the followers of Android have an average or below average income because smartphones on this platform are much cheaper than iPhones. Also, if we take a look at geography, we will see that these are mainly developing countries, where the average level income is small. As for the nature of interaction with applications, then followers of Android most often not willing to pay for applications.

Ways to make money from Android apps:

If your application is not for business, then in the case of Android it is better to build a strategy monetization on advertising inside the application. Or come up with another way, but definitely not sell a subscription to the application (but you can sell at a low price).

The Android app development services market is booming and there is currently a high demand for the development of specialized applications for various purposes. Mobile apps are a trend of our time. And if you want to grow your business, we will help you use this trend.

Apple target audience

Apple supporters are credited with high purchasing power. However, more importantly, when developing a new mobile application, it is the fact that Apple’s adherents in most of them are building the digital world into religion. They are interested in new products, have demanding taste and, figuratively speaking, and spoiled. And this means that by creating applications for iOS, you need to think very carefully about the concept of how to generate revenue from apps, come up with a cool design, offer something unique and innovative. In general, you need to surprise.

Ways to monetize:

Owners of Apple devices are willing to pay for the installation of the application, but at the same time pay great attention to quality, data security, design, etc. No one wants to pay for a product that has better analogs, and competition among iOS applications very high. Users of mobile gadgets not only play games or sit on social networks. 70% of mobile users search for a product or service from a smartphone. Therefore, “market inside the apps” will most likely be the best option for your free application.

Monetization through in-app purchases is best suited for iOS apps. Statistics shows that iOS users usually spend 2.5 times more than Android users ($1.08 versus $0.43 for monthly purchases in apps per user). Moreover, Asian users tend to spend more on purchases in apps than the rest of the world.
The importance of a mobile business application is hardly necessary to explain: with its help, you can increase market coverage, retain and return customers, optimize employees' work, etc.

We employ only highly qualified programmers who have experience in performing the most difficult tasks of developing applications. As well as experienced managers who will advise you on any issues relating to the iOS app development services.

Make money from iOS apps

However, among all the ways to monetize a free application, there is no better or worse; each has its own advantages and disadvantages. Therefore, you should try all methods to determine for yourself the most profitable.

mova.io specialists will be glad to help you to carefully weigh the pros and cons of each method, hear the opinions of professionals. And finally, to choose the best monetization strategy for your mobile application. In addition, we provide full cycle mobile and web development, quality assurance, maintenance, and support.

Conclusion

The key to successful monetization is the right choice of the market, a well-chosen scheme of making money from apps and the analysis of metrics data.
Do not spray on everything, you will always have time to cover the mobile space, and for a start - concentrate on one distribution channel.
Remember that a free application is a rule in the application market.
Analyze data, because you should know everything about your users.
Using this tactic, your mobile application will surely justify all hopes and expectations placed on it.

Professionals of the mova.io company will provide full-cycle mobile app development, will help to determine the best monetization strategy of making money off free apps and add advertising to the application if needed. We orientated on the result. We share our experience to help your project grow and become a successful business.


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