How To Make Money From A Free App

$111 billion. This is the amount of revenue generated by mobile applications on the Android and iOS app stores, the two major app distribution platforms. And most of this revenue is created by free applications alone, which make up more than 90% of apps in the app market. Yes, free applications make a lot more money than paid ones. In fact, revenue generated by applications that charge users for downloads, is expected to plummet in the coming years. Majority of customers too, prefer free applications over ones that are paid. Most top-rated and top grossing apps are free of charge, and they are here to stay.

But you must be wondering, how do free apps really make money? It surely can’t be that easy. And you would be right, it isn’t. The number of apps on app distribution platforms amount to several millions and app stores are ever-expanding; more and more apps are bound to be added every day. And a huge market always calls for tough competition. Which is why, it’s imperative to closely analyze your business industry and the type of application you’re planning to create, and then design a rock-solid monetization strategy. All top app development companies in Kuwait will tell you that this is the crucial next step during and after the developmental stage.

Here, we have attempted to consolidate some of the most popular app monetization models that will help convert your app idea into cash.

Done via third-party networks, advertising through affiliate marketing or by displaying commercials, is the most common and simple app monetization strategy. The app publisher can get paid by charging on the basis of a variety of models including cost-per-click, cost-per-view, cost-per-install, or cost-per-impression (every time an ad is displayed). These apps can take different forms:

Interstitial ads – These are full-screen pop-ups that are displayed during specific time frames or until the user chooses to close the ad or click on it. However, placement is key here since pop-ups tend to be intrusive and annoying. A good strategy is to display them in naturally occurring transitions, either before or after the user has accomplished a particular function.
Banner ads – Far less intrusive, these ads can belong to a range of different sizes and are placed around the app content, usually at the top or bottom of the screen. But because these ads barely interrupt user interaction, they tend to have a low engagement rate. It has been found, however, that top performing apps place their ads at the lower half of the screen.
In-app video ads – Displayed automatically, these ads are usually reward-based in which the consumer receives certain perks (in terms of app currency, points, etc.) in return for watching the entire video.
Native ads – These ads are designed to be fully integrated into the app layout and hence cause very little annoyance among users. However, they do tend to generate lower revenues.

Subscriptions

Even though one of the least used monetization model, subscriptions can prove to be a great source of consistent revenue. In this type of strategy, a popular technique is to offer free app content to users for a restricted period of time (like a free trial) and then charge them if they wish to continue using the app services. Subscriptions can also be used as a way to give users complete access to the application’s certain features that are otherwise disallowed. This model can be especially useful for services that provide audio and video content but can also be hard to implement since publishers are expected to employ the best mobile app developers to constantly renew content and upgrade features.

In-App Purchases

In this revenue model, users can be incentivized to unlock additional features or premium content that can either be offered as consumables (virtual currencies, in-game points), non-consumables (non-expirable items such as advanced game levels or ad blocking), or subscriptions (allowing users to access certain features/content for a limited period of time). Subscriptions can either be auto renewable or nonrenewable. This model is overtly preferred by game publishers since users often buy digital currencies to purchase in-game items and access new levels, in order to improve their gaming experience.

Implementing in-app purchases is highly lucrative since there is essentially no virtual limit to the amount that users can choose to spend, as opposed to paid apps with one-time fees, which are limited in the amount they can earn per user. They also have a really high user engagement level.

However, it’s challenging to use this model effectively since publishers have to consider whether their app content is enticing enough for users to make in-app purchases. Also, user expectations increase when there’s money involved, so the app has to keep offering upgrades and maintain optimal functionality at all times. This will inadvertently increase developmental and designing costs, even with the topmost app development companies in Kuwait. Finally, this system needs to develop and integrate a complex payment gateway, which can produce considerable technical challenges.

In-app purchases is synonymous with the freemium model, which offers the app for free, but allows users to access premium content/upgrades for a specified fee.

App Merchandise

With the boom in e-commerce businesses and an increasing number of consumers shopping online, most e-commerce app owners offer their apps for free and sell goods within those free mobile apps. This model can often be combined with email marketing to get to your target audience. Selling online has an added advantage of reaching a large audience anytime, anywhere. But this also means that your products need to have the ability to attract a large consumer base and give them what they actually need. With this model, consumer expectations in terms of mobile app performance and user-friendliness are also really high.

These are only some of the popular app monetization strategies, the rest of which we will cover in the upcoming blog. Every business is distinct in its own way and needs a customized monetization strategy that will maximize its revenue. So, stay tuned to find out about additional models that help apps generate cash and to learn which model is the right fit for your business.

In the meanwhile, feel free to check out our portfolio, in which we list our professional website design and mobile app development work:

Design Master, a leading mobile app development company in Kuwait, is well-equipped in the creation and maintenance of mobile apps, employing only the best mobile app developer team. We strive to closely analyze your business and industry in order to customize an effective monetization strategy that will uniquely function for your application type and maximize your returns.