How Do Free Apps Earn Money?

The application market is huge, with billions of dollars worth. What’s more, most of the apps are entirely free and therefore in higher demand among users.

 

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The popularity of free services is confirmed by statistics. According to the latest research, only 25% of paid apps are downloaded more than 100 times. On the other hand, 25% of free software is likely to be downloaded over 15,000 times. Not bad, isn’t it?

But how much money do apps make if they’re free? Can such a digital product be a profitable venture at all? The answer is yes, it can. Free mobile services are quite capable of bringing money to their owners, you just need to approach your business properly.

That’s what we want to talk to you about in our new article. You’ll find out if there is any point in releasing a free application to the market and learn the key ways to benefit from it. We’re going to analyze the issue from A to Z, and if you have any questions left, you’re welcome to consult with our experts.

Now let’s see how to monetize free apps.

Apps Market Statistics

We wonder if anyone could have guessed in the early of mobile applications how popular they would be. Anyway, today these programs are in incredible demand. According to Statista, more than 1.8 million apps of any type can be found in App Store, and even more are in Google Play (namely, almost 2.6 million). And this is hardly the app market limit! On the contrary, the market is growing at 14% per year, and the trend is expected to continue.

And speaking of earning with apps, the forecasts are also rather impressive. Take a look at the infographic below: it perfectly shows that the profit mobile services bring to their owners is increases from year to year. What’s more, as Google Play claims, 97-99% of revenue comes from free applications.

But how does a free app make money? It’s free, isn’t it? So it doesn’t require payment… right? Keep reading our article, and you’ll find out the answer to these questions.

Now let’s discuss who to focus on when creating applications. What is the easiest audience to monetize? According to recent studies, the most productive users are men and women over 30 (but under 40). These people are financially solvent and used to taking advantage of applications in their daily life.

But how do apps make money? What are the main options?

The Most Popular App Monetization Methods

In fact, there are only 3 application types, namely, shareware, free, and paid apps. Let’s take a closer look at each option.

Paid Apps

In the first case, everything is clear: the user pays money and gets the right to download the application. Thus, the owner of the service makes a profit without delay.

Pros:

  • quick start of earnings. As we said, you don’t have to wait to start making a profit. Of course, if you manage to convince someone to download your application at all;
  • user loyalty. Once the person has agreed to part with the money, he’s likely to use the purchased product (in your case, a mobile application).

Cons:

  • the difficulty of attracting users. This is the biggest drawback of paid apps. Why pay money if there is always a chance to find a free analog (or a shareware one)?

When to choose this monetization business model for your app?

  • the functionality of your service is truly unique or at least exceeds the offers of free analogs;
  • the cost of the application isn’t too high;
  • you thought out your marketing campaign from alpha to omega, so to speak.

Shareware apps

Shareware applications are the most popular these days. Such a mobile service seems to be free, but only in its basic version. To access the most valuable features, users have to fork out.

Pros:

  • the ability to attract more users. Since there is a free version of the program, there shouldn’t be a shortage of users;
  • several monetization strategies. To increase your profits, you can monetize paid and free users in different ways.

Cons:

  • a few functional sets. The main difficulty is to come up with a fairly good basic functionality and offer tempting features in its paid version. To be precise, on the one hand, you cannot offend free users, and on the other hand, you must find a way to lure paid ones.

Free Apps

We’ll discuss popular monetization methods for free apps in due course. And right now we’d like to briefly describe the advantages and disadvantages of such programs.

To begin with, users don’t expect any miracles from free services. And if your application isn’t perfect in one way or another, they won’t be unnecessarily critical.

Pros:

  • attracting a larger audience. The user doesn’t need to pay money, and if the program hasn’t met his expectations, there is nothing easier than removing it. The user doesn’t lose anything in the end. Therefore, he is more willing to download it in the first place;
  • a greater number of positive reviews. Oddly enough, free apps have more chances to get positive user feedback (as various surveys claim).

Cons:

  • no confidence in income. You have to think over a monetization strategy in advance in order to make money from free apps. Otherwise, your project will be unprofitable.
  • low user loyalty. Paid users are much more loyal (we’ve already explained above why this is due).

How much does it cost to develop an application? Not a bad question, which deserves a special discussion.

If you’ve decided to release a free (or shareware) application to the market, you might find it useful to read the next section of our article.

How Do Free Apps Make Money?

When publishing free apps in the mobile application market, it is important to decide in advance on a monetization strategy. We offer you some easy ways to make the most of your digital product.

In-app advertising

Scientists from the University of Cambridge recently conducted a study and found that almost 75% of applications on Google Play are free and 80% of them are being monetized through ads. Moreover, in 2020, digital advertising spending amounted to almost $ 100 billion (at least 65% was in the mobile segment).

Well, advertising is one of the best app monetization methods. The basic rule is to stick to the golden mean, otherwise, the user may get tired of your intrusiveness.

Among the main types of advertising are the following:

  • Banner advertising, the most traditional one. An advertising banner is usually located at the bottom or top of the screen and covers it only partially.
  • Native approach, when advertising is like a continuation (or addition) of the application and therefore least annoys users;
  • Interstitial advertising, which occupies the entire application screen. And for this reason, the user cannot but pay attention to it;
  • Video advertising (explanations are needless, right?);
  • Interactive advertising, commonly used to monetize games. “Watch the promotional video and get additional features in the game!” – this is how the call to the gamer sounds, and he follows it.

But if you really intend to make money from free apps via ads, do your utmost to choose the most effective advertising model. Take your time to find the best option.

Pros:

You can make the app completely free and monetize it only with ads. Thus, you’ll attract as many users as possible and you’ll be able to gain their trust.

Cons:

  • it’s far too easy to overdo it with ads and therefore tire the user;
  • the income per user is quite low, so you have to convince a lot of people to download your program to start making decent money;
  • there is also such a thing as banner blindness, and it cannot be ignored either.

In-app purchases

When thinking about how to make money from free apps, don’t discount monetization with in-app purchases. If you have some offer virtual goods to sell, go ahead, it’s a good chance to earn an extra penny!

The easiest way to implement such a monetization model is in gaming applications. Gamers like no one else are willing to pay if they get some improvements in return. There are a lot of ideas: access to new levels, more powerful weapons, etc. It all depends on the essence of the game.

BTW!

Did you know that Pokemon Go users made $ 1.5 million in in-app purchases every day? These are good numbers, aren’t they?

Pros:

This is a good monetization business model for your app because it’s familiar to users. It won’t annoy them, which is important.

Cons:

Alas, a very low percentage of users make purchases regularly. And it’s not always possible to come up with a suitable virtual product to sell.

Freemium

Freemium model is one of the best app monetization methods and undoubtedly the most popular among them. It uses a shareware approach, which we’ve briefly described above. You’ve probably already grasped its general meaning but we’d like to repeat it anyway. We’re dealing with subtleties here, and you had better know them.

When it comes to Freemium, you don’t ask the user for money right away and let him download the application without any payment. Moreover, you offer him quite decent basic functionality. And if the user wants more, he must pay. Then he’ll get access to premium features.

Pros:

The Freemium model is very easy to implement. Still further, users like it. If they want, they can use the application for free, and no one will reproach them or force them to pay. They’re welcome to buy access to premium features at any time.

Cons:

You have to work hard to make the premium features really worth paying for.

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