There are thousands of them – free apps. And you might wonder if the guys creating them aren’t broke yet. How can so many people spend time and money on an app that brings nothing back? Well, not exactly nothing, as it turns out. There are different approaches to making money from apps.
How do free apps make money? Here, we will discuss the top simple monetization methods and how you can create an app and make money off of it.
Free vs Paid
People spend several hours per day on apps. No wonder that it’s possible to find not only attention and glory to you as a developer but some revenue. Free apps make money as well.
But first, let’s briefly touch on the subject paid vs free applications before we discuss how apps make money when they are free. Either type can be beneficial to your project.
- Easier marketing — users are more likely to try a free app;
- Users are more likely to recommend it to friends;
- Faster user base acquisition (reduces the costs of advertising the app).
- More trust concerning personal information;
- Users know what they are paying for right away;
- The company doesn’t need to support free clients, only those who have paid.
As you might notice, paid apps generally look more profitable in perspective. But user acquisition poses quite a challenge — people hesitate to pay for something they don’t know if they would get use out of. That’s why so many app developers launch them for free.
How do they make money off an app and maintain the project?
How to Make Money from Apps
The only way to make free apps generate revenue is by using monetization methods, such as offering premium features or branded merchandise. We can also look into other industries and see which methods they use. For example, according to a Reuters survey, digital media businesses rely heavily on subscriptions, but the main revenue focus is on advertising.
How to generate revenue from apps is also something to take into account when devising your project strategy. You should choose the monetization model before the development starts. If you are not sure about the choice, you might want to consult with a development team that had previous experience building free applications.
This model implies that basic features are provided for free, but you generate revenue from apps by offering some advanced options. So, what can those be?
The basic features of an app are free but for an improved experience, the user can pay for extra ones. This model works great for game apps. Players can buy some upgrades to enjoy the game more. The trick is not to give away too much or too little in the free version.
Ad blocking can also be a type of in-app purchase. They annoy a lot of people who are willing to pay for an ad-free experience. Some free apps make money without ads simply by eliminating them.
This works great not just for media projects – articles, music or video streaming apps but other types of applications can also adopt this method and make money off apps (Slack and Grammarly have premium features under a subscription). The user pays a monthly fee for access to the chosen content. Needless to say, the quality of content should be impeccable.
Advertising is still the most popular way to make money with apps. Although ads are still overall annoying, some types of placements are less annoying than others. They are also easy to implement. For example, banner ads take over a relatively small part of the screen. So, the user can actually see the main ad message but won’t get too frustrated. Let’s explore the different ad types that are worth considering.
Interstitial ads might take the same picture but show it full screen to the user. These appear at the beginning or end of a certain part of user experience. For example, when the app is launched or when a game is finished. Then the user is not that irritated and the advertiser gets a more qualitative ad contact.
Rewarded video ads. This type provides a very high-quality contact with the user. First, the person is ready for advertising. Second, the conditions are fair. Third, the user gets a reward: additional points, extra time in a game, etc.
Possibly the best way to make money with an app is native advertising. This one should feel like an inherent part of an app. And this has always been a struggle: how to make something look like it belongs there. Native advertising looks like it’s part of the app content, yet it clearly that the user is clicking on sponsored content (see image below).
How do apps make money from advertising since it is such a good source of revenue? Through ad networks, like AdSense. These are websites where you can find information on potential advertisers and sell your ad space. Each ad you publish in your application gets a special Tracking Pixel that counts how many times users clicked on it and, thus, how much you have earned. The good part is that you don’t have to search for advertisers. AdSence will take care of it.
Dos and Don’ts of App Monetization
- Study your target audience and their spending habits;
- Study your competitors;
- Suggest a good value for money to the user in your app;
- Make your app visually pleasing: bright screenshots, clear description and make it all available on the marketplace;
- Test several monetization models and stick with those that are working best.
- Pile on too much: too many ads, too complex payment model, too boring basic (free) version;
- Hide that your app is freemium. Make it clear what is free and what you are selling;
- Don’t make the users think twice on how to pay you. The simpler it is, the better.
How to Go On About Creating Free Apps
You have so many opportunities to make money from a free app. You’ve come up with an idea, whether it’s a game app, content project or something else. And you have already decided on the features you are going to offer in the app and on the monetization model. You have a rough plan and structure for the app. Is there anything else to consider?
There are a few more things you need to figure out, like what paid features users could find worthy of spending their money. You should also think about adapting the app for iOS or Android. People use their phones so much that any app they have access to from the web should fit on any screen of a mobile device.
When you use a web development agency for a project, you can choose one that has experience with projects similar to yours. Get advice from them on all the little things involved in creating free web applications, including app functionality, monetization models.
There are various ways in which apps earn money. You might opt for in-app purchase or subscription model, branded merch for sale or advertising opportunities. You might even mix several monetization ways, testing them to find the model you can profit from the most.