Top 7 Ways Free Apps Make Money

Did you know that 90.5% of the apps in the iOS App Store and 96.3% of Google Play Store’s applications are free?

And no matter how surprising it may sound, but the most profitable Android apps in 2019 were free. Coin Master itself was the leading app worldwide with revenue of $42.34 million.

Mobile app development is a costly investment. So, before you hire a developer to turn your idea into reality, it is important to understand what are the potential ways of making money. 

In this post, you will discover the top seven app monetization strategies that allow free apps to profit and help businesses generate ROI.

1. In-App Advertising 

Advertising has always been one of the most used marketing methods to increase profit. By allowing advertisers to strategically place an ad on a certain place in your app, you can start receiving steady cash flow.

There are several in-app advertising models you can incorporate:

• Banner ads: They usually consist of images and text and have specific goals in mind. Most often we can see them placed on the top or bottom of mobile screens. Even though these types of ads are short, they are quite effective and play an important role in generating brand awareness. They are a great model to use because they are small in size, conscience and cover only a small part of your app screen. This allows you to make money without disturbing your users.
• Interstitial ads: These kinds of ads cover the whole screen of your app users. They appear automatically at a specific time, most often between the transition of different activities. We can see them in various forms including images, text and rich media content. When users come across these advertisements they can choose to close them or consume the content.   
• Video ads: As the name itself suggests, these ads automatically appear in the form of video content. Businesses can use them to promote their products or services in your app and can effectively bring you money. Normally, brands incorporate this content to give users some reward after consuming it. For instance, in gaming apps, this includes providing users with extra lives after viewing such ads. 
• Native ads: Unlike other advertising methods, native ads naturally blend in the app’s content. They are quite a popular type to use because they are not annoying for users which makes them efficient and can generate you higher revenue. 
• Rich media ads: These are one of the most efficient ads because they include engaging content like audio, video, images and text which makes them quite interactive.  

In-app advertising is most suitable for businesses with a large audience because advertisers would normally choose to place ads in apps with many users.

2. In-App Purchases

Another common app monetization strategy is in-app purchases. They actually allow users to buy something directly from the app.  

In 2018, the Fortnite game generated $450 million from their iOS revenue and their strategy was primarily based on this advertising model.

This is impressive because they made a lot of money mainly from selling costumes and celebratory dances.

[Source: SensorTower]

There are three types of in-app purchases:

• Consumable: They are normally used in gaming apps and gamers can only use them once. For instance, these may run when players want to move levels, unlock premium content or receive health points. 
• Non-consumable: They include different features that users can utilize permanently after purchasing. An example of this is ad-blocking which customers can use for an unlimited time.  
• Subscriptions: They are actually subscriptions where app users can unlock specific functions or premium content 

3. Freemium

Freemium is another common method free apps can make money. It is a way of combining a free and a paid version of your app.

If users like your free application, then they are also likely to use a paid version that offers extra features and functionalities. 

With a freemium model, you offer users to pay for an upgrade and they are then taken to an app store where they can make a purchase.

If you decide to incorporate the freemium model, then make sure you include a limited number of features in your free app. Otherwise not many users will want to use the PRO version.  

Dropbox, the file hosting service, is among those brands that implement this monetization strategy. The company offers both, a free version that allows limited storage and paid versions that provide its users with different amounts of space.  

4. Email Marketing

Email marketing is a profitable strategy that includes collecting email addresses through permission and sending promotional materials.

The aim is to build brand credibility, create strong relationships and increase the interest in your app which ultimately results in a boost in revenue.

You can collect emails in several ways by:

• Using a marketing automation platform and email collection tool like Mailchimp.
• Asking users for email addresses directly by offering something in return.
• Using Facebook software development kit (SDK) which automatically gathers emails once users sign in using their Facebook accounts.  

Email marketing is a great way to increase user retention by offering in-app virtual currency different features and more. 

5. Sponsorship

A sponsorship model is a great option for apps that already have acquired a good amount of regular users in a particular niche.

There are two ways you can implement this method. You either find a sponsor in the specific niche who will find your app interesting. 

By creating a list of companies in your industry and contacting them, you will find out which of them would like to collaborate with you.

Or, these sponsors find you and reach out to you to ask whether it is possible to promote their products or services within your app. 

No matter which way you partner with a sponsor, once your app users interact with their promotional content and take the desired action, you will be able to get the pre-decided amount of money. 

You can either charge a certain fee, or both you and the sponsor company can agree to split the generated share. It all depends on your wishes.  

6. Referral Marketing

Referral marketing refers to the process of promoting products or services of third-party brands. To earn money, you can promote their apps, run in-app ads or advertise what they offer via in-app-store.

There are three ways you can implement this method:

• Cost per view (CPV): It refers to the number of views your app has generated for the affiliate ad.
• Cost per click (CPC): This method depends on the number of clicks that advertisements receive in your app.
• Cost per acquisition (CPA): In this model, you can earn money based on the number of impressions and installs. 

7. Crowdfunding

Crowdfunding is a relatively new method of monetizing free apps. It focuses on collecting money through fundraising where a large number of people make donations via the internet.

As a way to thank these supporters, app owners usually give something in exchange. This may include giving exclusive rewards like discounts or pre-ordering options.

There are many crowdfunding websites where you can find individuals and institutions that can invest in your project.

Here are the top five:

• Kickstarter
• Patreon
• GoFundMe
• Crowdfunder
• Indiegogo

Takeaways

A huge number of available apps are free of charge. And while app development is a pricey process, there are ways you can monetize your app to make a profit and generate ROI.

Depending on your preferences and business goals, you can make money by:

• Running in-app ads
• Allowing in-app purchases
• Building a paid version of your app or using a freemium model
• Sending emails
• Finding a sponsor
• Promoting third-party brands
• Collecting money via crowdfunding

These methods can help you build brand awareness, improve credibility and establish trust which ultimately results in revenue increase.