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How Do Free Apps Make Money in 2018?

Author: Aleksandra Bessalitskykh
by Aleksandra Bessalitskykh
Posted: Dec 15, 2018

Do you know how free apps make money?

Developers who offer apps for free expect to get pay in some other form. If you want to develop a free app and don't know how to get profit from it, the following article will help you.

In brief, free applications make money from one of the following 8 most well-known monetization strategies:

  • Advertising- Referral marketing- In-app purchase & freemium model- Subscription model- Sponsorship- Crowdfunding- Email marketing- App merchandise & e-commerce

Nowadays it is quite hard to make money from mobile apps, as the market is oversaturated. The best choice is to displace the existing user behaviour.

Today, WhatsApp is worth $19 billion. This cross-platform messenger is free across the world and has colossal popularity.

How does WhatsApp make money? At first, it cost $1 per download on iOS and then, it cost $1 per year for every device. Now the company knows what monetization model to follow, as there is plenty of room for larger earnings.

One more free app that is worth billions is Snapchat. It makes money from ads, sponsored lenses, a discover section and through the application of branded geofilters. Similar to its main competitors Facebook and Instagram the app displays ads in core places. Despite the unstable state of Snapchat, it is predicted to gain $2b in revenue because of the growth of its user base by 221m in 2018.

To conclude, monetary gains with a free mobile app lie in innovation and reinvention. Every app mentioned above is worth billions, provides something unique and creates a new experience for the user.

A great example here is Uber. The company provided a great taxi solution for transportation which shifted people's behaviour. This allowed Uber to gain gross revenue of $37b in 2017.

There are many options to consider for your unique app in order to make people really want what you are offering and to earn money.

Leading Trends in App Monetization in 2018

  • In-app advertisement is still a popular method to get paid for your app, but with changing priorities.

A dominant role belongs to user experience. App monetization success is defined by the right ad, at the right time, for the right audience.

Remember: do not use advertising too much and make certain that the promoted brand has a positive effect and coincides with your app’s purpose.

  • Freemium app model popularity increases.

Most of the people use free apps, so the freemium model is a healthy solution, because it gives the chance to educate your users, provide a great user experience, and offer premium features. Consumers are taught to exchange these options and make transactions.

  • Growth of in-app purchases model.

Focus is shifted to the best user engagement and having this idea in mind will definitely push a user to buy items. If users have already done it they will likely continue to pay you.

  • Subscription method adoption.

In 2018 this monetization model will also grow. Apple made it available for all app categories. Before that, it was limited to media, entertainment, and cloud services. That is why, the subscription dashboard allows to analyse the data to define the best-selling products.

  • Native ad placement.

The advertisement will become more natural for consumers with the advancement of machine learning and contextual signs.

  • Free app monetization models in emerging markets.

The models described above are effective in developed markets. High purchasing power and usage of functions of modern smartphones let it possible for one make a lot of money from the app.

The appearance of new app users is expected in emerging markets. However, access to the more advanced smartphone features is limited and the average income is low.

So, you are suggested to create a "crowdsourced by-product model." An app that solves some of the users’ pain points is offered by app providers for free. As a result, users are a pool of labor that can generate in-app product that the company can sell. For example, DuoLingo gets revenue by selling translation services to businesses like CNN and Buzzfeed in 2014. Their news articles were used as translation materials for students and this in-app product was transferred back to the news portals.

You can get full information on the ways how to earn money from apps here

About the Author

I am a Software Development Consultant at MLSDev, a software development company, which specializes in mobile and web app development

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Author: Aleksandra Bessalitskykh

Aleksandra Bessalitskykh

Member since: Oct 03, 2018
Published articles: 16

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