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How do Free Mobile Apps generate revenue?

Author: Deniz John
by Deniz John
Posted: Jul 31, 2020

Ever wondered how free mobile apps generate revenue? This might sound astonishing but people generate even millions out of their free apps! Following the most appropriate monetization strategy, one can easily make good money in a short span of time.

This post outlines five proven ways to fetch big bucks using free mobile apps on Android and iOS. Before kicking off the development of a new app, it is imperative for you to understand how these free app ideas make money to create a sustainable revenue model.

It is clearly a myth that the paid apps are more profitable than the paid ones, in fact, the latest stats and studies suggest that revenue generated from paid apps might slow down compared to soaring free apps available in the market. So, if you have decided to make a free mobile app, continue reading the article and get an insight into how you can turn your free mobile app into a lucrative business model.

1. In-app purchases: One of the most popular ways to generate income out of your free mobile app is using in-app purchases that enable users to make purchases of virtual items directly from the app. Thousands of apps on the Google play store and Apple play store use this feature to generate huge revenues. The recent study by Forbes also suggests that apps with in-app purchases yield the highest revenue for their publishers.

In-app purchases can further be divided into two categories including:

  • Consumable Purchases: These refer to products that can be used by the users only once. This model is most likely used by game publishers as they make use of digital money or game currency like gems, coins or gold. Users, who are keen about their gaming activities, eventually can turn out to be your paying users using this technique.

  • Non-Consumable Purchases: These refer to features that users can buy for permanent use. This mostly includes additional functions or adblocking. Giving advanced features on the app is also found to convert your non-paying users into paying users.

2. In-app ads: Not to be ignored, advertisements are the biggest source of revenue if you are considering making good money out of your free mobile app. Companies have big advertising budgets to showcase their products and services, and if they find your app a platform to reach their target audience, you are certain to generate huge money out of it.

You can monetize your free app through various ads using networks like AdMob and Flurry. Among the several ways to display ad on your app, below listed are few ad types you can choose to display:

  • Banner ads: Among the most common ad types are banner ads that are displayed on the top of your app screen with some graphics and content. These can appear in different sizes and are less obstructive in nature as users can freely use the app even if it keeps appearing on the screen.

  • Interstitial ads: These ads cover the full screen on your mobile application as "pop-ups" that may appear at specific time frames. Users can watch or close these ads as the close button is provided at the upper right or left corner of the ad. For example, a Collage maker is an app that displays these ads once the user is done with editing the picture. These ads can work great in terms of your free app monetization.

  • Native ads: Not much liked by users, yet native ads work well for free mobile app developers. These ads do not seem like other ads in fact, they are integrated seamlessly into your mobile apps just like any other natural elements in the application, to promote a particular product or app. However, you should keep in mind that the revenue generated through this means can be a little low, compared with other ad types.

  • Video ads: Showcasing video ads on your free mobile application can definitely bring you a good deal of money. These ads stream automatically on the screen and are often used in exchange for some in-app rewards. For example, the popular gaming app, Candy Crush uses video apps to get its users an extra spin or trail.

  1. Freemium: To those who are alien to this concept, the freemium model refers to a model where basic features of the application are provided free of cost while getting access to advanced features, requires the users to pa and then avail special features. Through in-app purchases, users can upgrade their app and use premium features. This technique can work wonders when it comes to turning your non-paying users into paying users and make lucrative business. These practices are most common for educational, sports, health and medical applications where users can go for the paid version and get extra functions.
  2. Sponsorship: There is no doubt that sponsorship can be used as a powerful monetization strategy for free mobile users. It is not always easy to find a sponsor but the sponsorship program can benefit both i.e. the developer and the sponsor if you build the right niche audience and match the sponsor’s brand. If you and your sponsor have the same target audience, it can really turn out to be a lucrative deal for both. You can choose to split the revenue or can also go for a monthly sponsorship fee.
  3. Affiliate/ Referral marketing: Referral marketing, commonly known as affiliate marketing, involves promoting a third party product or services to unlock more revenue opportunities. If you plan to have a free mobile application, you can promote and sell your affiliates’ products or services and make profits based on the number of conversions, clicks or installs. You can rely on different pop-up ads to promote these products and convert them.

There are several types of campaigns for affiliate marketing that you can incorporate in your free app including:

  • CPC: Cost Per Click refers to a model where you get paid on the basis of each click on the ad displayed on your free mobile app.

  • CPV: Cost Per View campaigns usually go for video ads, where you get paid on the basis of the number of times the users watch the video ads on your mobile app. The more views on the ad, the more you can earn.

  • CPI: Cost Per Install refers to a model where you are paid whenever a user installs an application advertised on your application.

The Road ahead…

With continuous new apps developing every day and multiplying users, the mobile application market is sure to grow in the near future. Now that you know how to monetize your free mobile application, you also know how to become a millionaire. You can opt for any of these techniques or leverage on multiple options to optimize and monetize your free mobile application in the best possible way. However, it is recommended not to overuse these techniques where you might end up losing your app users. It is best to understand your target audience clearly and develop monetizing strategies that are tailored to keeping your application in mind.

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About the Author

Deniz is a passionate writer with over 6 years of experience who loves writing about technology, travel and the fashion industry. Having done his graduation in journalism and mass communication.

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  • sirfsach  -  1 year ago

    Very informative article. Please read mine articles based on crimes in India. SIRF-SACH

Author: Deniz John

Deniz John

Member since: Nov 18, 2019
Published articles: 1

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