How does free app make money. During this times we’ve been getting quite a huge of questions about this hottest topic into the app market.The truth behind apps monetization magic, as free applications definitely outmaneuver by the paid ones that is considering download numbers and the main thing is to find out that how to capitalize on that new customers. There is even an option that is to monetize an app by doing nothing that is just signing up on a market platform and get instant $50.
Without further a due, let’s unveil that the main advantage of creating free apps and the one of most efficient app monetization strategies.
How to make money from free apps
Key apps monetization strategies include:
- Advertising: video, native, incentivized, display ads and banners
- Email marketing
- In-app purchases
- Freemium upsell
- Amazon Underground
- Physical purchases and the merchandise
- Collect and sell the data
- Affiliate income from CPA to CPI
Best tools for monetize free apps:
- In the app advertising tools
- In the app advertising for the game applications
- Freemium model for the app monetization
- In the app video for advertising
Takesaway Secret Tip
Yep, that is how we’ll unveil that the ways you could make money when your app is free of cost. let’s start in the beginning! And in the first let’s see one of the toppest TED video about app monetization that is “How to build a Billion Dollar app?”
The App Market overview
The global app economy is the huge and it’s going to keep increasing. In 2016, there were more than of 2 million applications in Apple’ App Store and more than 2.4 million in Google’ Play Market, making it in the most one popular distribution platform into the world. It is projected which revenues generated by the mobile apps, including advertisements and in app purchases, will double in the year 2020.
Mobile advertising remains in the most profitable apps revenue models. 7 from 10 app providers utilize it in 2016 and the 18% plan for the use it in the near future. By using ads to monetize apps are quite simple that is all required for display commercial inside your mobile app and get paid from the ad networks.
* Games app monetization
By the Sweet pricing report, 32.5% of the largest mobile providers utilize in app ads for only source of in app revenue. You could get paid every time and the ad is displayed for the per click on an ad and that is when the user installs the advertised apps.
Native, banner and interstitial ads are on the top of the 3 formats used from the developers for their inventory monetizing.
- Interstitial ads
- Banners and display ads
- In the app video ads
- Native ads
Despite in the fact that Email Marketing is one of the comparatively old technique that is it can be quite powerful when it comes for monetizing apps. This strategy works on the best way when you kindly ask customers email during sign-in. As a result you get the possibility for consequently reach them and with the email notifications.
At the meantime, mobile apps offer the new opportunity for the collecting email addresses. That makes email marketing one of the most and main effective strategies on the web, that also has its pros and cons.
Here are few ways for collect email address with the mobile app:
- The first and the main way is to simply ask
- Other way of getting users emails by the Facebook SDK.
- Use few third-party tools for make email collection easier
Sponsorship placement with the application can be the powerful app monetization model if it provider builds the right app for tailored customers and launch it on behalf of other company. The main and the most challenge is to find the funder within similar or within the same target audience , white label for an app or adapt its design for match sponsor’s brand.
The main sponsorship deals:
- Agreed revenue split created from the app.
- Monthly sponsorship fee paid by those who is the funder for app maintenance or use.
For the free apps within the restricted content or features present for fix time, the customer can pay a subscription fee for get a full access and for unlock it. This revenue type is often used to cloud service and video streaming, online newspapers or magazines etc. The developer can provide the customer within the free trial period and charge the subscription fee by the an access without restrictions.
In the app purchases provide the ability for sell a variety of virtual items directly by your apps including extra bonuses, premium content, game currency and unlock game levels.
The strategy is within the categories:
- Consumable – a product which can be purchased and utilize once with the app.
- E virtual currencies.
- Non consumable – the featuring product bought to the permanent usage, which does not expire.
- Eg: new game levels or maps.
- Subscriptions are used for unlock features and the content to the limited period.
- Eg: annual news subscription.
Freemium apps are available free of charge but it contain paid or premium feature that is accessed by in-app purchases. The customer download free app version, if the content is of worth paying and get a full access for the functionality from committing a purchase. It is a best way for gain the new users at a fastest rate and as the premium features are not necessary.
Technically, it is one of the easiest revenue model for app publishers that is , as it requires the production of two apps versions light and full .
15% of the apps are utilizing paid sister versions for unlock additional features and rather than implementing in the app purchases.
One of the comparatively new ways of making money through Amazon App Store is Amazon Underground. Although it does not require ads or in-app purchases, let’s see how it works.
Being a relative newcomer in the word of the mobile apps, Underground offers its users to access an unlimited number of solutions that contains premium features for free. Instead, Amazon Underground pays application devs 2 cents per minute of use, per every single user.
Amazon Underground is an independent app store, with it’s own mobile app that has to be used for getting access into the store. To use this innovative strategy, app publishers are not allowed to implement ad or in-app purchases inside their apps.
In case you are using in-app purchases in your app, you agree to forgo those fees through listing on Amazon Underground. That means users are offered to ‘buy for free’ an unlimited number of your IAP’s, meanwhile developers are being paid directly by Amazon. Amazon also provides developers with free Revenue Forecasting Calculator to forecast their potential income.
The platform turned to be very effective. A great example is Goat Simulator – one of the top-30 paid apps, that costs $4,99 and has been downloaded over million times in Google Play store. Still, app publisher reported, that Goat Simulator earnings on Underground have outperformed its Google Play app version by 30%.
how do free apps make money – amazon underground market
Downside: If your app has a comparatively short average session length, this might be not the most efficient app monetization strategy (contrary to in-app purchases and ads). Meanwhile, this revenue type is good for those, who didn’t succeed with in-app purchases but have high app session length and bring real value to users.
Physical purchases and Merchandise
E-commerce businesses use free apps for selling physical goods or branded merchandise: toys, t-shirts, cell phone cases, etc. via email marketing or specially developed applications.
One of the first and most successful apps to boost revenue from branded merchandise was Angry Birds game. Rovio Company sells 1 million branded t-shirts, backpacks, and stickers every month. That is more, they managed to get 1 million per month revenue only on plush toys.
Rovio company sells 1 million plush toys from Angry Birds game every month.
Amazon provides an ability to get revenue from merchandise by creating a Merch self-service program that allows app publishers to sell custom branded t-shirts from within their apps.
All you need is to create and upload own artwork and promote it using the Amazon tools. Branded t-shirts will be produced, sold by Amazon and you get your revenue share. App developers don’t handle any payments and fulfillment, making the whole process really easy and beneficial.
How do free apps make money – amazon market
DragonVale game developers used Merch by Amazon service to create and sell.
Downside: You need to generate a large audience of users and sell something people want to buy.
Collecting and Selling Data
Well, this is probably not the most widespread and ethical way of app monetization (and that’s great), but collecting and selling personal data still remains one of the effective approaches to turn a profit.
Some companies that offer free mobile apps sell their databases to third parties. The information may contain user’s email address, social media accounts, and personal preferences.
So app developers can sell this kind of information to the researchers and make quite a good return of money. Actually, there are two ways to earn on selling data: track what users do and sell data to outside companies or use the raw data itself for your own purposes.
From a marketing point of view, companies want to pay to display ads to the most relevant audience possible; while on the flip side, far not each service can gather the same data as Facebook or Google does. Nevertheless, if your app is able to gather relevant data, then you may have a way to profit from it.
Downside: the worst of the apps can even infiltrate the call history and contact lists or access users’ social media accounts. The good thing is that there are anti-surveillance tools that can help you protect yourself from spying (e.g. Text Secure, Red Phone, Onion Browser, Orbot, etc.).
Affiliate Income and Referral Marketing (from CPA to CPI)
Developers can promote and sell affiliates’ services or products for the revenue split based on a number of installs and clicks. You can use pop-ups or banners to promote someone else’s apps or use ‘in-app store’ to advertise product or services.
Amazon store is the best example to illustrate how large the affiliate marketing can be. Just pick up a product to advertise to your app users, get revenue from all qualifying purchases and through advertising fees.
Cost Per Action, cost per acquisition (CPA) networks
There is also a number of affiliate networks, that will help you to find the affiliate that suits your own mobile application. The networks are generally based on cost-per-action (CPA model) or sharing revenue generated for advertisers.
There are several ways to use this app monetization model.
Promoting other apps
Advertising products through pop-ups or banners
Promoting products through an ‘in-app store’
Cost-per-mille or cost-per-impressions (CPM) – is a payment model based on a number of impressions. The advertiser is charged each 1,000 time the affiliate ad is displayed (mille is a Latin translation for thousand). iOS ads are generally more Affiliate expensive than ads displayed on Android devices and can differ up to 30% over the platform.
The average mobile revenue per thousand impressions (RPMs):
Banners: iOS ($1.20 – $3.00) vs Android ($1.15 – $2.50)
Interstitials: iOS ($4.00 – $6.00) vs Android ($3.00 – $4.00)
The highest end of CPM rates belongs to AdMob network operated by Google. As of July 2016, the CPM rate has reached $6 for Android and $10 for iOS per 1,000 mobile ad impressions.
Cost-per-click (CPC) – is a revenue model based on the number of clicks on an ad displayed. Such popular ad networks like Adfonic and Google’s AdMob are commonly PPC, providing both text and display advertisements.
Game developer Pink Pointer used native ads to monetize their free puzzle apps. CTA networks helped developers to achieve a 50% increase in Click-through rates (CTR- the number of ad clicks measurement), resulting in higher revenues.
Cost per sale networks (CPS). With CPS revenue model, also known as pay-per-sale, the app developer is charged only after a purchase has been completed. The app publisher gets fixed commission or percentage of the sale. ShareASale, Rakuten Linksh, and Amazon Associates are high paying, secured CPS networks, especially popular among developers.
Cost per view (CPV) – is a type of charging based on the number of video views or ad interactions, such as clicks on banners or call-to-action overlays. Mobile games developer Brighthouse successfully operated Cost per view networks to increase app revenue by 130%. They used video and interstitial ads inside their app White Tiles 4 to create natural breaks in between game sessions.
Cost per install networks (CPI) – is a type of app monetization equivalent to cost per acquisition used in web marketing. The publisher is paid every time the advertised app is installed by users. There is a number of platforms providing software to install into your app. The fee ranges from $0.80-$3.00, and online affiliate networks have a range of campaigns for global traffic generation while promoting other apps, making it a lucrative market to play.
Rovio used Google AdMob network to increase their Angry Birds downloads among Android users.
how do free apps make money – top networks
How do apps make money?
Mobile app development can make you rich if you go about it correctly. And if you still worry whether you can make money with a free app, get our experienced “yes-reply” straight away!
Top 25% of iOS developers and Top 16% of Android developers make over $5,000 per month with their free apps
Using the above numbers as a rough guide, we can state that nearly 20 percent of applications on the market are very good, 30 percent of apps are fine and the half of all apps are an actual rubbish, that’s sometimes not even worth your attention.
how do free apps make money – market infographic
And if you are in the top 20% with your perfectly coded high-quality app, there is no other chance but to get rich with a good monetization strategy afterwards. It goes without saying that if you wish to see your app in the first lines of the chart, you need to know how to make an app and how to monetize your app.
We also selected for you an interesting video about mobile app developing. Here you can see “How to Make an App – Secrets Top Developers Use to Gain Millions”. We are sure that this video will bring you a lots of ideas how to make your own app. Let’s enjoy!
how do free apps make money
Making an app is a bit different topic, but you can still get some hints via our Takeaway Secret Tips down below or contact us for more information.
So for now, let’s discover how much money can you make with your free app! Let’s start with the difference between paid only and freemium services. The graphic is shown in terms of Google searches.
Freemium vs Premium app search
how do free apps make money – freemium and free
And then take a look at the app categories that make the best profit. As you can see, Games are making more money. Nevertheless, you should consider that these numbers are just averages, and some apps are much more profitable than games.
Top grossing apps by category till 2018
The other factor to pay attention at is a Platform to use while creating an app. Let’s take a benchmark of earning in a $5k per app per month, which is below the average employed developer salary in the US and Western Europe, meanwhile in some countries it equals a salary of a whole team.
how do free apps make money – earnings platforms
The highest revenue model (when benchmark of earning is still $5k per app per month) is per device royalties or licensing fees. Although, this might be a very desirable revenue source, important to understand that it’s not available to all apps. Meanwhile models like affiliate and CPI programs are often harder to implement, but this research shows the effort is likely to be worth it.
how do free apps make money – revenue models
The most intriguing are the last two bottom end revenue models. The difference between them is only 1%. So what’s better: paid downloads or free apps with in-app purchases? Just take a look at the top grossing iPhone mobile gaming apps in the US as of January 2017, by Statista.
how do free apps make money – calculation
Actually, there are numerous ways you can target your apps and select the revenue model. And to increase your chances of financial success, take a look at the best tools to help you monetize your free app.
Best Tools to Help You Monetize Your Free App
Nowadays, when you say that the app is “free”, it can only mean that it’s free to download. But there is always a way for free apps to make a good money. Take a look at the best tools that offer multiple ways to turn your free app in a source of income.
In-App Advertising Monetization Tools
When it comes to in-app advertising tools the first thing you will face is finding an ad network. So: The first to mention is Google’s AdMob, that lets users use Google Analytics to better understand the audience, improve their advertisements, and gain new customers/consumers.
InMobi is a tool that helps you focus on creating better UX. It is more visually appealing than the majority of ad platforms. InMobi allows users to leave feedbacks about the ads, and, consequently, increase the value of targeting for the advertisers.
Facebook’s app advertising system offers to display its advertising inside of your app, making targeting more exact and conceivably better for revenue. Apple does also have their own ad tool for apps, which integrates the desired ads into your app and into one platform.
Among other popular and effective in-app advertising app monetization tools that work best for free apps are Amazon’s ad system (that still pays per impression), an automation tool with predictive analytics Tapjoy, Appsfire that tries to choose ads that blend best with the apps design, StartApp (that prioritizes ads and increases click-through rates), etc.
In-App Advertising for Game Applications
Considering the fact that game apps are one of the most popular app categories these days, some ads systems are keen specifically for them. So, the list of in-app advertising for game applications starts with Unity, as it’s completely focused on games and targets ads only for gamers. In a word, the tool allows monetizing apps entire player base with ease.
NativeX delivers great no lag video together with some pretty nice ad units. Chartboost is the biggest mobile games-only ad network, that offers free cross sales and a Direct Deals Marketplace making game app monetization and user acquisition easy and successful.
Freemium Model of App Monetization
If you prefer to get users enjoy your app for free rather than make them see your ads, there are also tools that can help you improve UX and support the freemium model of app monetization. In case you have your app developed with no digital storefront integrated into the code, you’ll find these tools useful:
Android takes care of their developers and offers its own solution to freemium called Androids In-App Billing tool. Meanwhile Apple also has its native system that offers users to purchase your in-app content or subscriptions. But shows it as a software download from the store. Well, yes, it takes 30% of the revenue but manages the transaction instead.
If you are looking for a simple digital storefront tool that allows in-app purchases, Swarm is there to help. It unlocks additional features that are not available on initial free downloaded version. While in case you prefer to combine ads and freemium model in your system, try out AdWorkMedia. It implements various app monetization tools at your disposal.
In-App Video Advertising
Another type of tools worth mentioning works with in-app video ads. Well, video ads may suit your app. It is a fact. Specifically, if they reflect an expected type of content. The following tools may easily help you monetize your free app:
Inneractive combines innovative ad units with perfect reporting and analytics. This allows to monetize mobile apps without actually sacrificing UX. At the same time, YuMe is also on the list. It uses PQI, a proprietary real-time inventory grading algorithm to bring campaigns the best inventory.
Meanwhile Adcolony is there to use their Instant Play HD technology combined with a buffer-free video playback, Vungle is the only one who features SDK suitable for iOS, Android, and Windows. At least they say so.
There are a lot of effective ways to monetize free apps, but it will take some planning and well-rounded marketing strategy. Advertising is still holding the leading position as app monetization method, with 65% of all apps on the market. (Source: Sweetpricing report). Still, developers use app monetization mix: in-app purchases and ads.
how do free apps make money – app purchase monetization mix
App publishers should do a market research, define target users, check other app developers success stories. The main challenge is to get awareness, acquire loyal users and choose the right revenue model. Developers should plan more targeted ad campaigns to promote the app and its releases, constantly provide updates on features, use more blended and unique revenue models to deliver value to users. This will lead to greater profits and help keep your customers satisfied.
Then please let us know that AIS Mobile Apps is a software development company which has expertise resources in the field of Mobile apps, Android app, ios and iphone apps and they have successfully created a very good bonding and relationship with large enterprise as well as small enterprise businesses.