How Do Free Apps Make Money- Build A Million Dollar App

There is no disgrace to accept that we all start a business to earn a living for us. After that comes the concept of sharing knowledge, making your own brand and being independent. Another home truth is EVERY STARTUP NEED MONEY, and this is the major stumbling block. We are afraid of risking our hard earned money; with the fear of losing everything.

Believe it or not, this fear must be consuming in your brain as well. You had researched a lot on startup ideas, and you had made your mind to invest your money in developing an app. Now you’re wondering why you should have a free app instead of a paid on? Or how free apps make money?

Here are two quick questions for you:

How many apps are there on your Smartphone right now?

How many of them are paid?

I have 28 mobile apps on my mobile phone and I have only one paid app: Netflix (Actually, I am addicted to few series of Netflix originals which are not available anywhere else).

Today; each app has its clones available which are similar in functions and are free. So the users will never spend their money to install a paid app. This is the reason that the top acquiring apps cost nothing to download like Spotify Music, HBO, Clash of clans, PokemonGo etc.

The Top Searched Questions Related To App Development Are:

1How much does it cost to make an app

2What are the best Startup ideas?

3How to convert and ios app to androi d?

4How to Make Money From Apps?

I have answered top three questions in previous blogs; now it’s time to know: How do free apps make money? This blog covers all the details

Let's Understand The App Monetization Options:

Your app can be a magnificent mode of earning and asking your users to pay for it is not the only option. As per statista the paid app revenues has decreased to 37.8% which earlier was 75.9%.

There are several other ways to acquire money from a mobile app business, let’s understand it one by one:

Advertising

The most simple and best revenue yielding model is advertising. All you have to do is display the commercials inside the mobile app and a third party ad-network will pay for that. Today, “7 out of 10 apps are earning great revenue with advertising.“

How did the advertising model work?

The advertiser needs to first select the impression method on each ad and the price of each impression. The impression method can be pay per click or pay per install, it depends on the advertiser. Then you have to clarify the type of advertising model according to which the commercial will be displayed in the app; it can be full screen, top stretched or bottom stretched ( I have covered this section later on, keep reading).

Whenever an impression is initiated by the user whether it is clicked or install you will get paid.

Let’s quickly have a glance at the types of advertising models:

Banner ad

Banner ads allow the advertisers to select from a variety of options as per the sizes and stretch (top or bottom part of the screen). These ads don’t intervene in the process of the app and the user can interact with the app without closing the ads.

In-app video ads

Video ads are displayed as “rewarded video” and are displayed automatically. The videos provide an in-app reward in exchange for watching the video. For example, the users can get reward points after watching the video which can be used in the next purchase.

Interstitial ad

Have you ever noticed full-screen pop-ups are displayed in the app at some specific time frames? The banners represent adverts of a third party company related to the app.These ads can be closed by a small close button at the corner.

Native ads

This is the most successful ads nowadays as it is less irritating and intrusive to the users. The ads are not displayed in focus or highlighted manner, they are integrated into the app as a part of the app. The ads will be displayed as promoted content or sponsored content in the app.

Your app users may not pay money for your app initially. You need to win their trust and give them a reason to pay money for your additional features.

Once you have entered the app market you should initially provide the app for free as this would give a positive feel to the user and they would readily take interest in your app.

This would give you more vital information about user behaviors which could later help you in building an ideal revenue model for your app.

Want to build your own app? Get Started With The Experts.

Freemium Accounts

As the name suggests “Free+Premium”. Giving some basic features free with the App while charging for the advanced features or giving part of the app free and as the user get involved with the app selling the rest of the app for a fixed price.

The Freemium apps can be divided into two categories

Free period apps

These are the apps which allow the users to use the app for a period of time and after that, the user has to pay a specified amount to use the app. The major advantage of this is you will have one chance to prove that your app is beneficial to them. They can try your app and decide whether the app is actually worth the money not. The best example here is Netflix; you can use Netflix free for a month and after that, you need to select the package and pay the fee based on that. I wasn’t sure of paying for $14 but after my one-month trial, I bought the plan happily.

Free version apps

This category of apps provides two versions; one is free and other is paid or premium. The premium features can be accessed anytime from in-app purchases. The best part of this monetization model is; it allows you a room for advertising model as well. You can post ads in the free version and ask the users to upgrade to the premium version for an ad-free experience. Consider Spotify as an example of this model. The free account allows only shuffle play of the songs while premium account provides features like ad-free, offline playing, unlimited skips etc.

Collecting and Selling Data

The behavior data of your user is invaluable for the researchers of your niche. We all know that apps collect a lot of data related to the app usage and user preferences; the data generally contains social media account details, email addresses and personal preferences of the users.

You can earn a good amount of money for the user’s data in two ways first; by selling this data to the researchers. The second way is; using the data for your own good. I have already explained the first part of so let’s have a quick look at the second way.

The companies related to your niche will display their ad in your app only when you can prove that you have the relevant audience. This data can help you to prove your point.

Referral Marketing

When you have a great audience and followers who trust your brand then you can earn a fortune amount by referring third party products and services to them. This model works similarly to the advertising model, the only difference is you are promoting the products instead of selling them via commercials.

You can simply suggest your audience to look out for the products/services related to your services/products. For example, if you have an eCommerce platform for selling clothes, you can suggest related accessories, bags, shoes of a third party website on your website. So, whenever a customer bought a dress a list of related shoes and other accessories will be displayed and when the customer click on those related objects, you will get paid.

Wrapping it up!!

App monetization is a simple task but a tricky one; you need to understand your target audience before selecting the monetization model. All you need is dedicated market research and a deep understanding of users and target audience.

The major challenge here is to acquire loyal users and the right revenue model. Keep your users satisfied and you will get the best profit.