3 Strategies to Make Money From Your Free App

All these efforts are unlikely to yield results if you don’t have a monetization strategy for your app in place. It’s time to game plan on how do you plan to make money from your mobile app.

While free apps might have a higher chances of being successful on the app stores, making money off your free app requires a carefully thought out app monetization strategy. Unlike paid apps that have a clear price tag attached to them, making money from free apps is somewhat more complex.

There are a number of ways to make money from your free app and each monetization method comes with its own set of pros and cons. Read on to get critical insights about how free apps make money, what are the options available to you and the pros and cons of each to choose the one you can use to maximize profits from your mobile app.

1. Advertising

Digital advertising via mobile applications has become a go-to strategy for marketers and its surge in popularity has resulted in high returns for mobile app developers. Users are spending an increasingly large amount of their time on smartphones making app advertising a highly effective platform for advertising.

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Pros of Advertising Model

  1. Increased benefit to the marketers: Studies have shown that consumers are more likely to remember and retain the ads displayed on the mobile apps over those they see on television and laptops because of higher engagement levels of the former.

  2. Ease of adoption: There are a number of mobile ad networks you can sign up with to get started with app advertising like Admob by Google or iAd by Apple. You can easily partner with relevant brands over these and get paid by them to post ads on your app.

  3. Greater number of options: App developers have the choice of what type of ads do you want to display in your free mobile app. You can choose between interstitial ads, banner ads, native ads and video ads according to your requirements.

Cons of Advertising Model

  1. Obstruction of the user experience: Ads within mobile apps can act as major detractors for the users and unless done focussing on showing relevant content to the target audience, can be a source of annoyance to the users.

  2. Need for widespread users to be effective: Your app needs to enjoy heavy traffic with a large user base generate a sustainable revenue stream solely from advertisements.

To be successful at in-app marketing, you need to focus on incorporating the ads in such a way that they don’t detract the users from actually navigating through the app. Having relevant content that actually provides them value instead of meaningless and irritating adverts is the way to go if you wish to follow this revenue model with your free app.

2. In-app purchases

In-app purchases bridge the gap between free mobile apps and ones with premium features. While the app itself is free to download, the users can access the premium features offered within the app by purchasing and unlocking them.

Pros of in-app purchases

  1. User willingness: The customers don’t feel like something is being shoved down their throats. They make purchases based on the value they feel is offered. Since the power resides with the end users, in-app purchases have become a highly effective app monetization strategy these days and will continue to remain an important part of app development in the near future.

  2. No need to develop two different applications: You don’t need a free app with basic features and another fully packed paid version for customers to upgrade to. In-app purchases ensure that a single app meets all user requirements.

  3. Value addition for the users: Whether you are offering consumables (virtual coins or gems), non-consumables (access to an ad-free version of app) or subscriptions (access to additional content on a periodic basis), the perceived value of in-app purchases make it a lucrative offer for the app users.

Cons of in-app purchases

  1. Cost-value equation: The additional features that you provide as in-app purchases should provide value and be compelling enough to drive the users towards making the purchase.

  2. Added technicalities for payments: You need to install additional payment gateways in order to process the purchases made. Since you would be processing sensitive credit card information, data security is another factor that must be taken into consideration, which amps up the functionality requirement of the app.

To successfully implement in-app purchases within your mobile app, an understanding of human psychology for designing features that compel the users to hit the buy button and complete their purchase is a must. App revenue follows the model for a freemium app, which is a hybrid between free apps and premium apps.

3. Subscription-based model

In the case of content-based mobile apps, a subscription model for making money from your free app works wonders. The revenue generated is more or less consistent. Subscriptions can be offered on a monthly or a yearly basis to incorporate choice for app users.

Pros of subscription model

  1. Higher engagement and consistent revenues: The advantage of content-based apps is that fresh content in the form of audio, video, images and even news is highly engaging. All you need to do is provide freshly brewed content that meets what your target audience is looking to consume and you have ensured a consistent revenue stream.

  2. Higher demand: The demand for content is ever increasing. With smartphone penetration becoming ubiquitous, accessibility to internet and changing content consumption trends, the demand for these apps is only going to increase.

  3. Platform support: Both Google Play Store, as well as Apple App Store, are incentivizing subscription model by slashing down their cuts in the revenue generated making it an attractive option for app developers.

Cons of subscription model

  1. Content creation: Creating engaging pieces of content that compels users to subscribe is a resource-intensive process.

  2. Limited scope: There are limited category of apps for which the subscription model has shown potential of revenue generation. If your app idea doesn’t have consistent value provided over a period of time, users won’t be likely to subscribe.

Simply having the know-how of “how do free apps make money” isn’t sufficient. The application of this knowledge is what matters.

There isn’t a single correct answer to choosing the monetization strategy for your free app. You could pick one that best fits your needs from the options available or create a monetization mix for your business that combines two or more of these strategies.

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