How Do Free Apps Make Money?

How Do Free Apps Make Money?

It may sound to be implausible, but trust me it’s Not. Today in such a huge pool of applications there is a wide range of them that are available to be accessed for FREE. Now, whether you are a Game lover or a die-hard movie fan, according to App Annie, iOS apps in their App Store have something for each and all, and that too at the cost of nothing. Having the majority of useful applications for free is the user’s right, but what about the app developers? How do they compensate for their expenses and profits? Let’s check that out…


When it comes to earning profits, then in-app purchases and advertisements are a way through it. Today almost all the free apps are highly dependent on them. But, somewhere or the other in order to have better revenue-generation, app developers have to think beyond their premium paid options. A smart way to achieve that is by having knowledge about other revenue-generating options and a detailed study of the market and the relevant competitors. Not only this, but familiarization with the targeted audience allow the developers to have the better-paid user experience. Now, let’s learn more about how free apps helps us to produce more money.




  • Give a thorough study to your market competitors and give a check to your missed money-making opportunities.
  • Make your apps “freemium” by offering paid access ONLY to the additional features.
  • Make in-app purchases a way to add paid access to the additional features within the app itself and don’t forget to keep it as optional.
  • Convince the users for subscription and offer paid contents only for a limited time.
  • In-app advertisements generate revenues through user’s clicks and impressions.
  • Focus on increasing the user is the best cheat-code for having the best revenue generations
  • Make your money making strategies feel like your normal app experience



Understand the Money Making Strategies:


In such a huge pool of free apps, having an appropriate money-making strategy is a must-to-follow rule. No doubt there are several options available in-line for you, but what to fit where is the task to be focused on, by taking care of your app type and its launching plan and obviously your user’s mindset. The in-app purchases give you the leniency to wave-off the initial price tag of your application and divide it into small fragments; smaller enough to be noticed.



In-App Purchases-


All the application that follow the strategy of in-app purchases, attract their users by offering additional and paid services for a short span of time via the free version of their applications. Specially, if we consider the gaming apps, then such a strategy is the most used one. It aims at making the user addictive to the app and forces them to purchase new level, gear, items or extra lives.

It’s not only relevant in the context of the gaming world but outside that too in-app purchases are in good trend. Now, whether it’s about the Calcot, 1Password, or even Apple music, they follow the strategy of allowing their users to have access to the paid features even when they are all consumed.

Free apps that serve paid additional and privileged services are often referred to as “freemium”. There are ‘N’ number of ways to be a “freemium” app, you can be one by offering free versions of your applications with some reduced features or attract your users by giving them access to the privileged services for a short span; once they’re addictive, they’ll be bound to purchase whatever you sell. No doubt, the latter one requires patience and much more hard work, but once achieved it is capable of giving unexpected profits.

Then, we have the auto-renewal subscription concept, the most loved one (obviously, among the app developers). Offered by mostly iOS and Android, this feature allows the users to have access to the privileged services only for a fixed time-frame, and the user’s subscription is auto-renewed, once the fixed time-frame is done. Such a feature is actually the most important one, specifically for the applications that have to be updated within short spans, so that the servers can be managed and the new content can be created properly.


In-App Advertisements-


In-app Advertisements comprises of a huge market. Their revenue-generation is highly dependent  upon the size, type, aim and position of the application. They focus on generating profits by user’s clicks, impressions and the amount of revenue-generation is highly dependent on user’s nationality, advertisement format and the video advertisements rather than the stable and static ones.


Mobile exclusive advertisement networks offer models and formats within the in-app advertising strategies to keep a record of all the ads performances. Hongkiat runs through some of the big networks here, including Google’s AdMob and Millennial Media.


Focus on User Growth –


No matter, in which of the two your free app depends on, you’ll have to focus on a very small group of users who are actually going to generate the revenues for you. This is the only reason why your target should be increasing the base of your active users. The increase in active base users leads to an increase in the size of that targeted small group of revenue-generators.


Along with all this, you should also keep a track on free-to-paid conversion rates, lifetime value of  a customer, churn rate, and all other comparable items. To support the on-going businesses as well as the start-ups Andreesen-Horowitz recently published a guide to important revenue-focused metrics and helped them to know about their company’s health as well as the performances. According to John Egan, growth engineer at Pinterest, these metrics were like in a post earlier this year .


Know your App Market and Users –


Better research is the key to success here. Examining the apps, knowing your competitors, identification of the best monetisation practices and much more are some of the basic things that should be included in your research.  Though it’s quite difficult to know about your competitor’s profits, but by studying about their money-making strategies and their advertisement content for better impression can be quite helpful. Asking yourself questions on what all is lacking in your competitor’s  app can also be very helpful. It can indirectly help you to develop new and innovative ways of improvisation.


For crafting a mobile monetization strategy deep understanding of users as well as competitors is very important for the better building of your app. Knowing about the demographics and tendencies of your app users will help you to present relevant ads. When we talk about the in-app purchases, it must be taken care that paid feature should be offered to those who have the desirability of some extra features. Skew too far one way and users will see no value in using your app. Skew too far another way and users won’t purchase additional features.


Be Subtle and Auctionable –


Don’t forget the motive of your application. Targeting the exact customer and knowing about them is a very sophisticated task. It’s quite obvious that users want to remain free from apps who aim is to make profits from in-app purchases and in-app advertisements. Users want to experience and use an app that seems to be their normal life’s schedule, and this is what successful free apps are doing today.


A 2014 study by Medialets (illustrated above) showed that the top performing banner ad sizes/positions by conversion rate were about 320×50 or 300×250 pixels and took up either a slice of the bottom of the screen, the lower half of the app, or a slice across the center of the screen. Interstitial ads, specially found in gaming apps are highly dependent  on their timing. They should be perfectly managed in a way that they don’t lead to any kind of obstructions. Their perfect timing and placements can ultimately lead to maximizing impressions while minimally breaking the flow of the app. The sole way is to put your ads in a way that they seem to be related to your app and should be from its native part


Concluding Note-


The best way to double your income is by getting focused on your business goals and develop money making strategies in a way that is highly dependent on your business as well as on your users. In case you developed an app just for giving a hike to your business or brand, then it’s quite obvious that you don’t require any in-app purchases or advertisements. You can simply expand your business by making available several options for the users to interact and connect with you. No matter what strategy you are following, the only thing to keep in mind is to keep a proper track on all your monitored data and how correct your assumptions were. Trying new things based on your user’s data and assumptions is the best way to innovate and should be done in a way that gives a hike to your money-making strategies.

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