How do free apps make money in 2021? As free apps continue to outnumber paid apps, it is common to ask this question. The interesting fact? Paid apps have seen a massive drop in terms of the number of installs over the years.
As per the industry reports, the paid apps’ revenues recorded a fall from 75.9% to 37.8%, and the numbers are expected to worsen by the end of the decade.
In such a scenario, the free apps find a sweet spot out of it. But how do they make money is still a secrete sauce for many? Despite being full of competition and cheaper clones, the secret sausage of free apps earning millions is still worth pursuing and hence could not be ignored by the experts from mobile app development companies in India.
So here are four ways that mobile app development companies do to earn from their free app.
App Monetization Options
When it comes to apps (premium or otherwise), there is a lot of difference between paid and free apps. Here is how:
Free Apps :
Attract more targeted users and increase visibility.
These apps are optimized for great reviews.
Less expensive and complex.
Multiple monetization opportunities.
Promotes itself through brand-building exercises.
Paid Apps :
It has fewer downloads and loses clients in the long run.
Have higher user expectations. It may fail to impress its users.
The cost of development and design is high.
Limited monetization options.
Even with great brand, apps are less likely to purchase.
4 Popular Revenue Models For Free Apps To Make Money
While there are numerous ways to build a money minting machine from your free mobile app, these tactics are proven, age-old tactics and hence could not be ignored.
#1: Advertising
When it comes to earning money from the internet on your mobile app or website, the most natural element that comes to mind is ads. This ad can come from either third-party sources or directly from the advertisers.
For instance, to gauge how vast the option is, the advertising industry crossed the mark of 190 billion USD in 2019 and 280 billion USD in 2020.
Thus, this makes the advertisements the most ideal way to earn from your free app as per the experts in the mobile application development company in Ahmedabad.
Some pros and cons around it:
Pros
- Apps ads have the highest probability of reaching the target audience.
- Improves income through CTR.
- Helps track user interaction.
- Video ads generate better traffic than other sources.
Cons
- The model is effective only for apps with a large pool of audiences.
- Irrelevant ads may help users lose interest in your app.
- It might affect user experience, thus defeating the purpose in the first step.
#2: Subscriptions
The next most common earning methodology that is widely accepted and has proved itself as a working model is the subscription model.
In this procedure, the users are given limited access to a service and post a fixed period or free trial; the subscription is imposed. Another version of the subscription-based model allows complete access to all the resources until the free trial lasts.
The following strategies are most commonly used in audio and video services along with online news services. However, companies have been trying to engineer better services and methodologies around it, and hence subscriptions play an integral part in the mobile app development services.
Pros:
- Ideal for streaming services (audio or video streaming services)
- Great fit for an engaged and serious audience who love what you do.
- Leads to more reliable income.
- It keeps customers hook.
- More space for improvements as well as experimentation.
Cons:
- Need constant updates and improvements to retain subscribers
- Transitioning from one-time fees or yearly fees to monthly recurring fees could induce serious backlash.
- The free trial requires a loss of resources and may even need tweaking.
- It May not fit smaller businesses or have a smaller pool of ideal businesses for the offering.
#3: Selling Merchandise
One of the lesser-known tactics that are often touted as complicated is selling merchandise through apps. The idea is to build a free e-commerce application that supports the selling of goods. The following could be achieved using email marketing as well.
Being innovative in approach, the idea is supported by the likes of business mammoths like Amazon. So the company, Amazon, started a program called Merch by Amazon to promote the idea.
In the following app, sellers can upload their designs or artwork and promote their goods worldwide. The company also provides payment and delivery options to complement the entire service, making it a win-win.
Pros:
- Selling online to a larger pool skyrockets your profits.
- Being an additional convenience, users can browse across your complete store.
- Great platforms for shoppers who never have to leave with an empty cart.
Cons:
- Complex technical integration can act as a hindrance.
- Poor Inventory visibility.
- Disjointed shopping experience.
- Decreases user experience drastically.
#4: Sponsorship
The sponsorship model is a lesser-known yet effective methodology that can help you earn substantially from your free app. The model acts on apps with a niche and decent installs. The investors impose the following criteria as they desire to visible results on their desired target group.
However, one has to be cautious before planning and building the following app and revenue strategies. Experts suggest listing down a list of potential customers and talking to them about your plans before lifting your pen. This will help you have a clear picture of the process.
For instance, Home Depot’s investment in the Weather Channel App. The animated app background advertises the investor’s logo, which targets homeowners into weatherproofing their homes.
Pros:
- Involves providing advertising space to brands that keep the users hooked.
- Brands can outstand their presence. Thus, helping the brands go long run.
- Minimal disturbances or improved UX.
Cons:
- Needs a strong brand with the integration of complex technologies.
- Requires investment in the initial stages by the app owner to include stats and figures.
- Can backslash if you work with the wrong set of investors.
Concluding Remarks
With a plethora of options out there, it has become one of the easiest ways to generate revenue from the app. Moreover, these methodologies are time-tested and serve as the perfect aid for someone who has begun their journey around it.
