Do you have a fantastic idea for a mobile app that could be the next big thing, but you're not sure if it's worth the investment?
We understand your concern. Developing a high-quality mobile application takes a significant amount of time and money, and it’s not always obvious how you can make money from something that's given away for free.
The good news is that there are several ways to monetize free apps.
To help you turn your idea into a successful app, we've put together a comprehensive guide on how to make money with free mobile applications. Whether you're a seasoned app developer or just starting, this guide will provide you with valuable insights into how you can generate revenue from your app without charging users for it.
Free apps make big money
The mobile app market is booming, with users on the App Store and Google Play spending a staggering $133 billion on apps and games in 2021, a 20% increase from the previous year, according to Sensotower.
If you're an app developer, this is a market you don't want to miss out on, but if you think that paid apps are the ones bringing in the most revenue, you're mistaken. The top grossing apps on both the App Store and Google Play are all free. This is because the vast majority of users prefer free apps: 97% of all Android apps on Google Play and all apps on the Apple App Store were free as of January 2022.
Developing a free app is a smart business strategy, but it's not enough to simply create it and expect users to flock to it. You need to ensure that your app is presented in a clear and understandable way so that users can find it quickly and immediately understand what it's designed for.
So, before diving deeper into money-generating matters, let’s explore your app’s packaging, as this is the first key to its success.
Present your free app the right way
The sheer number of mobile apps available today makes it increasingly difficult to stand out in the market. As of the first quarter of 2021, Apple’s App Store alone had hosted 2.22 million apps. With such intense competition, it's crucial to create an app package that quickly and effectively captures users' attention.
Clear packaging that includes an attention-grabbing name, informative description, and eye-catching screenshots can significantly improve your app's visibility and discoverability on the Google Play Store and Apple App Store.
To help your app stand out, here are some pre-launch marketing strategies to give you the edge.
Choose a clear and catchy app name
Your app’s name should be snappy and reflect its primary function. Although some apps have names that convey nothing about their purpose, your app will attract more users if its name hints at what it does. Additionally, including relevant keywords in the app name can improve discoverability.
For example, UBER, one of the most popular taxi apps, has a title that describes its function: “Uber – Request a ride”. Keep the name short, ideally under 100 characters, as it’s the first thing users see when considering whether or not to download your app.
Add a comprehensive app description
The first few sentences of your description (up to the “Read More” or “More” buttons) are particularly important, as they are the first thing that users see when they come across your app in the app store. Therefore, it's crucial to give a clear and compelling overview of your app's idea.
For instance, the description of Scrummer, a planning poker app for Scrum development teams, provides a great app description that is both brief and informative. In addition to general information, you should also provide a more detailed review of your app's features and functions in the main body.
Include eye-catching screenshots
It's a good idea to add descriptive text to your screenshots, highlighting some of your app’s key features. Take a cue from Uber (mentioned above), which uses descriptive verbs to create a sense of action and excitement in their screenshots.
By following these tips, you can create an informative and visually appealing app listing that will help your app stand out in the crowded app marketplace and attract more downloads.
How to monetize free apps
Now that you’ve learned how to develop a top-rated mobile app, let's delve into the tactics you can utilize to monetize free apps.
Method #1: In-App Purchases
One popular way to make money with free apps is through in-app purchases. This strategy is widely used in both the Google Play Store and the Apple App Store, particularly in mobile games. In-app purchases allow users to buy something, such as virtual currency or additional functions, directly within the app.
There are the three main categories of in-app purchases:
- Consumable: These are items that a user can only use once, such as virtual currency or health points. Such purchases are common in mobile games.
- Non-consumable: These are features that users buy for permanent use, such as additional functions or ad-blocking (which is how free apps can generate revenue without ads).
- Subscriptions: Your app can offer subscriptions that grant access to exclusive content or features for a set period of time. Subscriptions can either renew automatically or be non-renewing.
Method #2: In-App Ads
Another way to monetize free apps is through in-app ads. With in-app ads, you advertise your affiliates’ products inside your app and get paid if your users interact with those ads.
There are several types of campaigns used in affiliate marketing for in-app ads. The most popular are:
- Cost per click (CPC): You get paid for each click on ads displayed in your mobile application. Since a single click is usually not worth much, revenue is calculated on a cost per mille basis (mille means thousand in Latin).
- Cost per view (CPV): These campaigns are commonly used for video ads. You earn a higher payout when users of your app watch these ads more frequently.
- Cost per install (CPI): With this model, you earn money whenever a user of your app installs an advertised application.
To monetize your mobile application through ads, there are several networks to choose from, including one of our clients, Adtelligent. These networks typically support apps on various mobile platforms, but it's important to review the types of campaigns they offer to understand their payment structure.
You can display ads in your mobile app in different ways, such as the following:
- Banners: These ads appear at the top or bottom of the screen and include text and graphics. While relatively unobtrusive, banners have low click-through rates and rely heavily on brand recognition.
- Native: These ads blend seamlessly into the app and do not look like typical ads. They are effective because users do not view them as intrusive.
- Videos: The average click-through rate for video ads is 7.5 times higher than display ads, making them quite effective. These ads appear automatically when users interact with the app.
- Interstitial: These ads take up the entire screen and typically appear when users launch or close an application. However, they can also look like pop-ups.
- Rich media: These ads use multiple methods, including audio and video, to reach users. They are among the most lucrative ad types, with an average click-through rate of 2%.
While in-app ads can be a lucrative way to make money off free apps, they work best for applications with large audiences. For startups, this monetization strategy may not bring in big bucks initially.
Method #3: Freemium
Freemium is a model where a free version of the app is offered, but a paid version with additional features is also available. This strategy can be highly effective, as users are more likely to pay for a premium version of the app if they have already enjoyed the free version.
However, it's important to strike a balance between the features offered in the free version and the premium version. Providing too many functions in the free app may discourage users from upgrading to the paid version.
Method #4: Sponsorship
Sponsorship is another monetization model where a sponsor company supports the development of the mobile app. Once the app has gained a significant number of users, the app owner can approach a sponsor and offer to update the app's design to match the sponsor's brand.
Sponsorship deals can work either as a revenue-sharing arrangement or a monthly sponsorship fee. The main challenge of sponsorship is finding a sponsor that's interested in supporting your mobile app. It's crucial to develop a mobile app that's good enough to attract potential funders.
Method #5: Email Marketing
Email marketing remains a powerful tool for making money from mobile apps. Developers can collect user emails and send them promotional offers and other engaging content. Offering a Facebook login option to collect user emails is a subtle way to achieve this. However, developers should also give users the option to cancel email notifications to maintain credibility and avoid spamming.
Method #6: Transaction Fees
If you have an application that is free but sells someone else's products, you can make money by setting up transaction fees. Each time a user makes a purchase from your app, you get a fee. Uber makes huge profits from rides, Airbnb earns money on rental deals, and eBay generates income from its sellers' transactions. There are two models to choose from: fixed or progressive. The former means charging a fixed rate no matter the deal amount, while the latter implies higher rates for more expensive deals.
Method #7: Crowdfunding
Crowdfunding helps startups raise funds for their product development before it is released to the market. According to Absolute Reports, the crowdfunding market size is predicted to reach $288 billion in 2028 from $133.4 billion in 2021. You can spread your app concept or MVP across various crowdfunding sites like Kickstarter, Patreon, or Indiegogo for free and generate income from people who like your project—plus potentially attract big investors!
What method fits your business?
Choosing the right strategy is key to success. Here are a few tips for choosing the best app monetization methods from those mentioned above.
Consider the Business Goals of Your Free App
Every app has a business goal, and monetization strategies should be aligned with that goal. For example, an audio player app with many sound adjustments may not be well-suited for in-app purchases, but it could be profitable with ads or a subscription-based ad-free version. Similarly, an educational app could benefit from in-app purchases and ads.
Define Your Target Audience
Understanding your target audience is crucial in deciding which monetization options to use. Based on user needs and behaviors, you can choose the best monetization method for your app. It's important to remember that most users won't spend any money, so reaching as many people as possible is key.
Research Your Competitors
Conducting a competitor analysis can help you learn from others' experiences and see what mistakes they've made. By exploring app stores and searching for similar apps, you can find out what monetization methods your competitors are using and use that knowledge to create a better app.
Don't Overuse App Monetization Methods
While it's important to monetize your app, it's also important to keep your users' experience in mind. If your app is full of ads or in-app purchases, your users may stop using it and move on to a similar app. Be mindful of your users and make all ads and offers as subtle as possible.
Now that you know about how free apps make money, give your idea a go and turn it into reality! At Intersog, we have vast experience applying all the methods above. Many of our clients have built a successful business on their free apps. If you want to join their ranks, contact us for mobile app development. We are always happy to help.