How Do Free Apps Make Money in 2021 - Agicent
Mobile App Monetization

How Do Free Apps Make Money in 2021

How Do Apps Make Money
How do apps make money??

Mobile apps were the greatest hit of the pandemic era, i.e. 2020. According to Business Insider, mobile apps made $100 billion worldwide. So for now, investing in an app for making your business a game-changer is a great call. But before investing in app development and its marketing, have you unravelled the frequent question often asked by people? This question might also sow the seeds of curiosity inside your mind. The question is’ How to make money using apps’. Being a decision-maker of your business, are you also planning to make it free. Taking a call is important and so is to make the users feel that they own the app? Some tech companies have literally made the customers believe that they own the app. Don’t just launch an app, establish a relationship between you and your customers. Tell us, how are you planning to launch your app? Have you explored the possibility of making money from a free app? Let’s crack the puzzle of how do free apps make money.

For using an app, we usually go to google play, type the name of the app, and download it. But what happens behind the scene is still a mystery. For every business the ultimate goal is to make money, so how would you not explore a hotspot that holds your loyal customers to make revenue out of it. 

Difference Between Free and Paid Apps:

Free Apps:

As most of us know, free apps attract more customers as they are free to use and usually one does not have to pay to use the app. A user can simply download the app, use it and further can decide if that is beneficial for them or not. We all do this many times, correct? For example: For a photo collage, we download 3-4 best-rated apps and try making collages with each of them. The one we liked the most, we keep that and then uninstall others. Here the customers have three choices: One to discontinue the app usage, another to continue using the free version and the last one is to pay for the upgrade or the premium version.  As the app is free, the users don’t expect much and end up giving positive reviews. Summing up the above points below:

  • More Customers
  • More Reviews
  • Lower Customer Expectation
  • More Downloads
  • More Visibility

PS: You can also make money from free apps

Paid Apps:

As the name signifies, you have to pay for downloading the app and for using it further. For this type of app you don’t have to think a lot about how to make money using apps. The revenue model for these apps are clear, pay instant and use it later. The probability of a customer choosing the paid app is very less, in the first place. The user will either not use the app or will pay you for using the app. Only the loyal customers pay for these apps. The increasing count of downloads increases revenue. As you pay for the app, you don’t get to see the annoying advertisement here hence the user experience remains good throughout the usage. Also, as most of the businesses launch their app for free to get more downloads and users, therefore the competition in the market for the paid apps are less. 

Listing down the benefits of  paid app:

  • Loyal customers
  • Revenue system
  • No ads
  • Less competition
  • Better Engagement. 

Now let’s just consider, you want the users to first use the apps without any restrictions. The smart move here will be to make your app free. But while you are making your app free, don’t forget the ultimate goal of your idea, yes ‘the revenue’.  You will be a little surprised to know that free apps can also make money. Yes, you read it right. 

Ways From Which You Can Make Money From Free Apps:

1. Advertisement:

Advertising, in simple words, it means showing ads to the user while using the free app via a third-party app. Most free apps generate money via advertisement. Your curiosity raises a question again, how do free apps make money? The apps make money via:

Cost – per -impressions: If your app shows an ad to 1000 different users, you will be receiving a certain amount of money for the same. It is also termed as Cost – per -mile

Cost – per- installs: If the user whom you’re showing an ad about, installs the app, that means your target is achieved. You will be making money if the user installs the app your app is promoting. 

Cost – per -view: You can also charge your advertiser for the number of views you are giving while allowing ads to play in your app. 

Cost -per- click: These are usually for the display ads, if your user clicks on the display ad promotion done by the advertiser, you will receive the payment. You can fix a X amount of money per click and here you go. 

The ads can be in different formats. Usually there are banner ads, Video ads, Native ads and Interstitial ads. They all have their fixed placements and they appear there only. 

2. Sponsorship:

It is another interesting method to earn money. Here the app owner has to find an appropriate platform to launch your app on another platform. How do you make money from a free app? To crack the door for this frequent question of your’s,  the app owner has to find a similar niche platform as the app has. A great idea will be to launch the app using the brand identity of a  well established brand having a great number of audience base. 

Nowadays, you can also collaborate with the influencers and can easily ask them to frame a content for your app in their own style. As the influencers are more like the ordinary audience who deliver the content as per their experience and that’s why people follow them. The weightage of their experience and reviews are much more than a celebrity. Find out the relevant kind of Influencers and reach out to them for giving your brand a shoutout. 

3. Email marketing:

Email has now become an important part of our lives. And using the platform that users often browse through is a smart step. But how do apps make money via email is your next possible question, right? It is done by email marketing. All you need for this is cream  and verified data along with a great content to indulge with. Updating the subscriber with the latest deals and offers is a great call to take. If your business has plenty of new features, products, rewards and apps news to share, undoubtedly go for it. 

4. In-app purchase model:

If you have a freemium app model then it is a powerful method to earn money. Here the app offers their internal deal breaker for the user. For example, It asks you to buy certain currencies to unlock the rest features or you may buy certain health points which can be redeemed further. The app store takes care of all these transactions. You can make money from  free apps by offering internal deliverables and perks.  Again the offerings in the ‘In app purchase model’ are of two types. One is consumable(the offer which is valid for only a certain period of time) and another being non consumable(The offer that lasts long)

5. Crowdfunding:

Now, how do apps make money by crowdfunding is the new curiosity blooming inside? Crowdfunding is the newest talk of the town. Here an app with a great idea, nobel initiative  and extraordinary features gets funded worldwide. In simple terms, this means a small amount contributed by a large group of people. There are a lot of crowdfunding websites that bring investors and entrepreneurs together. This is usually done for charitable events, NGO’s and small startups.

6. Affiliate Marketing:

Let’s understand this more deeply to understand how do you make money from a free app. Affiliates marketing takes two to be powerful.  One has to be the mobile advertiser and another role will be played by the mobile affiliate. The mobile affiliates offer relevant products, services or events to advertise  to the target audience of the app which does not seem more like a promotion. Actions like clicks, installs, views drives the revenue here. Another way this Affiliate Marketing works is based on the percentage model. Here the Affiliate offers a certain amount of percentage of money that resulted from advertisement. 

7. Subscription:

A new user won’t buy the app for a trial. They usually try the app, scroll the feature and check if the app has any good for them. If yes, then they start using the app frequently. So how will you make money from a free app here? Simple, by offering some interesting features for free so that the users will  find it creative and interesting and locking the more interesting and premium features. Once they feel like they want to dive deeper in the more interesting and premium features, ask them to upgrade by paying some amount of monthly charges. In subscription you usually charge for some premium features that users want to use. You ask your users to upgrade the app from free to unlock a certain feature. If your app engagement is fantastic, go ahead for Subscription. Here the payment is done using a third party app like paypal. 

The subscription is further categories into two types:

  1. Subscription lasts for a certain period of time(Example: 3 month or 1 year) and once it expires,  it has to be renewed again. 
  2. Subscription that automatically gets renewed after the  free trial has been ended. Once you upgrade the app, the app then asks you to try the app for free but for the same you have to enter the credit card or debit card details. Further then it keeps deducting the amount as per the monthly charges. 

Factors to Know For “How do App Make Money”

  1. Identifying the type of your app: Are you clear what will you offer your audience? have you made your mind on the basic feature that you will be bringing on the table? Know what your app is offering and what problem it will solve for the users. If you are clear about these earlier stated questions then you can map appropriately about the monetization method you will be taking ahead. 
  1. Study your competition well: Half of the things are already clear if you know what exactly your competitors are offering, which feature from their app is a blast in the market and what holds the loophole in their app. Once you know this, you have a fair idea about what challenges your business holds. 
  1. Analyze the Target Audience: A business model hits differently when it focuses fully on their target audience. The target audience are those bunch of people for whom your business is solving a problem. Studying their needs, challenges and happiness gives appropriate ideas about the business. It also tells you what new things you can introduce for them. There are N numbers of factors that affect the customer’s utility. Remember, as being a marketer, your prime focus should be identifying the needs of your target audience and then offering what your business has. 

And that is where the CYCLE OF App Need -> App Discovery -> App Consideration -> App Download comes into action. 

  1. Don’t overlook the money you spend on making the app: If the development of the app has cost you a lot because of a variety of features, look at all the features and decide on which one you want to make free and for which feature you want the users to mark an upgrade. Because every single penny and each feature plays a vital role in your business. Take a wise call post analyzing your cost, features, USP and Target audience. 

Let’s sum up

The trend of mobile apps will keep on increasing shortly. During this covid pandemic, even the actions that required our physical presence are converted into virtual presence. Artificial intelligence, Virtual reality, cloud storage are making our life much easier and so are the apps based on these features. The gaming apps make billions of revenue through the mobile application and other apps are yet to arrive in their desired revenue benchmark. 

In conclusion, there are endless possibilities related to how apps make money. You just have to find out your go-to way and the actions associated with it. 

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