How do Apps make money
Learn how do apps make money, app monetization tricks and tips from Agicent.

Introduction

For those who are not familiar with the App business ecosystem may really wonder that how do Apps make money, and especially free apps. Apps like Clash of Clans, Spotify, Pokémon Go, etc. cost nothing to download but still they are able to generate huge revenues. This is because these App publishers have properly identified their users and incorporated an app monetization technique to earn money from their free apps. Clash of Clans is a perfect example of utilizing “In-app purchases” monetization technique to its full extent. The game intelligently bounds its gamers to buy gems again and again, which ultimately leads to massive generation of revenue in tunes of $ 5 Million almost everyday. So, if you also want to make money off your app then it is pretty necessary that you first figure out which app monetization strategy out of the slew of given options, will work best for your business. We at Agicent App Company always suggest our clients to decide about a specific long and short term app monetization strategy even before the development of the app is started. We help our clients in analyzing their business model and then suggest them the suitable app monetization approach.

In this post, we will discuss how do apps make money (Free and paid) and different app monetization techniques:-

  1. Free apps

Free apps mean Apps that are “Free” to download and free to use.  This app monetization tactic works best for completely free apps. These types of apps provide full functionality to users without any charge and users can use them without any limitation. These apps generally make revenues by displaying in-app advertisements. There are many ads SDK like Google AdMob, Unity Ads, etc. that can be integrated with your app to show ads. These ad SDKs show ads based on user interests which possibly increase the CTRs (Click Through Rates) and every time a user is clicking on an add popping up in your app, you are earning money. Choosing a good ad SDK is also important so as to maximize revenue from in-app ads. You can also choose to display different types of advertisements within your app like popup ads, rewarded video ads, and so on. These in-app advertisements are the primary source of income for completely free apps.

  1. Freemium Apps

Like Free Apps, Freemium apps are also free to download, but they charge users an amount to use certain “premium” features of the app, apart from regular free features. A good example can be the famous dating app tinder, they allow you to download and use the app for free, but charge an amount to access premium features of Tinder plus.

  1. Apps with in-app purchase

Most games follow this app monetization strategy where they let users play the game for free, but smartly lock certain power-ups, stages, game character customizations, etc. that can be unlocked only after paying an amount. But as I said the word “smartly”, I emphasize on this as well since this strategy may completely fail if it is not done after a diligence. Super Mario Run is a perfect example of such failure, as the game earned a lot of hype in the beginning but still wasn’t able to generate the revenue as per their set goals. The reason was, this game was presented as a free app with in-app purchases but the “Free” game play wasn’t more than a trial version game and instead of encouraging the user to buy more levels, it annoyed game players, including myself, and hence it failed.

  1. Upfront Paid Apps:

As the name suggests, Paid apps have the simplest and most direct app monetization strategy as the users have to pay an amount in order to download and use the app. In certain case of paid apps which are most compelling and useful, the in-app purchase mechanism can be implemented as well to increase the revenue intersections beyond upfront fees. NFS Most Wanted game is an example of a paid app but with further in-app purchases. However, you need to reconsider two facts before implementing this money-making strategy as follows:-

First, users tend to first see the app in action before they make up their mind to make a payment. Also, note that apps that follow “in-app purchases” or “freemium” monetization techniques generate more revenue as compared to the paid apps.

Second, there is no policy in Google Play Store or Apple App Store to launch trial versions of the paid apps. So, there is no way by which you can present your app to an end user without making them pay for it.

  1. Subscription Based Apps:

These apps follow the “subscription based” monetization strategy where users can download your app for free but need to pay on a regular interval of time to enjoy the app services. Popular apps like Apple Music, Spotify, Amazon Prime, etc. are examples of apps making a huge amount of money by following the subscription based app monetization methodology.

  1. E-tailer apps:

Even though many e-tailer apps like Amazon and Flipkart ship their apps completely free, without any ads, or in-app purchases, they still make big money but not from their apps but by selling physical goods or services. To these ecommerce companies, their apps are like a physical “outlet” which they invest in to maintain, upgrade, and update to enhance user experience and engagement.

  1. Enterprise Apps:

Enterprise Apps or Business apps are designed to resolve complex or big enterprise problems like CRM, Inventory management etc. these kind of apps generate money either by contractual fee (when a vendor offers such enterprise app solution to their client) or they simply exist to increase the efficiency of the organization and save money when an organization develops and maintains such app themselves.

We, at  Agicent app development company always try to keep ourselves updated on newest strategies in App development, App monetization and would add more information to this article as and when received. Readers may feel free to send their feedback or suggestions on comments, or email us at sales@agicent.com.

 

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