Don’t let the ‘free’ in ‘Free App’ give you the wrong impression, because these little fellas drag in a massive amount of revenue every year. For instance, according to recent statistics, the popular free app ‘Clash of Clans’ generates an average of $1,305,247 per day. If free apps aren’t charging users any money, how is this possible?
According to an article on Smart App Marketer, there are nine main ways in which free apps strike gold:
Sponsorships:
Just like with web sites, you can make good money by getting people, companies or brands to sponsor your apps.
This was an under-utilized app monetization method until fairly recently, but it’s starting to take off.
Basically the idea is to build a niche app with a specific target audience. You then find a person or company who has a similar target audience and do a deal for them to sponsor the app.
Subscriptions:
The subscription model looks something like this:
- The app is free to download.
- There might be some free content available in the app, but not always. It’s completely up to the developer.
- The user must pay a regular subscription fee to unlock all of the content in the app.
Email Marketing:
Just like on the web, email marketing works by collecting email addresses and marketing offers to people via email.
Mobile apps offer a new opportunity to collect email addresses of people who are interested in your product or service.
Even though email marketing is one of the most effective marketing strategies on the internet, it’s still largely underused in the mobile space. Most of the big players are taking advantage, but it’s not something that most smaller developers are looking at yet.
The ‘Freemium Upsell’:
The general idea is that a user can download & use an app for free. If they like it and want more from the app, they have the option of spending money to get it.
The benefit of the freemium upsell is that it removes a lot of friction from the download decision. People are very hesitant to download paid apps because they don’t know exactly what they are getting. But with a freemium app people can download it, test it for free and just delete it if they don’t like it.
Amazon Underground:
Amazon Underground is a relatively new way for developers to make money in the Amazon App Store. It doesn’t require advertising or in-app purchases. In fact, neither of these are allowed in apps listed on Amazon Underground.
So how does it work?
Amazon Underground is a separate app store, with its own mobile app that people must use to access it.
If your app does contain in-app purchases, you agree to waive the fees for them by listing on Underground. In other words, users can ‘purchase’ an unlimited number of your IAP’s without ever paying a cent.
Selling Merchandise:
The basic principle here is taking your brand or product and creating physical goods to sell alongside it.
These physical goods can be sold from within the app, and they can also be sold through email marketing if email addresses of users are being collected.
Affiliate Income:
Affiliate marketing, put simply, is the practice of promoting & selling someone else’s products or services in exchange for a percentage of the revenue.
Advertising:
It’s one of the most common ways for mobile app developers to make money with free apps.
The idea is simple. You display advertisements inside your apps and you earn money from the ad networks for doing so.
There are several ways to earn money from ads. You are either paid per impression (every time a user sees an ad), per click (every time someone clicks on an ad), or per install (every time a user clicks and ad and also installs the advertised app).
In-App Purchases:
In-app purchases are items available to buy inside your mobile app. Payments are handled by the app store that your app is in, and the app store takes a percentage of the revenue from each IAP.
IAP’s can be used to give your users the ability to unlock features in your app, unlock in-app items, buy digital goods, buy in-game currency, remove ads, and anything else you can come up with.
A lot of the top grossing app rely heavily on IAP’s as a source of revenue, so this is definitely a powerful way that free apps use to make money.
If you are considering a lucrative start-up business, free apps may be your answer. As technology becomes increasingly more of a necessity in all circles of life, apps are becoming a mainstream business model. Come up with a simple app model, decide which of these nine tools you will use to generate revenue, and debut your app!