How We Chose the Best Money-making Apps. The top nine money-making apps were chosen based on the features and tools they offer, how they help you make money, the background and reputation of the company, and when and how you get paid—whether it’s in cash or gift cards, etc.
How do free apps make money?
That’s the question that both app developers and users often ask.
What happens after a user downloads a free app from an app store? How much money do app developers make? If you are asking the same questions and want to know the answers, this article will explain each point in detail.
This guide covers the following factors on how free apps make money:
- the difference between free and paid apps
- the best monetization strategies to make money with mobile apps
- how much money do free apps make?
- approaches to choosing the best monetization strategies
- technical tools, APIs, integrations to make money from an app
- how world-famous companies make money from apps
Let’s jump right into an overview of all details.
FREE APPS VS PAID APPS BUSINESS MODEL
An average user in 2020 has 40 apps installed on their smartphone. For Millennials, the number rises to 67 apps. Around 49% of users open an app over 11 times each day. Overall, we interact with 30 apps each month.
Between 2018 and 2022, global app downloads will face a 25% increase.
When it comes to free vs. paid app downloads, users are hesitant about paying for an app. In fact, free apps take a whopping 96.4% of all app downloads on Google Play. If you release a free application, it automatically increases the chances that users will notice it.
When we look at app stores, we can clearly see that users are more likely to spend more money on mobile games. According to statistics, out of top-10 apps on Google Play with the highest revenue, the vast majority of them are games that you can download free of charge.
You have a lot of options, even if you decide to release a free application. Read on to learn more about each possible solution.
HOW TO MAKE MONEY FROM AN APP: MONETIZATION STRATEGIES
Games To Earn Money Apps
There are eight top monetization strategies that companies are using to generate money with free apps. If you are looking for an answer to the question ‘how do free apps make money?’, this part will explain the topic in all the details necessary for making the right choice.
Statista states that in 2019, there were three leading monetization strategies among developers:
- subscription model
- freemium model
- advertising model
Let’s take a look at how to make money from an app.
ADVERTISING
How do free apps make money, like millions of dollars?
This is the answer to your question. In-app ads are very popular among developers of free apps. Depending on the app type, in app ads revenue can be accounted in thousands of dollars.
Currently, there are 5 main types of free app advertising strategies that you can use to make money with your application:
- Banners
How do free apps make money with ads without interrupting user experience?
Banners ads are the least intrusive type of in-app advertising. They don’t interfere with user experience, as they still can interact with your application without any limitations. At the same time, Click Through Rate of such applications (the number of customers that click of them) is not that high, around 0.06 percent.
Still, the average banner ad format CPM is around $1.
- Videos
This type of in-app advertising is more intrusive, as it prevents users from using the app’s functionality. Such videos typically last for 10-30 seconds and can be added into apps and mobile games when there can be made natural pauses. That is why such video ads are often placed after a user finishes a game level.
You can use in-app ads as a form of a rewarding program. For example, users can get more lives in a game by watching video ads.
That is how to make money from an app with in-app advertising.
- Native Ad
Ads of this type are a little more difficult to make, as such ads should not interrupt the user experience. They should perfectly fit into the app design and overall concept, allowing to naturally promote a brand or a product.
Usually, such native ads don’t create a distraction for users, ensuring a higher level of conversion.
- Interstitial advertising
Such in-app ads are represented in the form of full-screen pop-ups that interfere with app usage. Ads of this type usually appear when users open or close an application. They have to either skip the add after watching them for a predefined type period or check the offering. Either way, such ads often irritate users as they don’t have a choice to simply ignore such ads without any further actions.
- Incentivized Ad
The vast majority of users (84%) prefer to deal with this type of in-app advertising. Instead of interrupting ads, they can get rewards for taking some actions, like sharing content, leaving a review, filling out a survey, etc.
Incentivized ads work better combined with the system of in-app currencies and purchases.
While in-app ads are one of the most popular types of free apps monetization, it might be a good idea not to irritate users with too many ads. As a result of irritation, users are less likely to click on ads, decreasing the conversion rate and your app ads revenue.
REFERRAL MARKETING
When you look at the previous monetization strategy, you can see that it is just a part of referral marketing.
As a part of referral marketing effects, you can place some content inside your free app to promote someone’s application, products, services, etc. You get a commission for a number of clicks, app installations, etc.
Referral marketing works as a cost-per-action (CPA model) and includes the following types of rewards that you can get:
- CPM (cost-per-mille, cost-per-impression) – you get a payment based on a number of impressions. Usually, you are charged every 1,000th time an ad is displayed. Such a model comes from a Latin word mille, which means a thousand.
- CPC (cost-per-click) – you are rewarded based on the number of clicks made on ads inside your application.
- CPV (cost-per-view) – you get a reward for each view of a video and ads interaction.
- CPI (cost-per-install) you get a payment each time a is installed via the ads inside your applications.
How do free apps without ads make money?
The answer to the ‘how do apps make money?’ question doesn’t always include the mentioning of in-app ads. There are four more monetization strategies for free apps that you can use to generate revenue:
- In-app purchase and a freemium model
- Subscription model
- Sponsorship model
- Crowdfunding model
- Email marketing
- App merchandise & eCommerce
These models provide an uninterrupted user experience and don’t irritate customers with unnecessary actions needed to be taken.
Let’s find out how to make money from an app without built-in ads.
IN-APP PURCHASE IN THE FREEMIUM MODEL
The Freemium model is a very popular approach to the monetization of free apps these days. You grant access to the basic features of your application for free and can provide some additional functionality or bonuses for a payment.
Please note that app stores manage such transactions and you only get a commission for every option sold.
In-app purchase strategy can be divided into three types of purchases:
- Consumables – one-time items that are mostly used in games. Examples include in-app currency, additional lives, etc.
- Non-consumables – feathers that are used permanently throughout the whole time of the app use. Examples include ad blocking, access to advanced app features. etc.
- Subscription – you can find a more detailed description of this model below. This monetization strategy allows to get access to some additional in-app content or features for some time, e.g. for a month, a quarter, for a year, or lifetime access.
How do free apps make money with this model?
In fact, they can generate millions in revenue with the help of in-app purchases. The most successful examples include The Clash of Clans, which earned a million a day on purchases, and Pokemon Go, which generated 1.5 million every day and only in a year managed to reach the revenue of over billion dollars.
Still, making money off of apps with a freemium model is no easy task. This monetization strategy is the best solution for applications and games with a huge number of users. Moreover, users may only opt to use the free version of your application and never buy any additional content. You should also remember that app stores take 30% out of every sale you make with your app.
SUBSCRIPTION MODEL
This is a very popular monetization strategy among SaaS, cloud services, audio, and video content streaming services. The subscription model entails getting payment for a weekly, monthly, quarterly, or annual use of your solutions.
Examples of solutions working on this model are numerous and include such world-famous solutions as Netflix, Apple Music, and Google Music. This monetization strategy is also applicable to online news portals and the Wall Street Journal and the New York Times successfully utilize it.
The subscription model is not the easiest approach to how to make money from an app, as you need to provide users with fresh content, regularly add new features, and release updates to incite them to continue using your application.
SPONSORSHIP MODEL
The use of this business model can bring you a lot of money. The only difficulty is finding a sponsor who will give you money in exchange for the promotion of their solution or product.
This monetization strategy works best is you have a unique app idea or have a big user base. It can be approached in two ways:
- Revenue split generated by the app
- Monthly sponsorship fee paid to you by app’s funder
CROWDFUNDING MODEL
The answer to the “how do app owners make money?’ started to include this monetization approach lately. Kickstarter, Indiegogo, CrowdFunder, and AppsFunder are the most popular crowdfunding platforms that you can use to make money from free apps.
You should be aware that there are thousands of other applications of such crowdfunding platforms and it is no easy task to get attention to your application. However, you can do it by providing real value with your unique app idea.
EMAIL MARKETING
This is the oldest among strategies that proved its effectiveness decades ago. To send emails to your users, you need to know their email addresses. You can get them in a few ways:
- Ask for an email address with a pop-up box. You can exchange the email address for free features, in-app currency, and other attractive offers.
- With Facebook SDK, when customers use social login or sign up.
- With third-party tools that are designed for email collection and can be integrated into your application.
Don’t forget about GDPR (General Data Protection Policy) and notify users when you collect emails, why you collect them, and how they will be used.
APP MERCHANDISE & E-COMMERCE
This is another approach that explains how to make money off a free app.
The eCommerce industry is growing with unprecedented growth. You can become a part of this growth by selling your own branded items within your application. Amazon takes on a lot of work, including merch production, selling, payments, and shipping, and you get a part of the profit.
Angry Birds is a successful example of how to make money with an app that utilized this monetization strategy. Even though there is a potential to generate millions in revenue, your app should become popular first. If you don’t have a dedicated fan base that is willing to pay for merch, you won’t be able to utilize this business approach.
How do apps make money?
You now know the most profitable and popular monetization strategies with the potential of bringing millions of dollars to you.
HOW MUCH DO FREE APPS MAKE MONEY?
The market of mobile apps is a lucrative niche for a business
As per Statista, worldwide mobile app revenues will account for 581.9 billion in 2020 and the number will grow to 935, 2 billion by 2023.
Over 25% of iOS developers and 16% of Android developers earn over $5,000 per month with their apps. This number should be considered as a benchmark in the app industry.
Almost 24% of apps generate up to $500,000 in revenue per month, and only 1.5% of apps can bring their owners over $500,000 every month.
As we already mentioned answering ‘how do free apps make money?’ question, subscription, freemium, and advertising are the most popular monetization models among the developers of free apps.
According to Sensortower, as of July 2020, the following apps are the most grossing on the market:
- TikTok
- YouTube
- Zoom Cloud Meetings
- Facebook Messenger
- Snapchat
- Gmail
- Disney+
- Amazon Shopping
As you can see from the list above, all these apps can be downloaded for free. Still, they generate a lot of money for their creators with the help of successfully implemented monetization strategies.
HOW TO CHOOSE THE BEST APP MONETIZATION STRATEGY
You can find the best strategy for app monetization by following the below 4 steps:
Step 1 – Research the market and find competitors to better understand what is popular on the market, which solutions do not get users’ attention, and what are the most potential app niches.
Step 2 – Determine your target audience and identify which points this audience has, how you can solve it, which interests them, etc. to provide users with relevant content and useful features.
Step 3 – Create a unique app idea and do not try to copy some famous apps or games.
Step 4 – Decide on the app monetization strategy and the best approaches to making money from apps.
After you know which type of app you are going to develop and have a unique app concept, you can use the following tools to present your application to users and get their attention:
- Clear and catchy name that will be easy to remember and that will convey the idea behind your article.
- Clear app description that will show the app’s real value to users and entice them to download your application.
- Eye-catching app previews like app screenshots, demo videos, and other visuals to let users know how your app looks like, which UX/UI offers, and how it will look on their devices.
HOW DO FREE APPS MAKE MONEY: REAL LIFE EXAMPLES?
There are a lot of apps on the market that generate millions in revenue.
WhatsApp is a unique example, as the app started with a paid model and charged $1 per download. How does WhatsApp make money? Later, it switched to another business model and now allows users to download the app for free. With over 2 billion users nowadays, WhatsApps hold unlimited opportunities for in-app ads.
Another vivid example is the Facebook app that you can use for free. Still, the company manages to get millions of dollars from its apps by utilizing in-app ads. According to statistics, ads generate 98,5% of revenue for the company, while payments and other feed generate only 1,5% of all revenue. In 2019 alone, advertising brought almost $69.7 billion to Facebook.
TikTok, which is the talk of the day, also generates a lot of money, however, utilizing an entirely different approach. The company sells its in-app coins that can be exchanged for digital products. Users can buy 100 coins for $0.99 and the prices reach $99.99 for 10,000 coins. In October of 2018, users spent more than $3.5 million on in-app purchases.
Regardless of the monetization strategy, you will choose, you can ensure sustainable growth of your application and revenue only with the help of steady innovations and improvements. No app can make money without users, and you should make sure that your application meets all their expectations. This way, users will stay loyal to your app and brand for a long time.
SUMMARIZING WORDS
Today, you can get a lot of answers to this question. Users are more likely to install a free app rather than a paid application. It makes sense to develop such a solution and implement one of the most popular app monetization strategies:
- subscription model
- freemium model
- advertising model
Regardless of the model you choose, first of all, make sure that your application provides value to users and helps to solve their problems.
You can combine a few monetization strategies to make even more money with your free application.
During the tenure of a marketing internship, a few students who were repeatedly asked by the owner of an application to promote their app among friends and get good reviews found themselves in a position to find out about the earnings of an app owner. An app is built collectively with the help of a significant team at the best android development company, with each member playing equal importance. And we are accustomed to using apps all day long.
These days, for each of our endeavours that require a mobile phone or a computer, an app is an essential requisite. Yet, most of us are not aware of the monetary benefits hidden behind these apps for their owners. How is Mark Zuckerberg a billionaire? Did a single app- Facebook lead him to be a billionaire? Do apps earn you such a good dividend? Is there a decent scope in developing an android app using the best android development company? We are here to answer all these questions that you have in mind.
In this blog, let us take you on a ride on the various income sources of apps. Read on to comprehend how much money you earn from an android app.
How much to expect from an app?
Believe it or not, Android applications are making millions of dollars each year in revenue. However, it is evident that several such applications on the Google app store are not much. Some of the apps lie around tatters and do not make a penny. So.wothers on the other hand, are making their owners play with billions of dollars. We surely have taken this deed into our hands. Still, practically looking at the scenario, it is not possible to provide exact figures of the financial benefits of developing an app.
We will still try to mention down some rough figures of the earnings of an android app as suggested by the best android development company. The apps maintaining a position in the top 200 list of apps earn their way about $82,500 daily. This revenue plummets to $3,500 when we look at the top 800 list of apps. Not to forget, these revenues do get influenced by the category they come under.
For example, a gaming app would earn greater than an entertainment app. A gaming app would reap some $22k on an average daily, while an entertainment app will get these figures down to only $3090 per day. Keeping that in mind, we will answer your questions regarding how much money do apps make per ad or how much money do apps make per download.
Although difficult to process, it is a fact that in 2018, a total of 52.2% of the entire web traffic was caused by mobiles in the USA.
This is the reason why everyone thinks of building an app even if they are running an offline business. Having a unique idea for any business in mind will help you get the attention of the audience. We say unusual because today, nearly 3.48 million apps are available on the google play store. Not all of them are of a clue to the users. To avoid being one of the useless ones, your idea must be unique and relatable to the target audience so they can make complete use of your app. But before going there, obviously, everyone knows how much they have to invest and how much they’ll get in return for their efforts and investment. We are here to discuss that.
Before we begin, you just understand that every niche gets you a different amount of revenue.
So how much can I earn from the Android app is answered in this blog.
As of quarter 1st of the year 2021, the global revenue of apps has been calculated to be $11.4 billion against $8.4 billion for the 1st quarter of the year 2020.
We have data of annual app revenue of the Google Play store till the last quarter of 2020. So with that being said, let us look at the revenue generated year-wise through the game apps as given by Statista.
Taking a glance at the above data, you must have understood the scope of developing an application with the best android development company. The annual revenue has seen a continuous increase every year. This isn’t really shocking as this is a byproduct of the boost in mobile usage over the years. In 2018, the cause of 52.2% of global traffic was mobile phones.
As is evident from the data itself, the app revenue annually is not set and varies from niche to niche. Hence, one needs to pay heed to the niche they are expecting a range of income from. The following data represents the discrete classification of revenue from different categories of apps.
Apart from your app’s category and target audience, you must decide the business model that you are seeking to implement in your app.
How do apps make money?
How We Earn Money From Apps
There are different ways through which you can make money with an app keeping the best android development company in mind. There are multiple ways of earning, and we are going to discuss the major ones.
- Subscription: one of the most common ways that you might know is through subscription. When an app asks you to get a subscription for its services, it directs you to get a subscription to the app. This way, the developer receives the money you pay for the subscription. If you are a developer, you can earn money by either putting up a paid app or insisting on getting a subscription for your app, either monthly or yearly. Apps like Netflix make their significant earnings through this method.
However, most apps refrain from using this method because they reach their target audience since Netflix has a huge audience and a massive fan following. Everyone around talks about ‘Netflix and chill’. All this is the impact of a great marketing strategy along with excellent content development for the audience. If you think you have a fantastic idea like that one, give it a shot! Also, if you think your app has some features that require a little more than just free service, you should go for a subscription method of earning.
Clearly, this method is the best way to earn. Statistics infer that this method allows the owner to reap 50% more than any other monetization method of apps.
Remember, getting prolonged subscriptions is not easy in today’s world of competition. However, an app like Netflix is still running on payment subscriptions because of the creativity, upgraded information, and tremendously engaging content that it provides to its customers. Hene, it is advised to choose wisely the method of monetization of your app. - In-app purchases: the next method to be informed here in-app purchases of an app. An app that includes in-App purchases is a great option to finance its developers. If you’ve played PUBG, the most sought-after game of the past few years, you must have noticed the various options that required purchases with real money. This is how gaming apps have been earning for ages. Many gaming apps use this strategy of inculcating in app purchases so that the customers are enticed to buy their favourite characters or traits for their characters while in the high of the game.
Advertisement: Advertisement is a strong win-win situation for both the developers and the customers. A little creativity and consumer psychology out into developing an excellent advertisement for any app can make your app thrive for years. Partnership with top brands who wish to advertise their products through the medium of your apps will turn out as the best thing you do for your app. Best android development company suggests that incorporating ads from different sources is an economical way to earn through an app. Having to watch advertisements on Youtube has never been a compulsion until recently. Now, every video plays with a certain amount of ads. This is a way of earning which is typically used by a lot of enthusiasts.
While partnering with any brand, you must make sure that the products are relevant to your application. For example, showing bath products ads on a technical app would not work as much as displaying earphones and stereo speakers ads would do on a music app. Now the question arises, how much money do apps make per ad? The answer depends upon the genre of the app as well as the ad unit. To give you an idea, the average income per impression earned in the US is $0.02. Here is an illustration of the impact of ad units on the revenue from apps.- Merchandise sale: the sale of goods in your applications is another unique technique. Most e-commerce companies create free versions to sell physical products like toys, clothing, shoes, etc. Such tangible things may be sold directly or via email marketing through the application. To cite an example, Amazon has developed a service called Amazon Merch, which allows publishers to create their work, upload it to their platform, and advertise their items, to motivate app publishers to embrace this technique. For owners and application customers, it is a win-win situation. Not just this, Amazon has also come forward in handling the delivery of the merchandise to facilitate things.
- Referrals: the type of marketing is the best used in today’s time. Here, two parties help each other grow through referrals. The publishers of an app are subjected to sell the products of another party called the affiliate marketer by installing their products on their site and asking for referrals or income in return based on per click or per view mechanism. An example would be the pop-up ads that show up on your screen while using a site or application. The app owner gets benefited with each click or view of that pop-up.
How much money do apps make per download?
How Can I Get Money From Apps
There are two categories of apps based on monetary aspects- paid and free. It is obvious to speak that paid apps do make some money per download. But is it possible that free apps also earn through downloads? If yes, how much money do free apps make per download? We will answer each of these questions distinctively here.
The paid apps get an amount per download as is designated as their cost. On the other hand, free apps earn through other monetization methods. So, as far as downloads are concerned, free apps do have a scope of earning through downloads. But, there is a limit of downloads that they have to achieve before it gets them paid. So, how much money a thousand download app can make depends on various aspects and can’t be discussed discreetly.
What’s the next big thing for application development?
While choosing a career or a work profession, one must inevitably consider the monetary benefits associated with it. Similarly, someone making a career in application development with the best android development company has to look out for the financial aid they will receive as a byproduct of working in their favourite field. For this reason, having an idea of how much an application will pay them is crucial. As much as it is required, it is very complicated to comprehend the exact amounts of dividend an app will pay you. It varies, person to person, strategy to strategy, varies among business models used, designs implemented, creativity put in, monetization methods used, companies collaborated with, and lots more.
Still, we have tried to cover most aspects of monetization through an app. Be it subscription or advertisement, be it in-app purchases or referrals, be very wise to choose the right kind of financing method for your income through your app. Otherwise, your app might become one of those apps if you are not going out to the general public but lying around in a corner in the Google Play Store. As blunt as it may sound, keep these things in mind and correlate each aspect of app development, implementation, and monetization to get yourself some good income. Good luck!
So now, all you really need is an expert Android App Development team that will blow up your app idea. Now sit back and relax, and your app will earn for you. Just reach out, and let’s do it together!