How do free mobile apps make money?

Do you feel the need of having a free mobile application developed but skeptical whether your idea is worth investing? Your concern is genuine as the development of a top-notch app demands a lot of time, patience, and most crucial money. So before you jump right in you must have a clear idea as to how to monetize your mobile app. Also, as free apps have always outnumbered the paid apps(both in terms of profit and number of downloads), there is always a common question asked as to how do free mobile apps make money?

So here we are providing the most effective revenue models for your free mobile application.

1. In-App purchases:

The most popular strategy to get the best out of your free app is In-App purchases. Used by a dozen of apps in the Google Play Store and App Store it allows the end user to make purchases right inside the application.

The In-App purchases, however, can be bifurcated into the following types:

• Consumable: Typically used in mobile games, consumables are the products that a user can only opt for once. The best example would be gems, extra points or virtual coins inside a game.
• Non-consumable: This is basically how the free apps make money without advertisements. Now you might have definitely come across many apps that offer a paid or a pro version that generally comes without ads. Non- consumable products are permanent in most cases.
• Subscriptions: Mobile applications sometimes offer paid subscriptions that tend to unlock premium features for a shorter duration of time or on a permanent base.

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2. Advertising:

One of the most common techniques most of the apps use nowadays is Advertising. Easiest to implement and managed by third-party networks, setting up advertising on your app is quite a simple task. The app owner just has to display the advertisements in the app space and earn from the third party ad networks.

These are the types of commercials used by app owners on their application.

• Interstitials: Having high impression rates and revenue, these type of ads are typically displayed at natural transition points in the flow of the app. Closely related to pop-ups they generally cover up the entire space of the app screen and offer decent interaction with the users on your app.
• Banner-ads: If you are new to mobile advertising, banner ads are actually a good way to start. These image-based ads appear on the top or bottom of the app screen and are less obstructive that helps the users to freely use the app.
• In-app video ads: Video advertising is already booming. In-app video ads are automatically placed in the app and are used as an exchange for some in-app reward. For instance, by simply watching a video ad, the user earns virtual app currency that could be further used for unlocking a game level or additional features.
• Native ads: These ads blend seamlessly into the app form and content. Native Ad strategies actually prove to work because most of the users these days opt for ad blockers and native ad strategies actually help for communicating commercial messages in an easy way.

Though if you're a small venture looking to monetize only through ads, it won't rain huge paychecks in your kitty.

3. Selling Merchandise:

One innovative method to generate revenue from your free app would be selling merchandise over it. For instance, to allow app publishers to monetize through this strategy, Amazon introduced Amazon Merch which allowed publishers to create their artwork and upload it to Amazon. Also, Amazon took care of production, shipping, and timely payments.  A lot of e-commerce setups are vouching for the same. 

4. Sponsorships:

A lucrative monetization model that can turn out be an actual boost to your app revenues is sponsorships. Also, mobile opens the doors to many new sponsors because it allows large sponsorships types and pricing options. You create a great app that gains a large amount of traction and then reach out to a potential funder who would, in turn, design the app to match the sponsor’s brand. For paychecks, you could either split the revenue with the sponsor brand or opt for a monthly subscription fee.

Just, for instance, The Marriot Rewards chase card is promoting its deals and rewards to their on- the- go business travelers with an exclusive sponsorship with the Gayot.com mobile application.

5. Referral Marketing:

This trick can actually work wonders for your app if done right. It helps you attract customers that are loyal and profitable. App publishers can promote or sell affiliate products/services based on clicks or installs. These are the referral marketing models to monetize your mobile app.

• CPI (Cost per Install): Relatively simple, you get paid for each advertised app install within your free app. There are a number of mobile advertising platforms that aims to drive more users, generate more money and offer a rich personalized experience on your platform.
• CPV (Cost per View): This model involves monetization based on the number of ad interactions or video views. For instance, videos, as well as interstitials, are used to create natural breaks in the gaming sessions. 
• CPC (Cost per Click): This type of model is based on a number of clicks on the ad displayed. It includes both text and display advertisements. You can look out for a number of ad networks like Commission Junction and Google’s own AdMob.

With so many monetization methods being mentioned, it becomes quite intimidating as to which finds suitability for your app. However trying out the tactics and analyzing your competitors can be a starting point. When you are starting with your mobile app development keep things in mind like your target clientele and your mobile app structure. Also for a good user experience and overall subtleness of the app don’t overuse the monetization methods.

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