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Did you know 97% of mobile apps available on app stores are free? Quite surprising, right? but the most important question that arises quickly afterward is, “How do free apps make money”. Perhaps you’re also wondering the same; if that’s the case, you’ve already landed at the right blog post.

Unquestionably, mobile apps have become an integral part of our daily lives. Whether we want to order our favorite food, read our favorite writer’s novel, or make reservations for the upcoming travelling, we are solely reliant on them for almost every little task.

According to a recent report published by Statista, it has been discovered that a remarkable revenue i.e, almost 98% of revenue comes from free apps. Free apps employ a wide range of monetization models, including in-app advertisements, freemium features, and other subscription services, in order to capitalize on their large user base.

Below, we’ll shed light on the top 10 monetization methods that free apps use to generate revenue. Besides, we’ll uncover all the essential information associated with how to make money with mobile apps. Also, connect with any reputable app development company to kickstart your app journey in order to stand out from the competition. 

Ready to dig in? Let’s delve deeper together!

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How do Free Apps Make Money –  Top 10 Most Effective Ways to Earn Money  from Mobile Apps

Here is a quick lowdown on the top 10 monetization methods that helps in generating revenue from free apps.

But before discovering the monetization methods, give a quick read on our blog post “How much does it cost to make an app”. In that way, you’ll get all the essential information regarding the mobile application development.

How do Free Apps Make Money - Top 10 Most Effective Ways to Earn Money from Mobile Apps

1.    In-App Advertising

In-app advertising remains one of the most common methods of monetization when we talk about make money from free apps. In this model, ads are placed in the application interface. Besides, the advertisers pay for the advertisements based on the clicks and impressions.

With the help of the following method, developers can generate hefty amounts without the users experiencing financial burdens and just using the app for free.

Moreover, they can choose among available multiple banner ad formats to sync with their app design and performance. On the contrary, intrusive ads are the ones that are irritating to the users and ultimately lead to loss of user engagement and lowering engagement.

Similarly, by blocking ads, ad blockers hamper the capacity of in-app advertisements, resulting in a revenue loss.

Pros Cons
●      Easy to implement ●      Can be intrusive if not optimized
●      Can generate revenue quickly ●      Revenue can be inconsistent
●      No direct payment required ●      User experience may be affected
●      Various ad formats available ●      Ad blockers can reduce effectiveness

Types of In-app Ads

In-app advertising offers various formats to monetize mobile applications. Each type has its own benefits and certain pitfalls.

●      Interstitial Ads

Interstitial ads are full-screen ads that appear at natural app transition points, such as between different levels of a game or when moving from one section of an app to another. Additionally, they are often visually engaging and can include videos, images, or interactive elements that keep the users hooked all the times.

●      Banner Ads

Banner ads are small, rectangular ads that are displayed at the top or bottom of the app interface. They are less intrusive than interstitial ads but can still be effective in generating revenue in the long run.

●      In-stream Video Ads

In-stream video ads are those type of video ads that are shown between content while the user is streaming a video. They can appear before, during, or after the main video and are typically skippable after a few seconds.

●      Native Ads

Native ads are ads that blend into the app’s natural content, matching its style and layout. They are designed to look like a part of the app’s content, making them less intrusive and more engaging for users.

●      Rewarded Video Ads

Rewarded video ads offer users rewards, such as in-app currency or extra lives in a game, in exchange for watching a video ad. They are commonly used in gaming apps to provide users with a positive incentive to engage with the ad.

Ad Type Pros Cons
Interstitial Ads Highly engaging, effective for promotions Can interrupt user experience, may lead to app abandonment
Banner Ads Less intrusive, easy to integrate Limited space, lower click-through rates
In-stream Video Ads Highly engaging, effective for video content Costly to produce, can be intrusive
Native Ads Blend seamlessly, high engagement rates Requires careful design, less noticeable
Rewarded Video Ads Positive user experience, increases engagement Users may feel pressured, requires balancing

Final Thoughts

In-app advertising has been proven as the most viable revenue source for free apps, however, it needs a delicate approach to ensure that it does not interfere with the user’s experience. By the right selection of advertising formats and the proper placement optimization the developers will increase their revenue while the users will enjoy the positive user experience.

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2.    Affiliate Marketing

Affiliate marketing is a recognized method for app monetization where developers are given commissions by displaying products or services from other businesses.

This model works by providing explicit affiliate links either within the app’s content or user interface.

When users download these links and make a purchase afterward, the app receives a commission from the merchant.

Contrary to the common understanding affiliate marketing makes it possible to monetize apps without direct selling of products or services. Instead of selling the products / services by themselves, they shake hands with potential buyers, showing them what to buy.

This funnel system allows businesses to make a lot of money if they execute it properly because it depends on the app’s ability to recommend products or services that its audience is interested in.

Pros Cons
●      Passive income stream ●      Requires constant monitoring and updating
●      No need to create or manage products ●      Commission rates can vary widely
●      Can be integrated seamlessly into app content ●      Success depends on the app’s ability to drive sales

Final Thoughts

Affiliate marketing gives app developers, the opportunity to earn income in a flexible manner and hence, it can prove highly profitable.

Through partnership with related companies or by endorsement of their products/services to their audience, developers can earn commission on sales which are generated by using their affiliate links.

Nevertheless, affiliate marketing success is possible only if you well know your audience and can recommend products/services that do indeed have real value within it.

3.    Freemium Apps

In freemium apps, users can get basic features of the app in a free version, and those additional paid features can be unlocked in the premium version.

This model offers users the trial version of the app with no commitment to a purchase. This makes it the preferred option among developers.

This business model largely depends on the extent to which the app can give users enough value in the free version for them to upgrade.

Pros Cons
●      Attracts a larger user base ●      Requires continuous development of premium content
●      Allows for incremental revenue growth ●      Can lead to a divide between free and paid users
●      Provides flexibility in pricing and offerings ●      Users may be hesitant to upgrade without clear benefits

Final Thoughts

Freemium apps strike a balance of providing value for free and monetizing through paid features. This model can be highly effective in attracting a great number of users and generating the revenue from those users who have decided to pay for an upgrade.

Even though on the one hand there is a need to offer many features and content for free to attract users, it is equally important on the other hand to have enough specific features for users to upgrade to a paid plan.

4.    In-App Purchases

In-app purchases (IAPs) include virtual products, which can be acquired for a small fee from within the application, or features can be unlocked.

This approach is often implemented in gaming apps, in which users can buy in-game currency, power-ups or additional levels.

Developers can generate revenue by making available several purchase options, from small transient prices to major impactful upgrades.

Pros Cons
●      Can generate significant revenue ●      Requires careful balancing to avoid user backlash
●      Encourages users to engage more with the app ●      May lead to accusations of pay-to-win mechanics
●      Offers a scalable monetization strategy ●      Can be seen as exploitative if not implemented well

 

Final Thoughts

In-app purchases are a leading monetization tool which, with the right strategy, can yield substantial earnings.

This could effectively be accomplished through a monetization option that allows users to purchase virtual goods or unlock other features, thus making it scalable and thereby users stay more engaged with the app.

Nevertheless, the developers need to be extremely cautious in determining the right number of in-app purchase options as it not only helps in targeting free users but also prevents the user base from getting alienated.

5.    Offerwall/Incentivized Ads

Let’s talk about Offerwall or Incentivized ads. They encourage users to carry out some tasks within the app, such as watching a video, taking a survey, or downloading another app. Upon completion, the users are rewarded by game points or other benefits.

Offerwall / Incentivized ads are valuable tools to engage users and generate revenue. They are a win-win-win scenario in which users are rewarded for watching ads and advertisers get their revenues from ads positioning.

Pros Cons
●      Increases user engagement and retention ●      Can lead to users feeling overwhelmed by ads
●      Provides a non-intrusive way to monetize ●      Requires careful implementation to avoid abuse
●      Can be integrated into existing app content ●      May not be suitable for all app types

Final Thoughts

Another alternative to in-app purchases is the use of offerwalls and incentivized ads. This can help to engage users and convert them into paying customers.

Through paying them for completing precise actions, developers get revenue for their service and their users at the same time.

Still, it is essential to conduct a qualified implementation of these features to avoid disheartening users with ads and to make a nice interface.

6.    In-App/In-Stream Video Ads

In-app/in-stream video ads are short video clips that roll automatically during natural app events or whenever a user requests them. These ads can be a lucrative way-out of the pockets and mostly when they offer incentives such as accumulation of additional points in the game or bonuses.

Pros Cons
●      Engaging Format ●      Intrusiveness can disrupt user experience
●      High Revenue Potential ●      Production costs for high-quality videos can be high
●      Seamless Integration ●      Increased bandwidth usage for users
●      Rewards for User Interaction ●      Users may experience problems with frequent video ads

 

Final Thoughts


The video ads placed in the apps/in-stream can be highly fruitful in getting the attention of the users and earning revenue. On the other side, developers need to consider both the advantages and disadvantages involved that includes the cost of production and irritating the potential users with too many ads.

7.    Push Notification Ads

For applications, push notification ads are a pull-up technique, that sends messages to users’ devices, even if the app is shut down. These notifications can be used either for the financial campaigns, promotions, or any type of marketing messages. Although push notifications can be a very valuable tool for marketing, if they are used without considering the interests of target audiences, they can be perceived as intrusive.

Pros Cons
●      Direct Communication ●      Can be seen as intrusive if not used carefully
●      Targeted Marketing ●      Users may opt out of notifications, limiting reach
●      High Visibility ●      Limited space for content, challenging for complex messages
●      Instant Delivery ●      Potential for users to perceive notifications as spam

Final Thoughts
Push notification ads provide a great possibility of addressing users directly, and thus, developing engagement. Nonetheless, you need to bear in mind users’ preferences and make sure that the notifications are relevant and useful to avoid overdosing them and approaching the idea of a spam.

8.    Playable Ads and Rewarded Videos

Playable ads and rewarded videos create a new possibility for users to engage and relate the ads in a more attracting way. Playing ads are pertinent, since they give users a chance to establish whether an application meets their expectation. Another type is a reward video ad that hands users a benefit like an in-app currency every time they complete viewing a video ad.

 

Pros Cons
●      High User Engagement ●      Development costs can be higher for interactive ad experiences
●      Increased Advertiser ROI ●      Requires careful integration to avoid disrupting user experience
●      Better User Experience ●      Not suitable for all types of apps and audiences
●      Incentivized User Actions ●      May not appeal to all users, leading to lower engagement

Final Thoughts

Playable adverts and rewarded videos can be a win-win situation for both advertisers and users, where advertisers get an interesting ad experience and users get a chance to win prizes. But, again, developers should pay this utmost attention to whether these ads are smoothly integrated without hindering the users’ experience.

9.    Subscriptions

Subscriptions provide users with the privilege of getting essential or top-notch content or features for a fixed price that has to be paid regularly. Such model could give a reliable income and raise customer engagement, however, it would have to have a large audience stuff ready to pay and content delivery should to be so good to attract and retain subscribers.

Pros Cons
Recurring Revenue Stream High commission fees on app stores can impact profitability
Increased Customer Loyalty Requires continuous delivery of high-quality content or services
Opportunities for Upselling Users may cancel subscriptions if they feel they’re not valuable
Predictable Revenue Can be challenging to attract and retain a large subscriber base

Final Thoughts

The subscription model can be a good source of revenue for apps that gives benefit to users persistently. Nonetheless, developers should handle their subscription plans with great care to ensure that the offerings are lucrative and offer clear benefits to the subscribers.

10.    Freemium Upsell

Freemium upsell model allows users look at the lite version of an application for free including the possibility to upgrade to the premium version by either unlocking more features or getting the app ad-free. This model can aid attracting customers via a free trial and later moving them to a premium package to receive additional features.

Pros Cons
●      Attracts Users with Free Offering ●      Can be challenging to balance free and paid features
●      Opportunity for Upselling ●      Requires ongoing development and maintenance of two versions
●      Increases User Engagement ●      Some users may be resistant to paying for premium features
●      Potential for Recurring Revenue ●      Premium version must offer significant value to justify the cost

Final Thoughts

The freemium upsell model can play an important role in app acquisition and converting free trial users into paid-service subscribers. Nevertheless, such balance should be very accurately maintained through the features provided in the free & paid versions to make the users’ experience worthy.

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How do Free Apps Make Money –  Payment Models in Mobile Advertising and Affiliate Marketing

Mobile advertising and affiliate marketing utilize various payment models to compensate publishers for displaying ads or promoting products. These models determine how publishers are paid based on specific actions or metrics. These days, the gaming industry is one of the largest sectors that is generating immense revenue. Hence, you should invest in this category for app development. In that, regard, our recent blog game development ideas can further assist you. Also, you can reach to our game app development company to discuss your app ideas. 

Here are some common payment models:

Payment Model Description Pros Cons
Cost-Per-Impression Advertisers pay for every 1,000 impressions of their ad. Guaranteed revenue for publishers based on ad views. Limited revenue potential if users do not engage with ads.
Effective Cost Per Thousand Impressions (eCPM) An estimate of the ad revenue the publisher receives from every 1,000 ad impressions. Helps publishers understand their revenue per impression. Revenue can vary based on user engagement and ad performance.
Cost-Per-Click Publishers receive payment based on the number of clicks on an ad. Encourages publishers to place ads strategically to maximize clicks. Revenue depends on user interaction with ads.
Cost-Per-View Used for video ads, where publishers are paid based on the number of views or interactions. Rewards publishers for engaging video content. Requires high-quality video content to drive views and interactions.
Cost-Per-Install Publishers receive payment each time a user installs an advertised product. Directly ties revenue to user actions. Requires publishers to drive installations through effective marketing.
Cost-Per-Sale Publishers receive a fixed commission or percentage of the sale for each completed purchase. High revenue potential for successful sales. Relies on user purchases, which may be less predictable.

How do Free Apps Make Money – Key Overview

Have you ever thought of how free apps make profits? There are various monetization methods that helps in generating revenue. We will discuss them in detail below.

How do Free Apps Make Money – Key Overview

In reality, the most common method is Advertising. Though, it doesn’t work alone. Instead; there are many more techniques going on. Subscription plans and in-app purchases are getting preference nowadays as there is an increase seen of 50% in freemium model yearly.

Did you know that a staggering 96.2% of all apps on the market are free? This dominance highlights the fierce competition in this space.

Besides, the mobile app market is projected to reach a revenue of $581 billion by the end of 2024, which further highlights the importance of free apps.

Amazingly, 98% of Google Play’s revenue is generated by free apps, showcasing their ability to monetize effectively.

Moreover, users’ spending on the Apple store is expected to soar to nearly $200 billion by 2025, further emphasizing the financial viability of free apps.

When we talk about how freemium apps make massive amounts, it not only relies on launching a free app, but also it depends on the strategy you choose.

Plus, it depends on your app’s objectives and target  audience, too.

In a nutshell, the answer to this query which helps users earn thousands or even millions is due to app monetization process. While charging one time fees is one of the options, there still are many alternative approaches.

Effective app monetization is an important factor for free app profitability. However, just creating an app totally free without having any clear strategy in mind will ultimately result in app failure.

Hence, its best to research thoroughly and choose the most suitable monetization strategy that perfectly aligns with your app’s main goal and audience. Partner with any trustworthy mobile app development company and get your dream app developed today. 

How Much Money Can Free Apps Generate?

Have you ever had any thought about how much money free apps can make? To tell you the truth, it is really diverse.

While some free apps make several millions each year, it`s more like breaking the ice. What is more, not only paid apps but even free ones can actually generate several thousand dollars every month.

So, what can be realistically expected from such a business?

The numbers move considerably due to certain variables such as app type, user numbers, device type, and country wherein the app operates.

Typically, both app owners and advertisers use eCPM (effective cost per mile or effective cost per thousand impressions) as an essential metric to evaluate the impression-based revenue.

For example, the approximate eCPM in year 2024 for banner ads within the mobile apps in the United States is of $0.37 USD for Android apps and $0.38 USD for iPhone apps. Consequently, an iPhone app-reviewing service that is based in the US has 5,000+ daily viewership of banner ads and it can potentially generate daily incomes of up to $2.30. Quite staggering, right?

Although this figure may appear to be trivial, keep in mind that banner ads represent only one out of numerous way for apps to monetize. On the other hand, reward video ad formats tend to earn much higher eCPMs.

However, while some developers choose paid, freemium and subscription options to guarantee a stable income, others go for ad support monetization to gain mass acceptance.

In a nutshell, making apps with high-end features helps you generate immense revenue. Read our blog on “How much does it cost to make an app” and get all the relevant information to transform your dream app into reality. 

Which Mobile Platform Is Better for Free App Monetization?

Deciding Between iOS and Android for App Monetization? The short answer? Both platforms offer incredible opportunities. However, industry trends listed below can help your decision based on your app type and the monetization strategy you decide to utilize.

How do Free Apps Make Money – Top Monetization Methods to Watch out for in 2024

Here’s a breakdown for key monetization methods that are mostly encountered for generating revenue from free apps.

How do Free Apps Make Money - Top Monetization Methods to Watch out for in 2024

Subscriptions

Apple’s App Store continues to soar for subscription-based apps. Via this model, it is expected that the App Store market will capture a dominant 80% share (around $17.1 billion) and would reach to a staggering rate of $21.4 billion by the end of 2024.

This translates to significantly higher user spending on iOS subscriptions compared to Google Play, where the latter one is expected to reach to $4.3 billion in revenue by 2024.

In short, conversion rates to subscriptions are significantly higher (over 55%) then other methods.

In-App Purchases

Similar to subscriptions, iOS users seem more receptive to in-app purchases. Data suggests that the global in-app spending will reach to $102 billion for iOS apps in 2024. Conversely, android apps is expected to reach $58 billion.

In-App Advertising

In-app advertising isn’t ending anywhere, it’s just transforming. Behold, the era of banner ads that occupy almost 50% of the screen is long gone.

A recent report by Tenjin (2024) shows a surprising shift: Among mobile platforms, Android apps have today assumed the lead in ad revenue, surpassing even Apple’s iOS devices.

This implies that in-app advertising is subsequently becoming more targeted and competent comparing the former methods.

Apart from these monetization methods, there are some additional factors you need to watch out for better profitability.

Additional Factors to Consider

App Store Stability

The App Store has historically demonstrated greater stability and consistency in revenue growth, with a 2.4% year-over-year increase in total app and game revenue in 2024.

Developer Commissions

Both platforms take a cut from in-app purchases and subscriptions. App Store’s commission remains at 15%-30%, while Google Play charges a 15% commission on the first $1 million and 30% beyond. However, if you opt out of Google’s payment services, expect to pay an additional 12%-27% fee.

Ultimately, the best platform for your app depends on your specific goals and target audience. By considering the latest trends in monetization, user demographics, and platform stability, you can make an informed decision that maximizes your app’s revenue potential.

However, if you’re starting with a single platform launch, carefully consider your goals and target audience.

For subscription-based apps or those targeting users with higher incomes, iOS might be a more strategic choice. If in-app advertising is a core revenue stream, Android’s recent surge in ad revenue leadership is worth considering.

To Summarize

Remember, both platforms – Android and iOS has its certain benefits and pitfalls. The key is to analyze your app, its target audience, and the latest monetization trends to make an informed decision.

By carefully considering these factors listed above, you can effortlessly select the platform as per your business requirements. Eventually, you can attain maximum revenue potential for your app over a short haul.

How to Choose the Best Monetization Strategy to Generate Revenue from Free Apps?

How to Choose the Best Monetization Strategy to Generate Revenue from Free Apps?

When it comes to making money from free apps, you will need to choose the best monetization method that perfectly aligns with your business objectives and targeted audience.

Here’s a comprehensive guide to help you choose the winning app monetization strategy. Let’s overview each of them in detail.

Identify Your Business Goals

Before monetizing your app, it is of utmost importance to set your app’s business objectives as a core goal.

Decide what your motive behind this is, if it’s only to increase the revenue or to gather a large user base or to enhance your brand’s visibility. Your monetization strategy must be aligned with those objectives.

Through a comprehensive assessment of your business objectives, your monetization efforts will be successful and they will also be profitable.

Know Your Audience

A profound grasp of your target group is a must in this situation. Conduct market research for evaluation of the user demographics, preferences, and consumers’ habits.

This information will help you design your monetization strategy to fit the best with your business requirements. By doing targeted advertising with the knowledge of your potential audience, you can create campaigns that will eventually assist you in making more money from your app in the long run.

Analyze Your Competitors

Through competitive analysis, you can find out effective monetization techniques used within your niche.

Analyze competitors’ apps that have similar functionality in order to get to know their pricing models, their advertising strategies, and user engagement methods.

This awareness would be beneficial and help you differentiate among other competitors and apply different revenue streams.

With comparing your growth with the opponents, you’ll be able to develop a money making strategy that distinguishes your app from your competitors.

Evaluate Monetization Models

There are several monetization models to consider, including;

●      Freemium

Provide the basic version of your app for free and charge your users who need special features or high-quality content.

●      In-App Advertising

Put together ad blocks made of ads by paying advertisers and get paid based on view (impression) or click.

●      Subscription

To get money, charge users a monthly fee or something like this to gain access to the premium content and features.

●      In-App Purchases

Provide virtual accessories and service items for purchase within your app.

To sum up, choose a model the fits your app’s value proposition and can assist you in capturing large user base. Try different models to find the one which ensures the maximum revenue and makes the users happy.

Consider User Experience

To ensure that monetization doesn’t hurt the user experience, it should support and not hamper it. Do not employ intrusive ads or pricing models which users may find annoying and thus hinder the use of the app.

Try to attain a tradeoff that gives you both, revenue and user satisfaction. By prioritizing users’ experience first, your monetization activities would be well received and beneficial.

Test and Iterate

When you have made up your mind about your monetization strategy, you have to test whether it is suitable in a real market situation.

Introduce some key metrics you need to track, such as engagement, retention and revenue.

Based on that information, work on your strategy, trying to make it as effective as possible and to generate as much revenue as you can.

Developing and improving your monetization strategy will enable you to remain competitive and to keep your app successful in the long-term.

With the help of the above-mentioned tips, you can create a sustainable business model for your app and also connect with your users hassle-free.

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How Do Free Apps Generate Revenue – Tools for Monetizing Apps

Making money through a free app is not an easy task at all, however it can be done appropriately if the right tools are available.

Needless to say, apps can be launched for free on both app stores hassle-free, though, it doesn’t ensure gaining profit right from the beginning.

Here are some of the best tools available for monetizing your app.

Tools for Monetizing Free Apps Description
AdMob AdMob provides advanced technologies to understand user behavior, drive in-app purchases, and maximize ad revenue.
InMobi InMobi focuses on enhancing the user experience within apps, providing market insights and engaging ads for your target audience.
Apple Search Ads Apple Search Ads helps your app stand out in the App Store search results, offering basic and advanced advertising solutions.
StartApp StartApp helps increase click-through rates (CTRs) and optimizes ad placement to maximize revenue for app publishers.
TapJoy TapJoy specializes in maximizing user value for freemium apps, helping publishers increase revenue from each user.
Facebook Audience Network Facebook Audience Network is a leading ad network for apps, offering targeted ads for iOS and Android apps.
Amazon Advertising Amazon Advertising offers a range of ad solutions to reach and engage millions of Amazon customers across various platforms.
Appsfire Appsfire is an ad network tool that specializes in user acquisition and native advertising, providing effective targeting services.
Unity Ads Unity Ads is a global ad network for mobile games, offering high-quality video ads that enhance the gaming experience for users.
Chartboost Chartboost is a mobile game monetization platform that offers customized ad experiences, including interstitial and rewarded video ads.

These tools mentioned earlier will enable you to monetize your app successfully. Select the ones which go alongside the goals of your app and perfectly fulfill your user’s needs.

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Highest Grossing Apps of 2024 with Their Estimated Revenue & Monetization Models

Below is a quick rundown on the top grossing apps with their estimated revenue and revenue stream models.

App Name Estimated Revenue (USD Million) Primary Revenue Stream(s)
TikTok $3.5 Billion In-app purchases (virtual gifts, filters), advertising
Spotify $3.2 Billion Premium subscriptions, advertising
YouTube $3.0 Billion Premium subscriptions (ad-free viewing), advertising
Facebook $2.8 Billion In-app purchases (games, virtual items), advertising
Instagram $2.5 Billion In-app purchases (filters, effects), advertising
Candy Crush Saga $2.3 Billion In-app purchases (extra lives, boosters)
Roblox $2.0 Billion In-app purchases (virtual currency, clothing for avatars)
Netflix $1.8 Billion In-app purchases (mobile games), subscriptions
Pokémon Go $1.7 Billion In-app purchases (premium items, in-game currency)
Pandora $1.5 Billion Premium subscriptions, advertising (limited on free tier)

Free vs Premium Vs Freemium Model – Which One is Best?

Choosing the right monetization strategy for your app can be tricky. There are three main models to consider: free, premium, and freemium.

Each model has its own advantages and disadvantages, and the best choice for you will depend on your specific app requirements and target audience.

Here’s a breakdown of each model to help you decide which will be beneficial for your business.

Free vs Premium Vs Freemium Model

 

Model Pros Cons
Free – Large user base – May struggle to monetize
– Quick adoption – Relies heavily on alternative revenue streams
Premium – Steady revenue stream – Limited initial reach
– Users invested in app   experience
Freemium – Attracts large user base – Requires careful balancing of free & premium features
– Opportunity for recurring revenue through in-app purchases – Potential user confusion over

Free Model

The free model offers your app for free, relying on alternative revenue streams such as advertising, in-app purchases, or subscriptions.

This model can attract a large user base quickly but may struggle to generate significant revenue without a large user base.

Premium Model

In the premium model, users pay an upfront fee to download and use your app. This model can provide a steady revenue stream, especially if your app offers unique or high-demand features. However, it may limit your app’s initial reach compared to free apps.

Freemium Model

The freemium model offers a basic version of your app for free, with additional features or content available for purchase.

This model allows you to attract a large user base with the free version while monetizing through in-app purchases. However, it requires careful balancing of free and premium features to encourage upgrades.

Final Thoughts

Choosing the best model depends on your app’s goals, target audience, and monetization strategy. The free model can be a good choice for apps aiming for a large user base, while the premium model may be more suitable for apps with unique features or content.

The freemium model offers a balance between the two, attracting users with a free version while monetizing through in-app purchases.

Ultimately, the best model is one that aligns with your app’s objectives and user base.

Here are some additional factors to consider;

The nature of your app

Is it a simple utility app or a complex game with ongoing development costs?

Your target audience

Are users likely to be budget-conscious or willing to pay for premium features?

Your development resources

Can you afford to develop a free app with a heavy reliance on advertising?

It’s also worth noting that some apps may benefit from a hybrid approach. For example, you could offer a free version with basic features and a premium version with additional features and functionality.

Ultimately, the key is to experiment and see what works best for your app. Track your user engagement and revenue data, and be willing to adjust your monetization strategy as needed.

Comparison of Distinct Monetization Models Based on Their Feature Set

Here is a detailed breakdown of distinct monetization models based on their feature set.

Feature Free Model Premium Model Freemium Model
Upfront Cost Free Paid Free (with optional paid features)
User Acquisition Easiest Most Difficult Moderate
Revenue Potential Low (relies on ads) High Moderate (depends on conversion rate)
User Engagement May be lower May be higher Varies depending on free vs. premium features
Brand Awareness Good Limited Can be good

Top App Monetization Trends in 2024

The app market is ever-evolving; however, simply getting users to download your app isn’t enough anymore. The real challenge lies in keeping them engaged and generating a considerable amount of revenue.

In the upcoming years, we’ll see a rapid transition towards sustainable monetization strategies that will prioritize user experience and aid businesses in developing lasting relationships with their audience.

Here are the 8 key trends that will evolve the app monetization world in the coming years.

1. Subscription Evolution

Whether subscriptions are going away or here to stay, the best-of-one-fits-all idea is fading. For instance, we’ll witness an increase in tiered subscriptions, which allow customers to choose from diverse feature sets and price levels.

Such a measure satisfies a wider market and different budgetary constraints, meaning everyone can choose the level of access that is most suitable for them.

Additionally, the freemium model will be resuscitated. The truth is in the value added in the free version. This might involve a choice between core functionalities with shortcomings of its own or maybe a preview of premium features to motivate users to move to a full version.

2. The Power of In-App Data

In-app advertising will always exist, but it’s getting more complex. Data collection and user behavior analysis would be further developed to enhance such personalized and non-intrusive ads.

This implies that the display ads in specific apps will be further subjected to the users’ interests and in-app activities. This will result in a better perception of advertisements and may result in more conversions.

Nevertheless, in-app data is a real treasure when it comes to analyzing users` activities and inclinations. Based on this data analysis, companies can enhance their monetization strategies, promote content according to user’s individual preferences, and increase user engagement.

3. The Rise of In-App Commerce

Today, shoppers no longer have to click links to order to purchase items from external websites. The purchase flow opportunity within the application will take a leading role, thus resulting in increasing revenue and conversions.

In other words, it allows users to explore, research, and buy products or services not only outside but also in the app without leaving their comfortable virtual environment.

This trend is essential for e-commerce apps, gaming apps with virtual economies, and even social media platforms with marketplaces embedded.

4. Focus on User Retention

User acquisition is the most important initial step; nevertheless, retention is the most vital factor for long-term success.

In 2024, app developers will focus on user retention strategies in particular.

This may be done by introducing loyalty programs, enhancing the type of content, and developing a sense of community within the app.

The more you get your audience involved, the higher the chances you have of turning them into paying customers and make them brand ambassadors.

5. The Subscription Economy Expands

Subscription models will not just encompass access to premium features or content but will be extended to other aspects as well.

Micro subscriptions that offer sales of “in-app” features or consumable items will rise. Such an offer is beneficial because it provides more freedom and is also suitable for people who are not interested in having a full-time subscription but are mentally prepared to purchase some perks.

Moreover, value-based subscriptions, which users pay for depending on their engagement in-app, could find a market in the video streaming sectors. In short, the subscription economy will expand in the coming years.

6. The Power of Influencer Marketing and In-App Advocacy Programs

Using the social media power of influencers and in-game characters will be key to promoting the app and monetizing it afterward.

Collaboration with influencers can help drive application downloads and improve user engagement, while app marketing programs can encourage existing users to promote the app with their networks.

That way, trust is fueled, and sincerity is boosted, which may lead to improved conversion rates.

7. Focus on User Privacy and Building Trust

As data privacy comes under increased scrutiny, those apps that maintain users’ data security and have clear data policies will be preeminent.

Defining data privacy policies clearly, providing users with the opportunity to control their data, and using strong security measures will be of great significance while building trust among your community.

This is not just an ethical issue but also an opportunity to use data to enhance consumers’ experiences, which is a competitive advantage in today’s data-driven world.

8. Exploring New Revenue Streams

The app monetization landscape is experiencing a steady transformation.

Developers will certainly try out new revenue channels, such as selling invitations via the app for events held in the app, virtual goods (filters in a photo editing app or cosmetic items in a game), and augmented reality (AR) or virtual reality (VR) games for monetization.

With these technologies evolving in the future, more ways of app monetization will be created.

By staying updated with the following trends and adapting your strategies accordingly, you can strategically position yourself over your competitors.

How do Free Apps Make Money – Final Tips

With the rise of the mobile apps, monetization strategies are becoming more and more essential for generating revenue in the long run.

With mobile advertising spending forecasted to reach a whopping $400 billion by 2024, it is pertinent for businesses to thoughtfully choose the most suitable ad formats and placement without affecting the user experience.

Advertising is still the major source of revenue in this area, with format such as interstitial, video, and rewarded ads amongst the most popular.

Nevertheless, it is important to understand that building a successful app monetization strategy is not a quick process and needs to be aligned with your app’s prime purpose and users.

Merging up ads with in-app purchases hits revenue considerably, but to be sure that this has a positive impact on users, a rational balance is needed.

Below are the tips that you should focus on in order to engage the users and give them even more enjoyable experience.

Align your monetization strategy with your app’s purpose and audience.

  • Focus on user acquisition to increase your chances of monetization.
  • Ensure that your monetization methods enhance user experience rather than detract from it.
  • Analyze your competitors to understand successful monetization strategies in your market.
  • Continuously improve your app based on user feedback to increase engagement and retention.

Why Choose Trango Tech for Your Mobile App Development?

At Trango Tech, we are aware of the intricacies of monetization of app and have the expertise to help you develop a successful mobile app. With our experience and knowledge, we can assist you with the creation of an app that users love and are ready to pay for.

Feel free to reach out to us today to talk about your app concept, development platform, or monetization approaches.

About The Author

blog author
Mariam Amin

Mariam Amin is an Electronics Engineering graduate. As a content marketer, with her insights on engineering and digital strategy, she showcases informative guides and content that is built on imparting knowledge. When away from marketing and the digital landscape, you can find her looking over the food industry, and fitness trends, and catching up on a documentary or a movie.

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