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The free app industry has always outstripped the paid app market. In terms of earnings and downloads. Now, most people frequently ask, "How much Money do Apps make?" Have you ever considered how to profit from apps?

Before we get into how to earn money with free apps, It's important to understand that, according to Techcrunch, the app boom hasn't finished.

Even though the share of paid app income has dropped from 75.9% to 37.8%, the mobile app business is still worth billions of dollars.

What is the Difference Between Free Apps and Paid Apps?

Individuals who aren't tech-savvy don't know the difference between free and paid apps. Many people who do so simply disregard it. One thing you must understand is that there is no such thing as a free lunch. This piece will begin with that saying.

There's always a catch when something is handed out for free.

For example, right now, everyone can use my personal money management service for free. But, once I've fixed all the faults and added all the requested features. The service will be locked behind a paywall. What is the explanation for this? In my app, there are no commercials or monitoring, not even Google Analytics.

When a developer, or even a firm, offers a free app, there is almost always a method to profit from it. By now, it's a well-known reality that all apps use some form of tracking. The most typical justification is that it aids in product improvement or AI.

Free Apps

A free app does not need a salesforce security evaluation. Customers can download it at no cost.

• The paid app has fewer downloads. However, you will automatically lose potential clients who are not willing to pay.
• Higher user expectation. You will have to make sure your app works flawlessly and offers a full set of features.
• The development and design of paid apps are quite high.
• Limited Monetization options- monthly and yearly fees.
• Even with many great reviews, people are less likely to buy an app if they can't try it out first.

Paid Apps

You may control the license in a paid app, and customers will have to buy licenses through a payment gateway. To handle licenses, Salesforce provides an LMA application. 

LMA is an application that will be installed on your company's Salesforce instance. Please be aware that Salesforce will charge you for the security review. Also, it adds a revenue-sharing agreement with the Salesforce ISV team.

Salesforce gives you Trial Template orgs and trial orgs. This allows customers to try out your product.

• Because the paid app has fewer downloads, you will lose potential customers who are unwilling to pay.
• Higher user expectations. You'll need to make sure your software runs well and has a comprehensive set of features.
• Paid app development and design costs are relatively high.
• Monthly and yearly payments are the only monetization choices.
• Even if an app has many positive ratings, users are less likely to buy it if they can't try it out first.

Free apps have higher chances of success.

You have an app concept that you believe will be the next big thing. You spent a lot of time planning and designing the. You hired the best app developers to work on it and checked off all the boxes required for success.

If you don't have a monetization strategy for your app, all your efforts will be for nothing. So how do you intend to monetize your mobile app?

While free apps have a better chance of succeeding in the app stores, making money from them demands a well-thought-out monetization strategy.

Wondering how do you make money from a free app? Well, making money from free apps is more difficult than making money from apps with a visible price tag.

There are several ways to monetize your free software. Each way has its own set of advantages and disadvantages. Read on to learn:

• How to earn money with free apps
• What options are available to you
• The benefits and drawbacks of each option 

These will help you to choose the best approach for increasing revenues from your app.

The App Monetization Strategies

As of 2015, the following are the most popular app monetization strategies used. These are also the top mobile app development company's recommendations.

Needless to say, there are several ways to earn money with free apps. But the main difficulty is determining which ones are the best. We've already included them all in the previous post.

Learn about the best ways to make money with mobile apps in a variety of ways:

Advertising

When making money with free software, advertising is perhaps the most frequent and easiest to install. But, of course, you can also do it through a third-party ad network.

Ads are a simple way to monetize apps and make money. An app owner only needs to include advertisements in their app. They can also use affiliate marketing to earn money from third-party ad networks.

You can be paid every time an ad is shown. Every time a user clicks on the ad. Every time a user downloads the sponsored software. Because this is a free version, you can also run ad campaigns to generate cash for a limited time.

App vendors often use four different types of display adverts to monetize their apps. But, first, you must keep track of if your target customers find them interesting or block them.

Interstitial ads:

Full-screen pop-ups that appear at certain times are an example of this form of app adverts. You can close this ad by pressing the close button in the top left or right corner.

E.g., When a user finishes altering a photo and saves it to the gallery, an advertisement may appear.

Gaana, a wonderful example of app monetization, employs this strategy. This app was able to improve its app experience by incorporating such an ad technique. Also, they did it without having to pay any advertising fees.

Banner ads:

These display advertising come in various sizes and appear at the top or bottom of the app screen. They are usually modest and unnoticeable, allowing users to utilize the program freely.

In-app video ads:

These ads show up automatically and are used as a reward video in exchange for in-app benefits. 

E.g., App users can get app currency by watching an advertisement video. They can use them to unlock levels in the game or buy more features. This is the most widely used advertising-income strategy among users.

Native ads:

Native advertisements are embedded into the app to seem like a natural part. However, it is most commonly used to promote a product or a mobile app. Here, free affiliate marketing will help increase user engagement for your app.

People are less angry and invasive with such adverts. Hence, this strategy is becoming increasingly popular.

But, one thing to keep in mind about native ads is that, in comparison to other ways, their earnings might be quite low. Native advertisements are the most disliked by users, even though app developers consider them the greatest technique.

Rewarded Videos:

When it comes to in-app ad integration, this is the most effective advertising model. Online users watch them in return for points, life, or virtual items. It is simple to make money using this ad model. Also, as an advertiser, you can successfully deliver brand messages.

The main benefit of adopting this ad campaign is that it has a high retention rate. This is because it rewards consumers for watching these ads. It's great for the gaming apps industry because gamers enjoy getting free stuff. Also, the effective cost per millie for this sort of advertising is higher than for any other.

Now, as the great philosopher once stated, everything has two sides, good and bad. So let's take a look at the gist of this app monetization method.

Pros: 

• It boosts your app's primary revenue by increasing CTR.
• In-app ads have a better chance of reaching the intended audience.
• Ads aid in the measurement of user activity.
• Video commercials are more popular than social media networking, web browsing, or audio ads traffic.

Cons:

• This technique works best with apps that have a huge user base.
• Irrelevant advertisements—if your ads are completely unrelated to the app category's context.
• Web-users readily overlook unappealing ads.
• It may disrupt user navigation in the app.

Subscriptions

Subscriptions can be a very effective way to make money from mobile apps. App publishers can choose to provide free content in their apps for a short period. Then start charging customers a membership price. This allows them to access the entire app without limits.

The majority of free app publishers use a popular and common strategy. In this strategy, they prove a free trial period before charging a subscription price. This is for people who wish to continue accessing the app's content.

E.g., Cloud services, audio and video streaming, and online news services.

Apple is paying special attention to how app subscription models work. This will help them make the incorporation of this revenue model easier. Apples' current model will maintain its revenue split of 70/30 for the first year of subscription. The revised revenue split of 85/15 will take effect after one year.

This structure was created to encourage app publishers to charge a recurring subscription. Not a one-time price for their apps. But, according to Sweet Pricing, only 5% of the successful apps are subscription-based.

Pros:

• It's a good concept for cloud services like Spotify that supply music and video material.
• A more engaged and serious audience will use the app's capabilities.
• As a result, you'll have a more consistent income.
• The software is rewarded in the Apple Store if it keeps users for a longer amount of time.

Cons:

• You must keep innovating new features and content for app subscribers.
• Changing from a one-time price to a monthly cost can cause some severe resentment among users.
• You need a free trial period, and it may need adjustments.
• Small businesses are unlikely to provide enough value to justify monthly payments.

Selling Merchandise

Another fresh idea is to offer products through your free mobile apps.

To sell physical things such as toys, clothing, and shoes, many e-commerce enterprises create free versions. These genuine items can be sold through the app or email marketing.

Amazon has launched a service called Merch by Amazon. This service will encourage app developers to use this method. It lets publishers create artwork, upload it to their platform, and promote their items. It's a win-win situation for both app owners and users.

Amazon even handles the sale and delivery of items to make things easier.

Take a look at these advantages and disadvantages. They will help you decide whether to use this monetization technique for your free app idea.

Pros:

• Selling online allows you to reach out to more individuals at any time and from any location.
• It's an extra convenience function. It allows users to look through their inventory and place orders accordingly.
• The never-ending aisle where no one has to go home empty-handed

Cons:

• Issues with software integration. eCommerce solutions might take time and lead to data mistakes.
• Inventory visibility is poor.
• The shopping experience seemed disjointed.
• Poor m-commerce experience. In the mobile app environment, you must have a simple smartphone version of your business.

In-App Purchases

In-app purchases are done from within free mobile apps and are quite simple to complete. They're usually utilized to access special content or features, such as powerups, restricted levels, or extra functionality.

To put it another way, in-app purchases allow you to sell a range of virtual things from the game. As a result, in-app purchases have improved the user experience of the finest free game apps. Such as Angry Birds and Clash of Clans.

According to Forbes, publishers make the most money from apps featuring in-app purchases. This monetization approach is predicted to continue to dominate in the coming years.

Game companies use this concept, owing to the digital currency. In fact, half of the games offer multiple game currencies. This includes gems, coins, and gold. Thus, in-app purchases are a big part of why people download apps.

This is an intriguing concept for converting non-paying app users to paying app users without being overbearing. But, you must keep people engaged in your free mobile apps for them to continue paying.

According to a poll by tech company Fyber:

"Among companies and ad agencies, there are many brands, approx 77%. Who have urged their agencies to invest in in-app purchasing inventory".

According to both agencies and advertisers. The bulk of advertising budgets in the UK are now spent on mobile. This is because in-app advertisements are more trustworthy than mobile browser ads. This is why they are worth investing in. In-app transactions are also made to increase engagement.

According to the Business of Apps report.

"Its playable ad formats, opt-in  and rewarded videos are viewed as the most effective in-app purchases method." 

Pros:

• A low-monetization strategy has a fair possibility of delivering big earnings.
• This concept is ideal for gaming apps. This is because many different currencies are available, such as gems, coins, and gold.
• It's essential if you want to offer more complex services through your app.
• For in-app purchases, your credit card information is kept securely.

Cons:

• Suppose in-app transactions are implemented incorrectly. They might result in negative reviews and disappointed users. On the other hand, when people buy in-app purchases, their expectations are significantly higher.
• The cost of an app with extensive features and functionalities will be considerable.

As a result, apps can make money without adverts, in-app purchases, or goods sales. Take a look at 7 extra monetization strategies, including

• Obtaining sponsorship
• Marketing through referrals
• Data collection and sale
• Upsell from a freemium service
• Purchases made in person
• Fees for transactions
• Crowdfunding.

Sponsorship

Sponsorship is a less popular way of revenue, but it can still be an interesting concept.

Suppose the app publisher creates the perfect specialized app for a specific demographic. Then they launch it on behalf of another brand, sponsorship in mobile applications. It can be a lucrative app monetization technique.

App publishers must think about sponsors with the same target demographic as apps. Make a list of businesses that gain from the collaboration is a good place to start.

The Home Depot advertising on the Weather Channel App. It is a good example of how free apps make money through sponsorship partnerships. The animated app background behind the temperature measurement is a sponsored commercial. It is aimed at homeowners interested in weatherproofing their homes.

Take a look at these pros and cons. They will help you decide whether to use this app monetization technique for your free app.

Pros:

• It gives brands with special content or discounts ad space within your app.
• Brands can stand out in the app, and consumers can be exposed to special offers and discounts.
• The user's experience is a little disrupted.

Cons:

• Your app must be backed by a strong brand, as well as sophisticated data and users.
• You must build instruments for measuring success to measure performance.
• If you collaborate with the wrong people, your app's ROI is likely to suffer.

Referral Marketing

It is the practice of advertising a third-party product or service to increase income.

Based on the number of clicks or installs, app publishers can promote or sell affiliates' items or services. For example, you can use Pop-up advertising to promote someone else's app or advertise products in this way.

Publishers utilize a variety of referral marketing models. This helps them grow their businesses.

Collecting and Selling Data

As you may know, Apps collect a lot of data about their users, whether it's user behavior or other app usages. Many academics in various domains are interested in all these user behavioral data.

This means that free app producers can profit by selling their users' behavior data to these researchers. E.g., Users' email addresses, social media profiles, and personal preferences.

This model can be beneficial in two ways. First, you can track what users do and sell the information to organizations or researchers. Second, you can also use the raw data yourself.

Companies want to pay for presenting adverts to the most relevant audience. So, if you can get enough relevant data, you might be able to profit from it.

The image below provides an overview. This will assist you in getting the most out of your monetization strategy:

Pros: 

• This strategy allows for easy consumer segmentation and makes the purchasing process simple.
• Such information is useful in recognizing and listening to customer voices. It also makes them available to the right companies.
• It has the potential to produce a genuine monetization app model.

Cons:

• The release of a consumer's personal information
• It's difficult to preserve consumer accountability.
• Customer data security is difficult to regulate.

Freemium Upsell

When it comes to freemium upsell, freemium apps are those that are available to download for free. But they contain paid or premium features. You need in-app payments to unlock these paid and premium features.

Users can download this type of freemium program without paying anything. Also, if they like the content, they can upgrade to get full capability by making a purchase. 

Premium services are optional. Hence, this strategy can attract a large number of new consumers.

Also, this method is mostly used in education, health, and sports applications. This allows users to get premium features for a fee.

These pros and cons will help you decide whether to go with the freemium model for your free app concept.

Pros:

• No unwanted advertisements
• This model can be used with any other method.
• It's a low-maintenance method of app monetization.
• Because it is free to use, this approach has a wide reach.

Cons:

• Variations in revenue
• Because the app is free, you are responsible for all maintenance costs.
• Because users haven't invested any money in your app, they can quickly abandon it.

Physical Purchases

Many eCommerce firms and startups have begun to sell their products on the app store. E.g., Angry Birds, a free application that raised the earnings from branded products.

Rovio sells 1 million branded t-shirts, backpacks, and stickers with its gaming software. In reality, Amazon has created a Merch self-service platform. This allowed Amazon to sell custom branded t-shirts through their applications. This allows them to generate revenue from products.

Let's take a look at the benefits and drawbacks of this monetization technique. These will help you understand how do free apps earn money without adverts.

Pros:

• This business concept is adaptable to any industry.
• This can assist marketers in making comfortable profits while minimizing danger.
• You can change this approach to include referral revenue-generating affiliate networks and collaborations.

Cons:

• If physical purchases are included in an app, the app store listing page will need to be clearer.
• Users' behavior is difficult to forecast, resulting in unpredictable income.
• It's difficult to compete with this model.

Transaction Fees

Transaction fees are the most effective approach to monetize your apps. It's the most effective technique to monetize your apps in the app store. It's especially achievable with apps that operate as a platform for digital transactions.

Let's look at an example. You can charge transaction fees. If your app allows third parties to sell their items and those purchases can be completed online. You may generate a lot of money by charging a tiny fee for each transaction that occurs on your app. This way, you may make money from your mobile apps without having to spend a lot of money.

Pros:

• It's a ruse for generating income.
• This concept encourages the use of cashless transactions.
• There is no risk to the user's reputation.

Cons:

• You can't change the cost because you have a fixed income.
• Any other monetization model is incompatible with it.

Crowdfunding

Crowdfunding, which is new in the market, is another way to earn money with free apps. In this strategy, startups and businesses post their ideas on crowdfunding platforms. They do this to raise funds for the development and advertising of their app. Platforms include Kickstarter, Patreon, Crowd Supply, Fundable, Indiegogo, and Chuffed.

Non-gaming mobile apps are preferred in crowdfunding, according to Mobile Growth Stack data. There were around 138 non-gaming apps that had raised funds between $10,000 and $100,000 as of May 2017. Whereas only 29 mobile games with a comparable funding target.

Pros

• Obtaining low-cost funds
• Pre-funding your next product is a great way to get ahead of the game.
• Investor relations will be easier.

cons

• Transparency increased
• Expensive fundraising
• Running a crowdfunding campaign takes a lot of time, and it might fail in the end.

App Monetization Mistakes To Avoid

Mistakes are likely to occur in the early stages of any process, for example common app development mistakes. This attracts blunders that result in significant losses. In which case, having a heads-up on these blunders will help you avoid them entirely. 

Not Analyzing And Targeting A Particular Niche

It's essential to understand the users' geographic requirements. Users in one country may favor your program, while users in other countries may ignore it. So, you must research the market niche and its sustainability concerning the location of the users. Make sure first to study your potential users and then design a monetization strategy.

Selecting The Wrong Pricing Model

Setting rates is an essential aspect of the app monetization plan, yet it's also a delicate one. Setting prices carelessly can backfire, obliterating what you've fought so hard for. For example, $5 may seem reasonable to you for the US audience (in the US, iOS users spend an average of $88 per year on mobile apps). But the same pricing may not be appropriate for consumers in other nations. So, always be sure to research your target audiences before making any decisions.

No Strategy For The Localized Version

Let's look at an example to grasp this better. Assume you're charging consumers USD 1 to skip a level in your game in the United States. This may be a reasonable price for US users to pay for in-app purchases. But it may not be for users in other countries where money is tight. In some places, such as Latin America, customers are not able to pay as much. As a result, the in-app app monetization model may even fail.

But you can use another monetization approach, such as in-app adverts, to generate cash.

Not Having A Strategy At All

Indie developers publish apps either for developing one or for pleasure. There is little regard for turning the app into a profitable business. Planning a monetization plan should begin when the development process is in progress.

You can also combine all these models and incorporate them into your app stylishly and functionally.

How to earn money with free apps for every download?

The downloads of an app do not generate revenue. Not on the App Store or Google Play, at least. The only place where you can get paying users to utilize your app is Amazon Underground.

Apps can earn money in a variety of ways, but there are three prominent ones.

• Outright Purchases (your paid app)
• Purchases made within the app (purchases made within your app)
• Advertising

How much money does a free app make from advertising?

For the app, most advertising networks use a cost-per-click (CPC) approach. As a result, every time a user clicks on an ad, a few pennies are added to your bank account. For banner advertisements, the average income per click is roughly $0.10. For an app, the minimal or ideal click-through ratio (CTR) is 1.5-2 percent. It also boosts the app's user engagement.

The general revenue per impression in free apps

The amount of money each app makes per ad is determined by your revenue model. E.g., banner ads have the lowest general revenue per impression ($0.10). Interstitial ads are moderate ($1-3). Video ads have the highest general revenue per impression ($5-10).

Conclusion

By now, we have a fair understanding on how to earn money with free apps. App adverts continue to be the most successful income strategy. However, in-app purchases and subscription models are also among the highest-earning revenue methods.

Each strategy has pros and cons, so it's crucial first to understand the product you want to create.

What benefit will it provide?

What is the demographic of the intended audience?

Are there any comparable products?

It is possible to develop a well-thought-out business strategy. It can include the app's income sources as well as the use of many monetization tactics. Customer hap