Since the demand for free apps has often dominated the paying ones (in terms of income and download numbers), most individuals also pose a common question about how much money apps make. Have you ever considered how to make money from apps? How Do App Make Money?
Although the amount of paying app sales has fallen from 75.9 percent to 37.8 percent, the demand for mobile apps is still worth billions of dollars. So, if you think free smartphone applications aren’t as lucrative as paid ones, you couldn’t be more mistaken. The truth is that, according to Google Play, 98 percent of worldwide revenue comes from free software. And, you need to think about the monetization strategy of apps more. (source)
Techcrunch also reports that more than 90% of the market’s applications are free now. And, in the coming years, the revenues generated from apps that charge for downloading (paid apps) are projected to decline.
How do App make money? Advertising is perhaps the most common and simplest to introduce when it comes to making money from free apps. And it is achieved via a third-party ad network as well. Here are the data on mobile advertising spending in the year 2019 and forecast in 2020, according to the new report and analysis by Statista.
The year 2019: the U.S.$190 billion
Planned for 2020: Dollars 280 billion
It’s very easy to use ads to monetize apps and make money. An app owner only needs to view ads inside their mobile app or opt for affiliate marketing and get paid from ad networks of third parties.
Any time an ad is shown (per impression), you can get charged per click on the ad, and when the advertised app is installed by a customer. As a free version app, for a particular period, you can also run ad campaigns to generate ad revenue.
How do App make money? Subscriptions can be a paid content technique that is very useful. App publishers can opt for a limited period to provide free content in their applications and then charge users for a monthly fee that allows them to access full content without any restrictions.
The popular and common strategy used by most free app publishers is to give those who want to continue using the app contains a free trial period and then charge the subscription fee. For cloud computing, audio and video streaming, and online news services, this type of strategy is also used.
Apple is paying special attention and making major adjustments to how app subscription models operate to facilitate the introduction of this business model. In the present model, for the first year of subscription, Apple will retain its existing 70/30 revenue split. The new 85/15 sales share will be automatically introduced after one year.
This new format has been designed to allow app publishers to sell their software for a monthly fee rather than a one-time fee. But despite this, according to Sweet Pricing, only 5 percent of the most profitable apps are using a subscription revenue model or creating subscription-based mobile apps.
How do App make money? In your free mobile applications, another imaginative way is to sell products. Many e-commerce companies develop free versions to sell physical goods such as toys, clothes, shoes, etc. These physical products can be sold directly to the app or via email marketing.
Amazon has started a service called Merch by Amazon to allow app publishers to use this approach, which enables publishers to build their artwork, upload it to their website and sell their products. For owners and app consumers, it is a win-win solution. Amazon also takes care of the payments and shipping of goods to make it simpler.
In-app purchases are made directly from free mobile apps and are usually quite a straightforward process. Typically, they are used for accessing special content or features such as power-ups, restrictive levels, or extra features. How do App make money?
In simple words, in-app purchases have the opportunity directly from the app to sell a range of virtual objects. The best free game games, such as Angry Birds, Clash of Clans, have improved their user experience by offering in-app purchases to users.
Apps with in-app purchases produce the highest revenue for their publishers, according to Forbes. In the years to come, this monetization approach is also anticipated to rule. This model is commonly used, mainly because of digital capital, by game publishers. Currently, half of the games, such as gems, coins, and gold, offer more than one game currency. In-app downloads, such in-app transactions play a significant role.
Overall, without being too invasive, this is an interesting model for turning non-paid app users into paying users. Although to keep paying, you have to keep users hooked on your free mobile apps. According to the survey by tech company Fyber, “Among ad agencies and brands, there are several brands that have asked their agencies to invest in the inventory of in-app purchases, around 77 percent.”
Well, both UK agencies and advertisers are currently investing the bulk of their mobile advertising budgets. That the format is more consistent than mobile browser advertising is the reason for investing in in-app advertisements. Besides, enhanced interaction is another central factor for in-app purchases.
Sponsorship is one of the strategies of monetization that is less widely used, but it can still be an interesting technique. In simple words, if the app publisher creates the right niche app for a targeted audience and releases it on behalf of another business, sponsorship of your mobile apps can be a powerful device monetization strategy. How do App make money?
App publishers, similar to blogs, need to recognize sponsors whose target audience is the same as the one that the app addresses. The development of a list of organizations and brands that could benefit from the relationship is a good starting point before creating the app.
Referral marketing entails advertising a product or service from a third party as a means of maximizing sales opportunities. App publishers can advertise or offer the goods or services of affiliates based on the number of clicks or installs. For this, to promote someone else’s app or advertise products, you can use pop-up ads.
There are various types of referral marketing models used in their development by publishers. How do App make money in referral marketing?
Cost per acquisition or cost per action (CPA):
There is a range of partner networks that can be used to find the best one for your free mobile app. You can either promote other apps in this model, advertise pop-up items, or promote apps through an in-app store and earn money.
Cost per click (CPC):
This form of the revenue model is based on the number of displayed clicks on an ad. For this model, you can enter common networks such as Adfonic or Google’s AdMob. They both have the text and show advertising that will help you earn the app cash.
Cost per view (CPV):
Based on the number of ad interactions or video views, this model includes billing. Through cost per view networks, smartphone game development company Bright House successfully increased its app revenue by 130 percent. In their mobile game, they used video as well as interstitial advertising to create natural breaks between sessions of the game.
Cost per install (CPI):
Cost per install is a relatively new marketing mechanism and is the mobile counterpart in the world of online marketing of CPA (cost per acquisition). The cost per install is just what it sounds like. With each installation of the advertised software in your free app, you get paid.
You can install apps on your app on a variety of platforms. This model is best demonstrated by Chartboost and Playhaven. Both are networks of third parties that have applications that you load into your app.
The fee ranges from $0.80-$3.00 for this network, and online partner networks have a variety of global traffic generating initiatives when supporting other applications, making it a lucrative market to play in.
Collecting and Selling Data
Usually, the data contains email addresses of users, social media accounts, and personal preferences. This model has two ways to benefit from it. You can either control what users do and sell information to outside businesses and researchers, or you can use the raw information for your purposes.
From a marketing point of view, corporations want the most appropriate audience to pay for showing advertising. So, if you can obtain enough relevant data, you can have a way of making a profit from it.
Freemium applications are available free of charge for downloading when it comes to talking about freemium upselling but include paid or premium features. It is possible to access these paid and premium features through in-app purchases. How do App make money with upsell?
In this type of freemium model software, users download the app without paying any price, and by committing a payment, if they like the content, they can get full access to features. Using this technique, it is easy to attract loads of new users because premium features are optional. Also, for education and health and sports applications, this approach is extremely popular, enabling users to get premium functionality at a specific cost.
There are several eCommerce companies and start-ups that have begun using free apps through established apps on the app store to sell their goods or physical products such as mobile cases, t-shirts, toys, etc. Let’s take an example of Angry Birds, one such free application, which increased the benefit from branded goods. How do App make money?
Rovio sells approximately 1 million branded t-shirts, backpacks, and stickers every month via this free gaming app. Currently, by introducing a Merch self-service program to sell personalized designed t-shirts from their apps, Amazon is providing a way to get revenue from merchandise.
Transaction fees are the best means of monetizing your apps. It’s the best way for the app store to make money from your apps. In particular, where digital transactions occur regularly, it is possible for those apps that provide a forum.
Finally, How Do App Make Money
Apps have become a source of income for many. By creating a valuable mobile app, you can easily make money by selling ad space by creating premium services or by selling products. This may take time but the fruit is for years.