How do Free Apps Make Money?

Most of us use free apps on our mobile devices. But have you wondered what keeps our favorite apps afloat? What is keeping the developers in business and helps us get our daily dose of App Entertainment?

If you are a game developer or thinking of being one, there are some techniques and models that you can use to monetize your app. We’ve gathered some of those techniques and summarized it for you.

1. In-App Purchases

One of the most commonly used monetization methods is the application of in-app purchases (IAP). This method is usually found in casual gaming, where players get to pay for upgrades, additional gameplay material, and certain bonuses.

IAP can also be found in various apps like Calcbot, Apple Music or Family Signal. They provide various specified and extended content for some fee.  There are various ways to approach IAP through various freemium models. Placing an app with reduced features which allows in-app purchases for the extended options.

2. Drawing traffic to other Apps/Channels

In certain cases, the app itself can represent the advertisement. It can practically be used to transfer traffic from various visitors to a specified landing pages, secondary apps, or other profit sources.

There are 4 categories for these apps:

  • Sponsorship – Various companies choose to finance an app regularly, or on otherwise agreed terms, and in return – the app itself provides some kind of promotional or marketing content for the paying company.
  • Secondary Apps – With massive websites that generate a lot of traffic, there is always some way of funneling all those visitors. There are various companies that use multiple apps to direct the traffic to the main website. Take Facebook for example, with both Facebook app, and Messenger, they get quite a lot of traffic redirecting.
  • Product Selling – Another approach is to have an app that provides a certain service, but it requires you to pay for the content. Take Kindle or Steam for example. You can download it for free and even find some free content, but most of the quality stuff has a price, and you buy it through the apps.
  • Affiliate Marketing – There is a sea of affiliate networks that provide app developers to pair their apps with similar ones and make them money by aiming and redirecting the traffic in a specific way.

3. Advertising

All the pop-ups, Banners, Pre-Roll Video Ads, and similar promotions fall in this category. It’s the number one revenue generator for the free app market. There are various AD PLATFORMS that can provide the services and help boost your apps income quite significantly. Check (shameless promotion-)

There are various types of payment structures, and they vary from different applications and uses of the app, but they evolve with the advertisement in the free apps.

4. Freemium Upsell

As we mentioned before, great way of “hooking-up” your new users is giving a free app that provides additional options and features for a certain price. There are countless examples of various freemium apps and games that provide limited features in their original free-form, but quite a number of users choose to pay for additional features, even monthly subscriptions, and similar fees. This model has to be planned ahead, during the development of the app, or it can really turn off the visitors and prove to be a costly mistake.

5. Reward Video Ads

Pre-roll and Reward Video advertising has created a great way for game developers to monetize the 98%’ers who would likely not pay for the game. There are various ways developers can implement Video ads in their games; forced, unforced, voluntary, involuntary types and so on, and all of those carry their own pros and cons. Implementation of certain models will either make or break the gameplay and meta-gameplay.

As a conclusion, if you are a Game Developer in this seemingly endless sea of free apps and constant evolution of the app development, you must plan your monetization strategy, use a mix or monetization tools to make sure you have a decent chance of making a successful and profitable app.