Do you have an idea for a free mobile application but you doubt whether it's worth investing? How do free apps make money? Your doubts are quite clear: mobile IOS / android app development requires a lot of time (typically, several months) and, more importantly, money. Before kicking off the development process, you should clearly understand how you’ll recoup your investments and how to make money with apps in 2020. We’ve decided to help you get your idea off the ground and show how exactly you can make money on free apps.
Free Apps Grossing Big BucksAccording to Sensotower, the App Store and Google Play users spent a total of $39.7 billion on mobile apps and games during the first half of 2019. This is a huge market you don’t want to miss out on If you think that it’s the paid apps that bring the lion’s share of this huge revenue, you’re wrong. In fact, if you check the list of the top grossing mobile applications (including games) in the Google Play Store and the Apple App Store, you’ll notice they’re all free. The vast majority of users on all continents prefer free mobile applications. In fact, the number of free app downloads is constantly rising. Statistics provided by Sensotower show that in the first half of 2019, free mobile apps downloads in Google Play increased by 16,4 percent and made up $41,9 billion. Whilst the App Store lost 1,4 percent in downloads. However, the overall tendency remains positive. Developing a free mobile app is definitely the right business strategy. Before shedding light on how to make money with apps, we’d like to draw your attention to another matter: correct app presentation. Remember that users must be able to quickly find your app and understand what it’s designed for.
Incite User Interest Through Accurate App PackagingAs of the second quarter of 2019, there were 2.46 million apps (of all types) in the Google Play Store and 1.96 million in the Apple App Store. The competition is really strong! How many users will find your free mobile app? How many of them will download it? No matter how good your app is and what monetization methods you use, you may still fail to attract customers without a clear app packaging. Potential users of your app should be able to quickly find it through search in the Google Play Store and the Apple App Store. To make your mobile app visible and easy to find, you should provide it with an attention-grabbing name, an informative description, and screenshots. Here are tips that will help you create a top-class app description:
Choose a Clear and Catchy App NameYour mobile app should have a snappy name that reflects its major functions. Though many applications have names that convey nothing about their functionality, your app is likely to attract a lot more users if it has a name that hints at what it does. It’s particularly useful to include keywords in the app name. In general, the name of your app shouldn’t be too long – 100 characters at most. Think carefully about the name, as it’s the first thing people see and pay attention to when they’re considering whether your application is worth downloading.
Come up With an Informative App DescriptionThe next step is to provide your app with a meaningful and informative description. The first several sentences (up to the “Read More” or “More” buttons) of an app description should give general information and illustrate the app’s main idea. This part mustn’t be long – up to 225 characters. Few people read further, so make sure to tailor this part of the app description to perfection.
Make Eye-Catching App ScreenshotsAn app’s name and description are important, but users want to know how your app will look on their mobile devices. That’s why you should include several screenshots – and make sure you pick the best. We recommend that you add some text to your screenshots, describing some functions of your application. As you can see, this screenshot shows that the app can work on smartphones, tablets, and smartwatches. Note that Uber uses verbs in their screenshot descriptions, which is the correct approach. Verbs are the parts of speech used to describe actions. People are more likely to act (i.e. to download your free mobile app) if they see verbs.
How to make money with free apps?Now that you know how to package a five-star app, we can move on to explaining the strategies you can leverage to make money on free apps.
Strategy #1: In-App PurchasesIn-app purchases is an extremely popular strategy used by thousands of apps in both the Google Play Store and the Apple App Store. In-app purchases allow users to buy something right in the app. There are three major types of in-app purchases:
- Consumable. Consumables are products that a user can use only once: for example, virtual money or health points. Such in-app purchases are usually used in mobile games.
- Non-consumable. Non-consumables are features that users buy for permanent use: for example, additional functions or ad blocking (this is how free apps make money without ads).
- Subscriptions. Your mobile application may offer subscriptions that unlock some content or functions for a certain period of time. Subscriptions can be either non-renewing or automatically renewing.
Strategy #2: In-App Ads
Ads are a driving force of the global market. They’re literally everywhere, and mobile apps aren’t an exception. In-app ads are actually tools of affiliate marketing. With in-app ads, you advertise your affiliates’ products (apps, games, etc.) inside your app and get paid if your users interact with those ads.
There are several types of campaigns used in affiliate marketing, so let’s mention the most popular:
- Cost per click (CPC). This model means that you get paid for each click on ads displayed in your mobile application. Typically, a single click is nearly worthless, so revenue is calculated on a cost per mille basis (mille is Latin for thousand).
- Cost per view (CPV). These campaigns are usually applied to video ads. The more times users of your app watch video ads, the higher payout you get.
- Cost per install (CPI). With this model, you get paid whenever a user of your app installs an advertised application.
- Banners. Banner ads usually appear at the top or at the bottom of a screen and have some text and graphics. Banners are considered to be relatively unobtrusive, as users are able to keep using your mobile app even if a banner is active. However, banners have low click-through rates (CTR) and heavily depend on brand recognition (users are far more likely to click if a banner advertises some well-known brand).
- Native. Most people don’t like ads and try to block them completely. How can you reach out to the users of your mobile application, then? Use native ads that don’t really look like ads. Native ads are seamlessly integrated into mobile applications, making them subtle but quite efficient.
- Videos. According to an article by Invesp, the CTR of video ads is 1.84%, so they’re quite effective. Typically, video ads appear automatically when users interact with apps.
- Interstitial. These ads take a whole screen and typically appear when users launch or close an application. However, interstitial ads may also look like pop-ups appearing from time to time.
- Rich media. If you’re wondering what type of in-app ads is the most efficient, here’s the answer: rich media ads that, according to the previously mentioned eMarketer article, show a CTR of 0.44%. Rich media ads use multiple methods to reach out to users, including audio, video, text, and more.
- In-app ads allow you to make money off free apps, but this monetization strategy works well only for applications with big audiences. If your app is a startup, don’t expect it to bring big bucks this way.
Strategy #3: Freemium
- To benefit from the freemium monetization strategy, you need a second, paid version of your application. If users like a free version, they’re likely to opt for a paid one that has some extra functions. With a freemium model, users are typically offered to upgrade an app to a paid version, and if they agree, they’re directed to an app store. For example, have a look at MX Player, a popular video player available on Google Play.
- This monetization option is quite efficient, but you shouldn’t provide too many functions in your free app; otherwise, few users will shell out for the paid one.