They say there are no free lunches yet the mobile applications we usually use are free. It is because of fierce competition that app developers don’t want to charge users up front. People who download apps will take the free one over a paid one. To get users to buy an app is no cakewalk. A simple review of app stores will make you realize the vastly different numbers paid and free apps carry. Paid apps are one way to earn money. Even free mobile apps can generate thriving revenue streams for the business. Your jaws will drop when you will see the amount of money free apps bring in for their owners each day. So how does that happen? App monetization can happen in a variety of ways.

And ideally, there is no “absolutely right” monetization model for an app.

Let’s find out the most popular and proven strategies to monetize free apps that can make money for you as well as keep your users happy:

1. Selling Ads

One of the best and most popular monetization models used by businesses all over the world, selling ads inside the application brings home good returns on investment. By 2021, in-app advertising is set to reach the $201 billion mark. Broadly speaking, there are four types of apps. Interstitial ads occur when downloading or making transitions inside the app. These full-page advertisements come when the app changes levels or is paused. They also help in drawing a user’s attention while the data from the server are being pulled. If done right they form a part of UX thus elevating the whole app experience.

Banner ads are an old-school favorite. They run across the screen on top or bottom when an app is used. They do not hinder the normal functioning of the app and occupy minimal screen space. As per research, they are less effective than interstitial apps. Next category is an upcoming favorite using videos inside the app. Sometimes, users will get a reward if they decide to watch short videos. Lastly, native ads become part of the content of the mobile app. They are the most relevant kind of advertisement that does not hamper user experience in any way.

2. Selling Subscriptions

Businesses sell monthly or annual subscriptions to engage users in apps that rely on content. While the subscription-based app monetization model is not as effective in drawing people to subscribe, it could be a money maker for businesses. Unfortunately, you have to keep your audience coming back with new information to give them an incentive to get the subscriptions. This incurs use of many resources for creating relevant content and executing the content strategy. You must have deep insights into how humans think and behave when a business is crafting subscriptions plans that intend to add value.

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3. Marketing Third Party Products

You have the ability to promote third-party products or services via a mobile app. This is known as referral marketing. Pick an affiliate network companies that are right for your content on your app. The revenue generated depends on the referral model chosen by the business:

  • Cost per impression (CPM): In this type of system, the advertiser pays you every 1,000th time their ad is displayed on your application.
  • Cost per click (CPC): In this type of referral marketing, the total revenue depends upon the number of times the user clicks on the advertisement in the mobile application.
  • Cost per view (CPV): This method revolves around video ads. Revenues depend on a number of views.
  • Cost per install (CPI): When you advertise an other-party mobile application within your app, you get paid for every time a user installs it.

4. Make Them Buy

This strategy works when you want users to come on board and get a taste of what lies ahead. While a user is free to download free apps, a more functionally engaging “paid” version is available on the app for the user to purchase. When users buy within the app, they are doing one of these:

  • Use Instantly: The products or features within the app can be used once when purchased. For example virtual coins and tokens.
  • Save for Later: Features that are available for use on a permanent basis fall under this category. For example, newer levels of the game or access to the ad-free version of the apps.
  • Periodically: This model allows unlocking of additional features of an app product for a limited amount of time, on a monthly or a yearly basis.

The free version should be interesting enough for users to get hooked. They should be left with wanting more. For example, if you are out to build a great game keep the first three levels free and the next level unlocks with in-app purchases. If the game is good enough, you will be able to get a sizable number of users to pay for the next level. Respect users by building the unclicked features even more interesting than the free ones so they feel the worth of their money spent.

Bottom Line

If you have an app idea you need to make sure you launch it as a free app and build your business via any of the above monetization techniques. The right monetization model will depend on a plethora of factors like target audience, geography, category, etc. Each method has its own benefits and drawbacks. However, the insights shared above will help you in analyzing what method is best suited for your app business.

It goes without saying you should consult a professional mobile app development company before making a decision or even testing the waters as their expertise and experience will keep you away from known pitfalls.



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