How Do Free Apps Make Money in 2020?

Mobile Development | 08/05/2020

How Do Free Apps Make Money in 2020?

Have you ever thought about how do free apps make money in 2020? This article is for the startups and entrepreneurs who want to learn – How to create and monetize an app or make money with free apps to generate a passive revenue stream by publishing free apps in the mobile app market.

Blog Summary:

  1. Introduction
  2. Freemium v/s Paid Apps: The Battle Still Continues!
  3. How Can You Earn Money from a Free Mobile App?
  4. Which Platform Will Make Most Money for App Developers: Android or iOS?
  5. Most Popular Monetization Strategy For How Do Free Apps Make Money
  6. Apps Are not Just Limited to Smartphones!
  7. How much does it cost to develop an app?
  8. FAQ

Once the entire app development process is completed, you’ve got to make a crucial decision before you upload your app on either App Store or Play Store.

Will you make your app available for FREE?

Or

Are you going to charge users to download and use your app?

One of the most common reasons for developers and entrepreneurs to charge for the app is that they don’t know any other way out to generate money from an app.

After spending such a huge amount of money on the development part, app owners think the only way to get a return on investment is to charge a certain fee per download to users.

But this is one of the most common misconceptions that prevail in the mind of app owners.

Yes, Free apps do make money!

And, that’s right! You just need to make sure to adopt a smart approach to this strategy.

So, if you’re in dilemma thinking whether to offer your app for free or not, I’d say that free app is the best option to go with.

 

Freemium v/s Paid Apps: The Battle Still Continues!

Freemium v/s Paid Apps

Image Source

What do you understand by the above graphics?

Mobile users are not used to paying for apps and so it’s unlikely that your app would be an exception.

As per the 2018 report, there are a total of 3.8 million apps on Google Play and almost 2 million apps in the Apple Play Store. The market is huge, and the worldwide revenue of mobile apps is expected to reach $190 billion by 2020.

Today, users have become quite selective in their choice and they just have 4-7 daily apps active in their smartphone. In such a scenario, if you make your app Paid, users are bound to look for a similar app available for free.

So, the best choice is to offer your app for free without charging anything. Later, try to get maximum downloads as possible and look for other revenue options.

You see, the mobile app market has grown substantially over the years and the industry experts predict the continued growth in the app market in the upcoming years. If you just look at the statistics below; you can see how far the app market has reached;

“In 2018, the mobile app traffic encountered 53% of the total web traffic in the USA and adults spends almost 4 hours consuming digital media that occurred on smartphones, laptops, desktops, and other connected devices. “

With such an impressive number, it’s no wonder why fortune 500 companies and big-shot entrepreneurs are trying to build a free mobile app that generates revenue. Still, a question arises is:

How Can You Earn Money from a Free Mobile App?

In accordance with the SensoTower, the App Store and Play Store users have together spent $40 billion in mobile apps and games by the first half of 2019. So, its quite clear that there’s a huge app market that you would not like to miss out.

If you think that the paid apps bring a huge share of revenue, then you’re absolutely wrong. In fact, if you check the list of top-grossing mobile apps and games in the App and Play store, you’ll notice that all apps are FREE. The majority of users prefer free apps.

According to SensoTower statistics, free mobile app downloads have gradually increased by 16% in Google Play Store while the App Store download rates decreased by 1.5%. However, the overall effect remains positive.

worldwide app revenue

Image Source

So, developing a free mobile app is an apt business strategy.

But,

Which Platform Will Make Most Money for App Developers: Android or iOS?

Before announcing any platform, a “clear winner”, you need to decide the platform for which you want your app to be developed. Your decision can create a great impact on your revenue stream due to differences in the platform's popularity and market penetration.

As you know, in the mobile app development market, developers are high in demand because of their experience, skills, and adaptation to the new market trends and are compensated accordingly. Talking about Android and iOS; Android platforms win here with an average salary of $98K amongst the developers. The reason for Android’s success is quite simple: constant market penetration that makes Android a foremost choice for developers to build an app. However, Apple’s iOS platform is not too behind since iOS app developers are making around $97K annually.

If you notice, both the platforms top the list in terms of earning and there’s no one superior to others. Companies are hiring mobile app marketing specialists to help them bridge the gap between the two and thus earn more revenue out of two in a single go.

While more niche platforms can definitely brag in more profits, they should only be considered once your app has noticed a significant profit on a widely used platform; especially considering the highly dominant Android and iOS duo. Once an app receives a significant profit, porting to another platform later is believed to be a smart move.

So, this was all about how platform selection can make a big difference in your revenue stream.

Before moving further with how free apps can help make money, I would like to draw your attention towards another important matter: Correct app presentation- that matters a lot.

Always remember that users must be quickly able to find your app in the App Store or Play store and understand what your app is curated for.

Encourage User Interest Towards Your App with Perfect App Packaging

How many users will find your free mobile app? How many of them will take the pain to download and understand your app? No matter how good your app idea is and what app monetization methods you use, you may still fail to attract potential customers without a picture-perfect app packaging.

In order to gain more customers, your potential app users must be able to find your app quickly in the App Store or the Play store. To make your app visible and easy to search, your app should have an attention-grabbing name, informative yet clear description, and an easy to understand screenshots.

Below are a few tips that will help you to curate a top-class app description.

1) Attract Users with Clear And Catchy App Names

Your mobile app should have a crisp name that reflects its description and functioning. It should include keywords in the app name. The name of your app shouldn’t be too long; 100 characters at max.

For example:

Let’s look at Spotify, one of the most popular music streaming app. As you can see, the app name consists of everything needed to explain what this app does/serve. (i.e. it offers live song and podcast streaming).

Spotify - App Store

2) Meaningful and Informative App Descriptions

The next step is to provide your app with an informative and meaningful app description.

The first several sentences (up to read more or show more button) should reveal general information about your app features and illustrate the app’s main idea. Ideally, it shouldn’t exceed the limit of 225 characters.

In the main body section, you should mention what problem your mobile app will solve along with drooling over its important features and functionalities.

For example:

Let’s have a look at a fantastic example of Scrummer that holds a brief yet informative description. It is a handy planning poker app for Scrum development teams that is available in the Apple App Store.

Scrummer - App Store

3) Do Not Forget to Include Enticing App Screenshots

Though your app name and description are important your users want to know how your app will look like in their device which is why you need to include some pictures of your app. Make sure you pick the best screenshots.

I recommend that you add some text to your screenshots that describe your app features and functionalities.

Let’s have a look at Uber’s Screenshot.

Uber - App Store Screenshots

There are several different ways to earn money from your app that you must explore and research on. Some of these ways might need you to charge your customers while others might not.

There is no ideal method or way to earn money from your app, and what would work the best for you is totally dependent on the services you are offering or your business model.

When you are creating an app yourself, it is important that you understand what the best-suited way would be to monetize your free app and bring in some enviable revenue. So, let’s get started!

5 Most Popular Monetization Strategy For How Do Free Apps Make Money

Below are some of the app monetization ways that can help you to gain monetary benefits from the app.

1) In-app advertising

This is probably one of the easiest ways to make some money with your app. The way it works is that you let advertisements show on your app.

Being an app owner, you will be paid as per the number of impressions or clicks an ad gets and the type of ads you offer on your app. Generally, the video ad is bound to get paid more as compared to the banner ads.

Not only such ads are important but the duration for which the video will be played and its display frequency on your app also holds special significance.

As an app owner, it’s your responsibility to monitor whether your targeted audience finds your ad’s compelling and entertaining or they’re simply blocking them.

BONUS TIP:

One interesting way that I recently noticed to earn more money from your app is by “NOT SHOWING Ads”.

Yes, you heard it right! You can earn money from your users by offering them an ad-free version of your app simply by purchasing an “app upgrade”. Recently, many applications like YouTube and Dictionary.com are practicing the same and leveraging clutter-free experience to the user.

2) Subscription

The subscription model is one of the most effective models to grab more bucks into your account.

The model is quite simple to understand:

Initially, your app would be offered “free” to the users where they can access the content to a certain extent without any kind of charges. Later, when the user gets indulged in your app and finds your app offering value to them, they can upgrade to the paid subscription where you can offer unlimited access to the app content.

Another similar model is where users get a free trial period to enjoy unlimited access to your app content for a certain period of time. Once the free-period expires, you can block users where they need to buy a subscription to get unblock and access to the valuable app content anytime, anywhere beyond the trial period.

Netflix and Amazon Prime are the leading examples gaining massive amounts by practicing the subscription models.

3) In-app purchases

This strategy is based on the freemium model where you offer users your app for free but with limited access to the features. Users can unlock some additional premium features, advanced levels, or access to some privileged content after buying app up-gradation.

In this model, an app can offer any extra bonus, virtual currency, or coins for the game, any free premium content, or unlock any extra level.

4) Sponsorship

If you’re an app owner and can find a sponsor with similar or the same target market then it is one of the most effective strategies for you.

Once you get the right sponsor, you can white label the app, you can adapt their app design in your application so as to match the app sponsors theme. If you want your app to be successful in the market, make sure you build a niche app specifically curated for the customized users on behalf of the sponsor/particular brand.

For instance: The app can even be a local restaurant app revamped with more customized and extravagant features specifically catered to a particular user group.

There are two ways to make this deal workout:

  1. A revenue split model
  2. Monthly sponsorship model
  • This strategy can actually prove to be a lucrative option since you would already get the benefit of the existing web traffic along with the brand loyalty build for ages.
  • This will not only enhance your user base but will also promote your app.

5) Paid apps

You’ve spent a whole lot of time, money, and important resources to build a kickass and robust app. So, its quite fair to tag your final deliverables a certain amount.

This means that if you even charge a mere amount of $0.50 and are able to bag in millions of app downloads, then your app marketing strategy is excellent enough to make you stand at almost a million-dollar milestone for your app revenue.

However, things are a bit different than it seems. Generally, Apple and Android users do not tend to spend money on apps since there are quite similar apps like yours that are available for free. So, think twice before you give your app a price tag.

Apps Are not Just Limited to Smartphones!

Applications aren’t just limited to mobile phones. Since the time more integrated smart devices have entered the market, a massive change has been noticed in application development.

Talking about the Unites States, Smart TVs are not uncommon in around 70 million US residents. Smart speakers like Alexa, Amazon, and Google Home have also dominated the app market. As per the latest reports, the ownership of these devices is expected to skyrocket by 126 million in 2020. Steady growth in third-party app purchase is also expected to surpass by 1400%. Such a massive figure isn’t it!

If you notice the above stats and figures, it won’t be an overstatement to consider Smart TVs and home devices in mind while designing your app. Expansion of these platforms not only opens up a new revenue stream for your business but also increases your app exposure.

Another platform to pay attention to is smartwatches. With wearables becoming increasingly prevalent in day to day life, it wouldn’t be a surprise if smartwatches would notice a whopping 52% share in the wearable devices.

In such a case, optimizing your app for smartwatches would be a competitive advantage to generate more revenue.

How much does it cost to develop an app?

Well, the cost to build a mobile app depends on several factors such as app features, platform, Operating System, plugins and integrations, advanced functionalities, and many more.

If you still want a ballpark figure, apply the below formula:

Total Mobile App Development Cost: Estimated Development Hours * Developer’s hourly cost

However, the exact quote shall be declared once the scope of the work is finalized. However, the base price to built any simple app can range between $10,000-$25,000 for android and iOS platforms.

Let’s Explore More

Frequently Asked Questions on How Do Free Apps Make Money

1) How free apps make money without ads?

Below are a few ways to make money on free apps:

  • Sponsorship
  • In-app purchases
  • Advertising
  • Subscription
  • Referral marketing
  • Cross-selling marketing
  • Freemium upsell

2) How much money can an app earn per download?

Well, you cannot predict how much a free mobile app can earn per download. For instance; the top 100 apps can earn $50,000 while the best 500 apps can even earn $5000.

3) How can we earn money from free apps?

Below is how you can earn money from free apps:

  1. Affiliate income
  2. Monthly/quarterly/yearly subscription
  3. Freemium model
  4. Unlocking some advanced features with in-app purchases

4) Can we monetize a free app?

Yes, why not! There are a lot of alternatives and app monetization techniques to earn money from apps. Below are a few hints to make money with apps;

  1. Advertisement is the most obvious way to earn money with apps.
  2. With In-app purchases, you can ask users to unlock rest features and enjoy the app.
  3. Let your user pay a monthly subscription and get premium access to the rich and hooking content.

5) How much money can you make from an app?

Well, it's quite difficult to justify an exact figure on how do free apps make money. It totally depends on your app idea, the problem it solves, and its capabilities. On average, an entertaining app can easily bag around $ 5K-6K daily while a gaming app can earn around $15-20K, still, you can’t really define an exact number.

Conclusion

Do You Need To Charge Your Users To Download App?

Absolutely not!

Free apps do generate real money.

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