The number of paid apps downloads have been on the decline in recent times as the use of free apps continue to be on the rise. As of today, free apps are more than the paid ones, posing the question. “How do free apps make money?” The global economy of apps is huge and it is expected to grow even more. Millions of apps have been released covering both paid and free options. Looking at the number of loads for each type, the free ones seem to take a lead. While this is helpful to the user, how do the free app developers benefit from such kind of business? Here are some of the ways through which they make money.
Referral Marketing and Affiliate Income
This usually comes from Cost per Action (CPA) networks. Developers can use their apps to market and sell affiliates’ products and/or services. The revenue earned then gets split based on the clicks and installs made.
Users get Freemium apps for free but they come with paid features that can be accessed via in-app purchases. Users get to download the free version of the app and access its full functionality once they pay for the content if they find it useful. It helps get new users faster because the paid features are not compulsory.
Money from Sponsorship
The placement of sponsorship within the app creates revenue when the provider develops the right niche app for targeted users and makes the launch in support of another company. All that the developer will need is a funder having the same target audience and adapt the design to match the brand of the sponsor.
Physical Merchandise and Purchases
Free apps are usually used by e-commerce businesses to sell branded merchandise or physical goods through either specially made apps or via email marketing. The Angry Birds game is one of the best examples used to enhance revenue from branded merchandise. It helps in selling branded backpacks, stickers and t-shirts hence providing a revenue share to the developer.
Via Email Marketing
In this revenue model, free app users are normally asked to sign-in using their email. This makes it possible to reach all of them using email notifications. Therefore, these mobile apps provide an opportunity to get email addresses that can be used effectively for email marketing to woo them into purchasing products and services.
Subscriptions for Access to Restricted Content
Free apps can present some restricted features or content that can only be accessed via subscriptions. A fee is therefore paid for users to unlock these features and fully access the content.
Through Amazon Underground
Developers can make money via Amazon Underground through the Amazon App Store. However, it doesn’t need in-app purchases or ads. Amazon Underground provides its users with unlimited solutions with paid features for free. Payment by Amazon Underground is made at the rate of 2 cents for every minute the app is used, per user.
Adverts Made on Apps
There are apps that pay through ads made on them. The mobile advertising approach is one of the profitable ways that free apps use to make money. To realize this, commercials are displayed in the mobile apps from where it can accrue income from the ad networks.
Gathering and Selling Data
Some companies provide free apps with an objective of collecting data and selling it out to other parties. This information may include social media accounts, email addresses and personal preferences. Although it is not ethical, it is one of the ways free apps can be used to make money.
This app revenue model provides an opportunity to sell a number of virtual items straight from the app. This includes premium content, additional bonuses, goods, game currency and unlocking game levels among other things. Ideally, the strategy may involve either consumable products, non-consumable options or subscriptions.
The app world has experienced great changes where new avenues have been created to profit from the business other than just by using paid apps. Free apps are also proving a worthwhile investment through advertisements and in-app purchases among other ways that have been used to generate income. Instead of building paid apps, developers can create free ones and exploit these avenues to generate income.