How does a Free App Make Money? We have the Answer

As of December 2021, Approximately 93.7% of apps were available for free on the Apple App Store. But how does a free app make money? Well, that is the question we are answering further.

Top smartphone apps have joined many segments to make lives easier for more than 6 billion smartphone users globally. Education, navigation, gaming, music, and more, these smartphone apps offer services with a few taps. But with such accessibility and efficiency, how are they beneficial for developers when they provide their apps for free? That is the question we are answering in this blog.

A Statista report tells us that on the Google Play Store, by December 2021, 97 apps were available for free to download. The Android operating system has led the app market with the highest number of free apps for a while.

How free apps make money?

Furthermore, we are discussing how can apps make money even if they are available for free. So, stay with us until the end of this blog to find some informative discussion.

1. Subscription apps

Before we explain how apps make money, let’s look at a few crucial insights. A BusinessofApps report shows, in 2020, subscription apps have generated $13 billion worth of revenue globally. Compared to the $2.4 billion revenue in 2016, you can imagine the annual growth these apps have seen. However, many top money-making apps such as Netflix, Spotify, and more have removed the subscription system supported by the Google Play Store.

When we talk about subscription apps, we include apps that require you to pay a periodic cost. Some apps follow this trend to provide access to premium features. While other apps are entirely dependent on the subscription pattern. For mobile app development companies, the subscription method is one of the most common trends in making money.

2. In-app purchases

The answer to the question “how do free apps make money?” can not be completed without talking about in-app purchases, one of the most common ways of making money for top app developers. There are many profitable apps that require payments for unlocking premium features or to use them beyond the free trial period.

These in-app purchases are done in a few ways-

• Recurring subscriptions- Where you pay periodically for additional features. For instance, Royal Pass for the famous PUBG game. With Royal Pass, you can unlock additional features and dresses.
• In-game tokens- These are a kind of currencies that unlock additional features such as new skins, premium services, new themes for gaming apps, and more.
• Pay per product- If you have used Graphic Designing services like Canva, you might know that Canva includes icons and elements that you can unlock for your designs by paying for each of them. Alternatively, you can also go for Canva Pro subscriptions that include these elements and icons.

3. In-app advertisements

Answering the question “how does a free app make money?” will look incomplete if we do not discuss how in-app advertisements are crucial for developers’ earnings. With good outreach and user count, companies can pay developers to display their ads on apps. Which, in short, enables developers of the best apps in having a source of passive income. Now, in-app advertising is done in multiple ways. To understand how do free apps earn money, let’s understand these types of advertisements in short.

• Banner ads- One of the most popular forms of in-app advertising, Banner ads are often visible either at the top, bottom, or both on the app UI. Without interrupting the user experience, these ads advertise the product or service in one of the most effective ways.
• Survey ads- In this form of in-app advertising, you organize a couple of surveys such as watching videos and answering questions to let the user know about a product or service. In return for attempting these videos, your app rewards the user with in-app coins or rewards. These kinds of surveys are often found in gaming apps.
• Video ads- In between the transition from one screen to another, these video ads are used to cover the loading time. Usually 5-10 seconds longer, such videos can also be annoying for users sometimes but for developers, they bring sponsorships.
• Native ads- Already integrated ads for a particular brand, these advertisements usually are sponsored and the app is designed with keeping these ads in the mind.
• Pop-up ads- As the name suggests, while using the app, users get popups including ads. These types of ads require an internet connection and can be annoying for users sometimes.

4. Freemium model

One of the most common answers to the question of how do free apps make money without ads, the Freemium model includes offering limited features or trials without charging anything. For instance, you can use the Adobe Lightroom app on your smartphone to edit pictures for free. However, many filters and features such as AI-supported masking and RAW format support are included under its premium subscription. Freemium might be one of the most popular models you will find in the app development market.

Key takeaways

Well, that is all we wanted to share with you to ensure that you have fact-based answers to your question- how do free apps earn money? Moving forward, we will wind up the blog after going through crucial key points once again so that you can revise them in short.

In the end, we hope you found this blog on “how can apps make money if available for free?” informative. You can read more in-depth blogs related to the app development market on MobileAppDaily. Until we see you with another new blog, Ciao!

Written By

Arpit Business Development Head

He is responsible for marketing programs, brand management, and corporate sponsorships. He thrives on challenges, particularly those that expand the company’s reach. Next to work, Shadow, his dog, immensely contributes to his happiness.

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