{"id":4982,"date":"2020-05-08T10:42:30","date_gmt":"2020-05-08T10:42:30","guid":{"rendered":"https:\/\/www.folio3.com\/mobile\/?p=4982"},"modified":"2020-12-22T09:11:24","modified_gmt":"2020-12-22T09:11:24","slug":"how-do-free-apps-make-money-on-android-and-ios","status":"publish","type":"post","link":"https:\/\/www.folio3.com\/mobile\/blog\/how-do-free-apps-make-money-on-android-and-ios\/","title":{"rendered":"How Do Free Apps Make Money on Android and iOS"},"content":{"rendered":"\n

Most of the free apps make money from the digital advertisements they show after every few minutes, which may give them revenue per click, or per ad, or per a certain period of time that is fixed by them with the company of the ad. <\/p>\n\n\n\n

Some free apps also have different monthly or annual subscriptions that people buy, and they earn money from, and people also make many in-app purchases that give money to these apps. There is also a concept of freemium upselling that will be discussed later in the article.<\/p>\n\n\n\n

Most of the\napps that exist today in the market are a part of the Google Play Store or the\niOS App Store and are downloaded by people through them, depending on whether\nthey are an Android user or own an iOS. As well know, many of these apps are\ntotally free for us to download, so how do apps make money is the first and foremost question one\nmay ask.<\/p>\n\n\n\n

There are\nmultiple different avenues through which a free app may earn money, and not\njust any money, billions of dollars, as it is suggested that last year, these\nfree apps gained revenue of $73.1 billion. This is not\njust any amount; it is quite a heavy price that we, the users, are paying\nwithout even knowing when and how.<\/p>\n\n\n\n

The Existing App Market<\/h2>\n\n\n\n

The\nmobile market, in recent years, has grown tremendously and is expected by the\nexperts to continue growing as more businesses are coming up with their apps,\nand many people are finding different apps more appealing than previous ones. <\/p>\n\n\n\n

On\naverage, an adult spends about 4-6 hours in front of a screen, be it\nsmartphones, a laptop, a tablet, or any other device. The market is that much\nin demand, and as mentioned earlier, grosses billions of dollars. The Fortune\n500 and other companies and entrepreneurs are all trying to get their hands on\nthis modern-day technology upgrade and entering the tech world.<\/p>\n\n\n\n

As\ntrends show, free apps earn more in the market than paid ones, when talking in\nterms of profits and the number of downloads, and again the question arises, how do apps make money,\nwhich may confuse many people, but has simple solutions to it.<\/p>\n\n\n\n

But, before we get into the details and answer that question, we have news from Techcrunch that says that this booming app era is still here to stay, and will further grow, and is going nowhere anytime soon. So all mobile app developers<\/a> and companies should gear up and be ready to move ahead with their ideas.<\/p>\n\n\n\n

Difference: Free Apps vs. Paid Apps<\/h2>\n\n\n\n
\n Free Apps<\/strong>\n <\/td>\n Paid Apps<\/strong>\n <\/td><\/tr>
Lower average revenue at each download, but higher average revenue overall <\/td>Higher average revenue on each download <\/td><\/tr>
Users are less likely to stay loyal to a free app, but they may get addicted and depending on the genre of the app (e.g., games) <\/td>Users are more loyal to their paid apps as they have a higher perceived value <\/td><\/tr>
The following of a free app depends on what service it is providing or what purpose it is serving for the users (e.g., work, entertainment, etc.) <\/td>May have a lesser following if users cannot try the app before purchasing <\/td><\/tr>
Has multiple competitors, but is itself free, so it can lure people towards itself <\/td>Has a lot of free competitors available in the market <\/td><\/tr>
Needs to keep the users engaged and give regular updates to intrigue them or they may delete the app altogether <\/td>Needs to provide more to the consumers as they are paying for it and expecting their desired outcome <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Android vs. iOS<\/h2>\n\n\n\n

Many people, before building an app, actually weigh the pros and cons of both these OS types: Android and iOS, and then see where their app fits best. The success of an app does not actually depend on which software to use, rather on the target audience that your app is looking forward to capturing.<\/p>\n\n\n\n

For example,\nthe US market for smartphones is dominated by iOS, so if your app targets the\nUS market, you would most likely make more money from apps for the iOS system.\nIf you are outside the US market, where Android is total domination, you are\nmost probably going to resort to an app that appeals to that market and is for\nGoogle Play Store.<\/p>\n\n\n\n

Thus, it is not\na question of which platform would help the app developers make the most amount\nof money; rather, it is the target market that will set your platform goal for\nyou. Though what most developers settle for is building an app that caters to\nboth the iOS store and the google app store so that maximum results are gained\nfrom both parties, and the app becomes a success overall.<\/p>\n\n\n\n

How Do Apps Make Money?<\/h2>\n\n\n\n

Different\napps that are free use different methods of earning money, depending on what\nthe company\u2019s needs are, who their target market is, etc. Some of the simple\nways in which apps can make money are as follows:<\/p>\n\n\n\n

In-App Purchases:<\/h3>\n\n\n\n

This\nis one of the easiest ways to make consumers pay when they download a free app.\nIn-App purchases can be of different kinds, for example, if a user is playing\non a game app, the game app can prompt them to buy coins and go forward to\nhigher levels, or if a user is reading an online book, the book app can prompt\nthem to buy the next chapter of the book in order to go forward. This intrigues\nthe user, who is excited to go forward, so they purchase as required, and the\napp gets its revenue.<\/p>\n\n\n\n

Advertisements:<\/h3>\n\n\n\n

Another\nway the app can gain revenue and make money by being a free app is through\nadvertisements that they can display. Digital advertisements can be seen in all\nkinds of apps, while playing a video, or any game app, or even when you are\njust browsing through, you can see ads that you may able to skip or ads that\nyou have to watch till the end. In this case, though, the user is not the one\npaying the app developer, it is actually the company whose ads are being\ndisplayed that pays the developer, and that is how they make money here.<\/p>\n\n\n\n

Subscriptions:<\/h3>\n\n\n\n

The\napps also earn much of the revenue by providing its users that avenue of\nsubscribing to the apps after downloading the free app. For example, people who\ndownload Netflix for free on their mobile phones or laptops can only watch\nanything on it once they have subscribed to a Netflix account. Bloomberg works\nin a similar way, where it prompts the user to make a subscription in order to\nreceive updated information about the financial market. Many novel-reading apps\nalso need you to make a subscription of how many books you can read in a\ncertain paid amount.<\/p>\n\n\n\n

Advertising Techniques in Apps:<\/h3>\n\n\n\n

As\nyou may have already noticed while using an app on your device, multiple\ndifferent kinds of ads come up on the screen, for example:<\/p>\n\n\n\n

Banner Ads:<\/h4>\n\n\n\n

These\nare the ads that are displayed at the top or the bottom of your device\u2019s screen\nand do not bother while the user is busy using the app. These have quite a low\nengagement rate as per research by companies.<\/p>\n\n\n\n

Video Ads:<\/h4>\n\n\n\n

These\nare the videos that pop up during the usage of the app and make you pause\nwhatever you are doing for a duration of about 10 to 30 seconds. These disrupt\nthe work you are doing on your device, but may also be a rewarding process. For\nexample, the app may prompt you to watch a video in return for coins, or\ntickets which may help you move forward in the game or the work you are doing,\nso you willingly watch them at times.<\/p>\n\n\n\n

Native Ads:<\/h4>\n\n\n\n

These\nkinds of ads include sponsored material or important video content that is\nnaturally integrated into the app itself, and do not necessarily disturb the\nconsumers\u2019 process of work; thus, users do not find these kinds of ads\nirritating like they do the rest of them.<\/p>\n\n\n\n

Interstitial Ads:<\/h4>\n\n\n\n

These\nare the pictorial or graphic content ads that are not in video form but pop up in\nfull-screen mode while the user is doing any work or playing on the device.\nThis mostly happens when the user either opens or closes the application, and\nthe user can press the cross sign to close the ad or click it if they are\ninterested to know more about what is displayed.<\/p>\n\n\n\n

Incentivized Ads:<\/h4>\n\n\n\n

These\nads provide some sort of incentive to the user for watching it or acting upon\nthe call of action presented in these ads. For example, mobile companies may\npresent their offers and subscriptions in these ads that people may click to\nuse, or an ad for making a certain donation or getting any kind of prize can be\ndisplayed that people may click to donate money or check if they won or not.\nThis kind of advertising gets the attention of the users. (1,581)<\/p>\n\n\n\n

Are Apps only for Mobile users?<\/h2>\n\n\n\n

As\nwe have already read in multiple articles, apps are not only confined to the\nMobile Phone users, and rather, apps can be downloaded and used by many other\ndevices too, such as desktop computers, laptops, tablets, the iPad, and many\nothers amongst these. The same apps also are downloadable on almost all of\nthese devices with a similar outlook and frontend to make it easier for the\nusers to use them.<\/p>\n\n\n\n

In\naddition to these, many apps are a freemium upsell or subscription-based, which\nhave a laptop or desktop version as well. For example, if you download Netflix\non your mobile phone and subscribe to it, you can also use the same account on\nyour laptop too, which gives you the advantage of a bigger screen and higher\nvolume. So the usability and ease of use of any app depend on the usage of the\napp itself that determines which device would be suitable for its use.<\/p>\n\n\n\n

Successful Apps:<\/h3>\n\n\n\n

Any\napp could or could not be successful, and it all depends on what the company at\nthe backend has in mind. An app would not be successful only based on whether\nit is free or paid, because even free apps might fail at the end of the day.\nThe success of apps relies on how do apps make money, and the following principles could help\nthe company in this regard and should ideally be followed:<\/p>\n\n\n\n

Know Your Users:<\/h3>\n\n\n\n

This\nis a very crucial step in the success of developing an app because you need to\ndo some research and find out who would be using your app, for what reasons,\nand whom do you want to be targeting for maximum payback. This could be easier\nfor people who have an active business already flowing, so they would know\ntheir target market and the demographics they will be catering to. <\/p>\n\n\n\n

For\nothers who have a completely new business they are going to be launching, they\nneed to go in more detail and find out who exactly they want to target and who\nwill be highly willing to go for the app they are offering. One needs to have a\nthorough understanding of the way people in the app market behave and think,\nand what attracts them the most.<\/p>\n\n\n\n

For starters, find out the operating system where your app would be available and the kind of users that exist on that network. Then you can work your way through finding out what your app is offering and to whom and why would the users need this app. Once you have all the answers to these questions, you are ready to launch your app.<\/p>\n\n\n\n\n\n

Know Your Competitors:<\/h3>\n\n\n\n

Many\nbusinesses overlook this highly important step but knowing your competitors\nthat exist in the market is very crucial to the success of your app. The\ncompany or people wanting to develop an app need to see how their competition\nis doing online, and if their app is successful or not, and also try to find\nout what is making their app so famous and successful.<\/p>\n\n\n\n

The\nfirst step, in this case, is to identify who your competitors are. Then, move\nforward to find out what they are offering through their apps and what\noperational components they are using to take that app to the end-users. The\nfollowing graph can show in one snapshot what all is important for a company to\nfind out about their competitors in the market.<\/p>\n\n\n\n\n\n

Next,\nmove on to finding out what is making your competitor successful, or why they\nare failing at their job. Find out their monetization methods, their marketing\nstrategies, their distribution channels, and every detail that you can find\nabout them before stepping into the market with your own product. <\/p>\n\n\n\n

Once\nyou\u2019re done with the analysis, make a differentiation strategy that would take\nyou a step ahead of your competitor in a slightly different way, and make that\nthe focal point of your whole strategy. Include a branding strategy too, and\nthen you will be ready to launch your app with no risk of competition.<\/p>\n\n\n\n

Work with Subtlety:<\/h3>\n\n\n\n

Now,\nyour know your users, and you have an in-depth idea about your competitors too,\nthe next step in making your app successful would be to figure out how to\nconvince our consumers to buy whatever your app is selling or make purchases\nwithin the app itself. You can do this by making the consumer believe that\ntheir app experience would be enhanced if they spend the right amount of money.<\/p>\n\n\n\n

You\nneed to create an illusion that spending money would take the users forward in\na heightened way, and this could be done through offering the right amount of\nin-app purchases or just the right kind of advertisements that would attract\nyour target audience. <\/p>\n\n\n\n

What\nthis also explains is that your free app should not be 100% perfect, and should\nbe good, but not provide everything that the user needs, as this will lower the\nchances of the user buying anything and spending any money at all. You\u2019ve got\nto create the illusion that they need to spend money to get the most out of\nyour app. This is where your art of subtlety comes into play.<\/p>\n\n\n\n

Your\napp needs to subtly tease the users with some enhanced features or benefits\nthat they would be highly interested in buying. Like give them a chance to buy\nsome tokens or coins in order to buy fancier belongings in the app, or show\npopups and banners at different intervals that advertise just the thing your\ntarget users need so that you get more clicks. In this way, you can use\nsubtlety to get your consumer to spend and have you earn in no time, taking\nyour app on its way towards success.<\/p>\n\n\n\n

App Monetization Strategies of 2020:<\/h2>\n\n\n\n

An\napp can be monetized in multiple different ways, but the most effective of\nthese ways are discussed in details as follows:<\/p>\n\n\n\n

Advertising:<\/h3>\n\n\n\n

As discussed earlier, multiple kinds of advertising exist for\napp developers to take the opportunity of as follows:<\/p>\n\n\n\n