Today, the app stores are full of applications that cost nothing to download them. As per the TechCrunch, there are more than 90% of applications that are obtainable free of cost. However, it doesn’t mean that those free applications are making money as well.
Here, you can see a proof The Verge reports that more than 98% of worldwide Google Play revenue comes from free applications. It is fact, that free applications have huge revenue potential.
Do you know how do free applications make money? In the recent time, two most popular companies that specialized in mobile app revenue and intellect have joined forces in a thorough study of the app industry economy, examining data produced directly by the app stores.
The research that performed by them has revealed some of the captivating figures about developers’ earnings that can shed some light on market tendencies and monetization strategies. Let’s have a look at the interesting figures:
- The total number of 1187 app developers, who have achieved the mark of $1 million in revenues from a blend of app purchases as well as in-app purchases in the last 12 months.
- 78% out of these app developers are generating their money from gaming apps that means gaming category leads in bringing most of the revenue in both the AppStore and Google play.
- Moreover, approximately 20000 app developers have already generated more than $100,000 in revenues – or $8,333 per month – from their apps in 2015.
- As per the research, more than 75000 developers, who have made $10,000 per year from their apps.
If you are also looking forwarding to making money from your free applications, below, you can find 5 wonderful ways to make money from your free applications:
An application that makes use of in-app purchases offers a free version of the application that comes with additional, optional and paid features. These can be seen in gaming apps, where users are encouraged to purchase new levels, gear, and items.
These types of purchases inspire repeat purchases as they are consumable like purchasing extra lives in Candy Crush Saga. Users can also find in-app purchases outside the mobile gaming world in apps like 1Password.
This second category of in-app purchases enables users to continue to make use of what you purchase unlike consumable items, which do not remain once they are used. All the free applications that have a paid component to give an access to an extra feature or set of features are stated as freemium.
Moreover, you can provide a free version of your application with reduced features like Calcbot or even enable users to try certain features firstly and then lock it down behind an in-app purchase like Apple music. The final approach needs much more development work as it is a workaround for there being no true trials in the app stores.
Today, subscriptions can be a wonderful monetization strategy as publishers can select to offer free content on their applications for a limited amount of time and then they can charge users for a subscription free as it will enable them to access full content without restrictions.
When it comes to talking about the most used technique to convince users to subscribe to an application is to deliver them a free trial period and then charge the subscription fee to those, who are wishing to continue to access the application content.
As we all know that Apple is giving extra attention to the monetization strategy and making a huge change in how app subscriptions work. Talking about the new model, Apple will maintain the usual 70/30 revenue spilled for the first year of subscription.
A new 85 percent/15 percent revenue share per subscriber will be implemented after one year. This new format has been made to motivate developers to sell their applications for a recurring fee rather than a one-time cost.
Another important change is that the method that is only obtainable for apps classified as cloud services, news, dating apps or other video streaming that will be applicable to all app categories.
Sponsorships are the less commonly used monetization method; however, it can be an interesting one as well. Likewise, publishers need to consider sponsors, whose target audience is the same as the one being addressed by their application.
Previously, it was considered as the under-utilized app monetization method; however, it started taking off. Eventually, the idea is to develop a niche application with the specific target audience. However, you can find a person or company that also has a similar target audience and do a deal for them to sponsor the application.
Usually, sponsorship arrangement appears like this:
- What you can do is take the application and modify its graphics so that you can reflect your new sponsor’s brand.
- The changed name of the application and any other content must match your sponsor’s brand.
- Commonly, it is known as white labeling and what you need to do is take your app and make it look like it is owned completely by your new sponsor.
- However, the sponsor will give you money in return.
However, the amount of money that you are making and how it can pay depend on the deal you make with the sponsor. Below, you can see some of the ideas:
- Monthly Sponsorship Fee: As you know that sponsor can pay to you a monthly fee for use of the app + maintenance.
- Revenue Split: In this, you as well as the sponsor will agree to split the revenue generated by the application.
The other important advantage of taking on a sponsor is that they maybe have a huge online following. Frequently, sponsors have popular social media accounts, YouTube channels, and blogs. However, if you are white-labelling an application for them, they can probably promote it to their existing audience. By this way, you can get a lot of downloads from a channel you couldn’t have used.
While it is an underused strategy, email marketing can be a wonderful way to publicizing and monetizing applications. This wonderful way of making money from your free apps works by requesting user email while login and consequently reaching them with email notifications.
Moreover, you can collect all the users’ email addresses in a database and may be very helpful in certain situations. For instance, customers, who have not used the application for some time, can reach them through email as it would be an interesting tool to approach and retain them.
Amazon Underground is a new way for many developers to generate money in the Amazon App Store. There is no need for advertising or in-app purchases, even none of these are allowed in apps listed on Amazon Underground.
It is a separate app store that has its own mobile application that can be used by people to access it. If your application comprises in-app purchases, you are agreeing to abandon the fees for them by listing on Underground.
In addition to this, users can purchase an unlimited number of your IAP’s without every paying a cent. Developers are paid directly by Amazon. The Amazon will pay developers $0.02 per minute for using per user. It is one of the attractive options for developers with apps that have a very high average session length; however, struggling to monetize with IAP’s.
So, these are the five wonderful ways to make money from your free applications; however, if you have decided to customize your application with more advanced features, you can hire a mobile app development company that has a proficient team of mobile app developers to comprehend your requirements.
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