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How Do Free Apps Drive Revenue?

how free applications manage to earn income

Trying to figure out how free applications manage to earn income?

Before publishing a free solution, its owners figure out in advance how to monetize their brainchild. Let’s distinguish the most effective schemes to achieve the best results.

# In-app ads

Recent studies by the University of Cambridge have revealed that around 74% of all apps available on Google Play don’t require any fees for users to enjoy them. Moreover, it was also proven that 80% of those services apply ads as a part of their monetisation strategy. In 2020 expenditure on online advertising reached $100 bln, and 64% of that belongs to the mobile application sector.

Advertising represents one of the most effective monetization methods, and to produce the best outcome, it’s better to maintain the golden medium, so the audience doesn’t get irritated with your intrusiveness.

There could be banner advertising, interstitial ads, video content, interactive advertising, etc. The least annoying would be the native method when ads serve as a logical extension of a framework. You’ll need to figure out which approach will work best to create a successful app to make money.

Advantages: in-app ads allow you to build a totally cost-free solution and still, earn money. Meaning, you can easily attract a wide audience gaining their trust.

Disadvantages: there’s a risk to annoy users by overdoing it. Moreover, don’t expect to obtain a high income per person. And, don’t forget about banner blindness and other similar things.

# In-app purchasing

The audience of Pokemon Go is making over $1 mln in in-application purchases every single day, so why not take advantage of such a technique as well?

The idea is to figure out what virtual goods you as an app owner can offer your customers for an additional price. This strategy works perfectly for gaming resources, but in general, it’s applicable for all sorts of platforms.

Advantages: this scheme won’t annoy your people since they’re definitely familiar with it.

Disadvantages: the thing is that not that many users decide to regularly shop online. Moreover, for some systems, it’s pretty challenging to come up with certain items which people will be eager to buy.

# Freemium

This strategy is considered to be one of the best methods to monetize the program. In such a case, you’re not demanding clients to give you their money right away, so people can download the solution for free. In addition to that, the audience can enjoy the app’s basic features free of charge. Some users might want more, so they’ll have to pay to take advantage of more advanced possibilities.

Advantages: it’s easy to get implemented, and users love it since they have an opportunity to choose.

Disadvantages: it’s pretty difficult to create truly impressive premium functionality to make people see the point of paying extra.

# Subscription

When applying this technique, app owners also offer the audience a free package and a paid one. However, as opposed to the Freemium strategy, users have to pay every month. Tinder and Netflix are bright examples of platforms having established this scheme.

Advantages: the audience stays loyal since they have a chance to try out the functionality before they’re offered to subscribe.

Disadvantages: it’s not that easy to convince people to go for paid subscriptions. Moreover, paid content must get updated regularly.

# White-label applications

In case you manage to develop a unique framework that has no analogs, you could patent it to sell the code to the parties concerned. In due time Uber was lucky to succeed in this type of monetization.

Advantages: it could be a perfect supplement to all other monetizing approaches in order to increase your profit.

Disadvantages: there are no actual drawbacks, but building a totally unique and multipurpose service is pretty challenging itself.

# Commissions for transactions

The commission model is a must-have for platforms where buyers meet sellers. The owners of those resources get their share of every transaction.

Advantages: the implementation is nice and easy, and it gets along with other monetizing approaches. A sufficient number of users will ensure you constant revenue.

Disadvantages: it’s hard to promote such marketplaces to keep them demanded. Significant investments will be required. Additionally, the reputation of the service depends on the behavior of sellers toward buyers.

# Sponsorship

Why not find a person who would be your sponsor? You’ll just need to convince him or her that your software is a great investment that will drive revenue. Some businesses decide to negotiate regular payments that sponsors are to receive. Alternatively, it could be a specific profit percentage.

Advantages: you’ll manage to find funds to design and evolve your app.

Disadvantages: be prepared to depend on the investor, and you’ll have to regularly pay that person money.

# Crowdfunding

When having a cool app idea, you could get registered with Kickstart or another similar system to present the project. Be eloquent to convince people to invest in your idea, and speak of what benefits they’ll get for helping you out.

Advantages: it won’t require investments or major efforts, at least on your part.

Disadvantages: it’s pretty unwise to rely solely on this strategy, so other approaches shall be used as well.

Despite the fact that the majority of services on the market are totally free, they still serve as a reliable source of income. The key point here is to create a truly great application and figure out what monetizing strategy will better work for it.