Are you thinking of making an app or mobile game and want to make money from it? Or maybe you already have a free app and want to know how to earn from it? Look no further! Our article is here to help you about making money with an app. We’ve got lots of great advice and easy-to-understand insights to help you turn your app into a money-making machine.
In the world of smartphones, apps are the ultimate game-changers. They have become an indispensable part of our daily lives, offering everything from entertainment to education, communication to commerce. But have you ever wondered how these free apps make money? After all, designing, developing, and maintaining an app is a costly affair. In this article, we will explore the various ways in which an app can generate revenue. From advertising to in-app purchases, from subscription models to sponsorships, we will uncover the mysteries of app monetization and help you understand how your favorite apps make money. So, let’s dive in and discover the secrets of app monetization!
7 Different Ways Through Which Apps Make Money
Here are 7 different ways how apps make money:
Advertising is one of the most common methods for free apps to generate money. By displaying ads to their users, apps can earn revenue from advertisers who are looking to reach their target audience. Different types of ads can be displayed within an app, including banner ads, interstitial ads, and rewarded video ads.
Banner ads are small ads that are displayed at the top or bottom of an app’s screen. These ads are usually static, meaning they do not move or change.
Interstitial ads are full-screen ads that appear between content or at natural transition points in the app. These ads can be images or videos and often have a “skip” option after a few seconds.
Rewarded Video Ads
Rewarded video ads are ads that offer users an incentive, such as virtual currency or an extra life, in exchange for watching the ad. These ads can be a great way for users to engage with an app while generating revenue for the developer.
Developers can earn revenue from advertising in different ways, such as:
Cost-per-Click (CPC): In CPC, the developer earns revenue each time a user clicks on an ad.
Cost-per-Impression (CPM): In CPM, the developer earns revenue for every 1000 views of the ad.
Cost-per-View (CPV): In CPV, the developer earns revenue for every view of the ad or every interaction on the ad.
Cost-per-Install (CPI): In CPI, the developer earns revenue whenever a user installs their app.
However, it’s essential to balance the amount of advertising with the user experience. Too many ads or intrusive ads can lead to a poor user experience and drive users away from the app. Therefore, developers need to find the right balance to maximize revenue while providing a positive user experience.
Another popular way for free apps to generate revenue is through in-app purchases. In-app purchases are items or features that users can buy within the app, such as virtual currency, extra lives, or premium content. These purchases can enhance the user experience and provide users with additional functionality that is not available in the free version of the app.
Types of In-App Purchases
In-app purchases can be of three types which are as follows:
Consumable purchases are items that can be used once and then need to be purchased again. Examples include virtual currency or extra lives in a game.
Non- Consumable Purchases
Non-consumable purchases are permanent items, such as unlocking a new level or removing ads from the app.
Subscription-based purchases are recurring payments that provide access to premium content or features for a set period, such as monthly or yearly.
Developers can earn revenue from in-app purchases by taking a percentage of each purchase. For example, Apple and Google take a 30% cut of all in-app purchases made through their app stores, leaving the remaining 70% for the developer. Developers need to provide a strong incentive for users to make in-app purchases for it to be successful. This can be accomplished by offering unique content or features that cannot be found in the free version of the app. Pricing is also an important consideration, as developers should set fair and reasonable prices to encourage users to buy in-app purchases. With these strategies in place, developers can boost their revenue and offer a more engaging experience for users.
Another way for apps to make money is through the subscription-based model. With this model, users pay a recurring fee to access premium features or content within the app. Popular examples include music or video streaming services, as well as news or magazine subscriptions.
Types of Subscription Models
There are different types of subscription models that apps can use, including:
Pay-Per-Use: Users pay a fee each time they use a service, such as a ride-hailing app.
Freemium: Basic app features are available for free, but premium content or features require a subscription.
Free Trial: Users can try out the premium features for a limited time before being required to subscribe.
Metered: Users are charged based on their usage, such as the number of articles they read on a news app.
The subscription method is often utilized by companies offering entertainment, news, media, and services. However, it is not a popular approach, with only 5% of successful apps using it to make money. If you’re in the business of providing VPN, video, or audio streaming services, then the subscription approach is the most effective way to generate revenue. To attract new users, you can offer a refund period, allowing them to try your service risk-free. Well-known companies like Netflix and Spotify rely on the subscription method to make money.
You can earn money from a free app using the “freemium” model. This is like a subscription model but has a small difference. In this model, users can use the free version of the app with basic features without any time limit. However, if they want to access advanced features, they must pay a monthly or annual fee. According to statistics, only 0.5-2% of app users purchase the premium version of the app. But, having a free version of your app can attract a larger audience and make it more popular. So, while only a small percentage of users may opt for the paid version, the free version can help spread the word about your app to a wider audience.
Sponsorship is a way of making money with your app that is not used as often as other methods, but it can still be a great idea. Sponsorship means partnering with another company to promote their products or services within your app.
To make sponsorship work for your mobile app, it’s important to create an app that is tailored to a specific audience. Then, you need to identify companies or organizations that are interested in reaching that same audience. These are the potential sponsors you should reach out to. Just like with websites, you need to find sponsors whose target audience matches the one you are trying to reach with your app. You can start by making a list of brands and organizations that you think would be a good fit for your app.
Sponsorship can be a powerful monetization strategy, but it’s important to make sure that the partnership is a good fit for both you and your sponsor. You want to make sure that you are promoting products or services that your audience will be interested in, and that the sponsor is getting the exposure they are looking for.
Crowdfunding is a novel way for app developers to make money from their free apps. Essentially, crowdfunding involves sharing your app idea on various platforms such as Patreon, Kickstarter, Indiegogo, Crowd Supply, Fundable, and Chuffed to raise funds to support the app’s development and promotion. This monetization strategy is relatively new in the industry, and it’s gaining popularity among startups and companies. By utilizing crowdfunding, app developers can appeal to a large audience of potential supporters who may be interested in donating money to help bring their app idea to life.
Through crowdfunding, app developers can seek donations from individuals who are passionate about the concept of the app and who believe in its potential success. This allows developers to get the necessary funding without having to rely on traditional funding sources like venture capitalists or angel investors.
One way for app publishers to monetize their apps is by creating a platform that connects businesses with consumers. The app owner provides a space where companies and individuals can carry out their commercial or financial activities and charges a commission on transactions. For instance, if you own an app that connects travelers with tour guides, you can charge a commission on every booking made through the app. Similarly, if you own a fitness app that connects users with personal trainers, you can charge a commission on every session booked through the app.
Another example is an online learning app that charges a fee for courses taken on the platform. Similarly, a doctor appointment booking app can charge a service fee for scheduling appointments with medical professionals. In essence, by providing a platform that connects businesses with consumers, app publishers can earn a percentage of the revenue generated through transactions on their app. This monetization strategy can be lucrative, especially for apps that facilitate high-value transactions.
However, it’s important for app publishers to ensure that their platform is secure, user-friendly and provides value to both businesses and consumers. By doing so, they can attract more users and increase their revenue potential.
Factors to Consider when Choosing a Monetization Strategy for Your App
Here are some useful tips you can follow to choose the most appropriate monetization strategy for your app:
Define Your Goals
Before choosing a monetization strategy, you should define your goals for your app. Are you looking to generate revenue, build a user base, or both? Depending on your goals, different monetization strategies may be more or less appropriate.
Understand Your Audience
Understanding your audience is critical to choosing the right monetization strategy for your app. Consider factors such as demographics, interests, and behaviors to determine which monetization strategies will resonate best with your users.
Analyze Your Competition
Analyzing your competition can give your insight into which monetization strategies are working well in your industry. Look at what other apps are doing and consider whether similar strategies could work for your app.
Consider the User Experience
The user experience is a critical factor to consider when choosing a monetization strategy. You want to make sure that the monetization method doesn’t detract from the overall user experience. Consider how ads or in-app purchases could affect your users’ enjoyment of your app.
Experiment with Different Methods
Don’t be afraid to experiment with different monetization methods to see what works best for your app and your users. Try out different strategies and analyze the results to determine which methods are most effective.
Optimize Your Monetization Strategy
Once you have chosen a monetization strategy, it’s important to optimize it for maximum effectiveness. Monitor your revenue and user engagement regularly and make adjustments as needed to improve performance.
By following these tips, you can choose the best monetization strategy for your app and maximize your revenue potential while providing a great user experience for your users.
How much Money do Apps make Per Download?
The revenue an app earns per download can vary greatly depending on various factors such as the app’s niche, monetization strategy, and target audience. However, on average, an app can earn around $0.60 to $1.20 per download.
It’s important to note that this is just an estimate and the actual revenue an app generates can be significantly higher or lower than this range. For example, an app that relies on in-app purchases or subscriptions can potentially earn much more revenue per download compared to an app that relies on advertising.
Ultimately, the revenue an app generates per download is just one aspect of its overall success. App developers need to focus on providing value to their users, building a loyal following, and continually optimizing their monetization strategy to ensure long-term success.
The Bottom Line
Making money from an app is not a one-size-fits-all approach. It requires app developers to understand their audience, analyze their competition, and experiment with different monetization methods to find the most effective one. However, with careful planning and execution, an app can generate a sustainable income stream and provide value to its users at the same time.
As the app market continues to grow and evolve, app developers need to keep an open mind and be willing to adapt their monetization strategy to stay competitive. By doing so, they can not only generate revenue but also create an engaging and rewarding experience for their users. So, whether you’re developing a new app or looking to improve an existing one, take the time to explore the various monetization options and find the one that works best for your app and your users.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.