When a newbie mobile user at first comes to Apple Store or Play Market, he might be a little confused about the variety of applications that developers offer to him. And what a surprise, they are mostly for free. And here comes a cognitive dissonance, how on earth such useful and labour consuming products can be given away for free?
It’s not obvious that free applications outrun even the cheapest ones on downloads. So their popularity is not something hard to understand. So now we got to this article's topic: how do free apps make money?
Reviewing App Market
The market field of mobile applications is enormous and it is not to diminish. There are about 5 million application on App Store and Play Market and experts say this amount will double by 2020.
Considering that portable devices and, especially, mobile phones are on the top of their usage, it’s definitely the right time to develop an application for your business. But there’s an obvious question: what that app should be, what it should look like and how to gain profit from free applications? If you have some of them, you’re on a right cause today we’re going to have a closer look at mobile application market.
TechCrunch reports claim that more than 80% of the most popular applications on App Store and Google Play are free. Unfortunately or not, applications that charge payment to be downloaded lose their positions in the recent years.
Making money free apps style
Making monet from apps is a hard work. How to make money from free apps is a great mystery. But we know a way or two about how to create an app and make money, so we'd like to share our priceless knowledge.
How app make money in general. Usually it's a payment-based way of monetizing, it's popular among mobile applications as well as among desktop programs (anti-virus software, PC cleaners,s online games and so on). When you develop seems like a money free app you intentionally create two (or even more) versions: Lite that is free to use and Pro that is necessary to pay for. Some companies provide customers with several premium expansions (Pro, Ultra, Mega etc).
So why people would pay for something that is free? Actually, very often apps that we download for free are just demo versions for a habituation.
Premium expansion gives users an access to full application content. So if you want a faster progress in a mobile game or an ability to save accomplished projects with the help of an app in different formats or you want full variety of filters, tools etc, be so kind to pay.
To make money with apps you should pick up a strategy. One of the most popular is providing users with full content for free but on a temporary foundation. So you try an app, you like it, and now be ready to pay. This strategy is aimed on users who don’t want to pay for a pig in a poke. And this is how free apps make money, bro.
Anything can be sold
Count of downloads prove that users like apps when they are up to decide if they want to pay for extra features. This way of monetizing is so profitable that developers rebuild their fee-based applications on this basement.
The biggest field when in-app purchase is used is a mobile game industry. Here developers offer extra features that are influential on a gameplay like in-game currency, faster levelling or better gear that you can’t obtain for free.
This way, apps’ “freeness” works as a temptation for customers. They try the product, they like it but as every sales manager will prove you, client always wants more. Rather it’s a game changing feature or it’s actually not so necessary for comfortable using.
In-app purchases can be conditionally separated on two kinds. The first is purchasing consumables like “give me extra 200 coins or this cute armor for my $0.99”. The advantage is that purchases can be done over and over again. The other kind is one time purchase like an extra level in game or permanent access to an extra feature.
The things are that advertising is the most popular and profitable model for gaining revenue from mobile apps. The core advantage is that advertising is pretty easy to implement technically, app just needs to display some clickable commercial propositions and get paid from advertising networks.
Usually reports claim that about a third of the biggest mobile app providers utilize advertisements as the only source. The usual model is to get paid every time the ad displays, per every click on it, or when the users downloads the app that is advertised.
Now let’s have a look at the most popular forms of in-app ads.
They are usually displayed in different sizes at the top or bottom of the in-app screen. They are not big and don’t stick out so users can interact with application without turning much attention on the banner. Developers can also charge the ad module to automatically consider users demographics and past behavior to display particular ads that could be interesting for a particular user. Despite all these benefits banner have still low CTR of around 0.1%.
They are the full-fledged screen popups like those you see on Youtube or TV and they are shown to a users at specific time frame. Usually these pop-ups can be closed by button in the corner or by turning to the ad page. This method to boost app revenue is really valuable with apps that have natural breaks in interaction (like between game levels or news post). They are usually displayed before or after the expected content. This strategy helps to maximize engagement.
They are usually shown automatically like common pop-ups but in mobile games you are able to get a reward after watching it, some kind of a “rewarded video”. You can get extra currency in games or additional features. This way of gaining profit on app is a real win-win for both user and developer.
They are also called “Native ads”. They also built seamlessly into tha main design concept as it’s created so. They are mostly considered as a sponsored peace of content that is aimed to promote a third-party product. Native advertising is usually less irritating for users so it gets more revenue for app providers.
A lot of reader can say that this type of gaining revenue from free apps is rather morally old. This statement is actually true but it doesn’t lessen it’s powerfulness when it comes to monetizing applications. It’s really a great idea when you ask users to type their emails during the registration. As a result, you get a chance to reach them through email notifications.
Mobile applications gives a possibility to collect users emails and that’s why email marketing is one of the most powerful ways to advertise them. But, as every technique, it has pros and cons.
Let’s have a look at the most popular ways of collecting email with your application.
The simplest way is to implement a third-party SDK to you application that should collect email addresses. It won’t take much efforts, just a couple of code lines and it’s in the bag.
The most straightforward and, maybe, evident way is to ask users to type their addresses for a reward (app currency, additional features and so on). Admit that it’s actually profitable for both you as a developer and user.
The last here but not the least way is to utilize Facebook SDK to collect emails. This SDK allows app to gather information (including emails) from the FB account. Just don’t forget to ask users are they agree to get emails logging through Facebook.
Emails can also be used if the customer didn’t use your app for a while. You can send him/her letters about updates, improvements or offer him/her some additional stuff for returning to the app (like a lot of online game developers do).
The enemy and maybe the only disadvantage of email marketing is spam filtering. If your letter comes to spam, user 100% won’t cognize it.
Act like Da Vinci did
This is an ancient way of capitalizing something free. Sponsorship gave humanity the best art masterpieces (a lot of Renaissance artists had sponsors) and great science inventions (martian colonization is now sponsored by SpaceX).
Sponsorship in app industry is a great idea of making money up front. Another great thing is that your application will be launched using your sponsor’s brand. It’s obvious that big and famous companies have bigger credit of trust than newbies.
There is a specific kind of sponsorship that gains popularity from year to year. It’s crowdfunding. The idea is simple as hell. As a developer, you start a crowdfunding campaign and regular people sponsor your idea. But why people sponsor developers? The most popular strategy is to provide sponsors with extra features like constant Premium, in-app goods or even merchandize. So that’s how things are done.
All of topics mentioned above have their pros and cons so they create a huge field for developer’s fantasies. Before implementing a revenue-generating strategy, developers should do a lot of preparations and analyzing work. The right way can be chosen with the knowledge of both your product and your audience.
Thunderrise Dev Team knows how do apps make money, just ask us for details! ;)