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How Do Free Apps Make Money

Do you have an idea to develop an app? Would you like to make it a free app, but doubt if it is worth shelling those big bucks? Would free apps give you a return on investment?


App development is a cumbersome process which requires time, effort and money. The development of an idea into a mobile application, which is market ready would take months and of course quite a lot of money. So it is only essential to understand how to monetize your app. 



As of March 2020, 96.3 percent of apps in Google Play Store and 90.84 percent of iOS apps were freely available, says reports on These free apps are driving close to $71.3 million dollars in revenue.


Through this article, you would be able to understand the nitty gritties of app development and earning revenue from your “free-app”.


Best Strategies To Monetize



  • In App Purchases

  • Subscriptions

  • Affiliate Income

  • Advertising

  • Freemium Upsell

  • Transaction Revenue



In App Purchases



In app purchases are typically used to buy extra features within the apps. The apps in itself would be free to download. Once you start using the app, you would be able to access special content, like additional levels in games by making an in-app purchase.


Typically in- app purchases can be of two ways. In some cases like in a game, you buy certain features which you can use only once. In the case of some other apps, when you make an in-app purchase, you would be buying a functionality or an ad blocking feature. This is typically a permanent buy/upgrade.





This is a very effective monetization technique. App publishers can choose to offer the app to be used for free for a limited period. Beyond that, the user has to pay a subscription fee, which may be renewed monthly or annually, but will have access to the full suite of features of the app. This model is typically successful in the case of apps with very high user engagement like music streaming apps, video streaming apps or productivity apps. Usually a third party payment gateway like Stripe or PayPal is linked to the app. This would ensure that the app store does not charge any commission.


The most common and successful type is the automatically renewing subscription. In the case of apps using this, the credit card details of the user are requested to activate the subscription and the subscription is renewed automatically, monthly or annually, as per the terms, to continue uninterrupted service.


Affiliate Income



In affiliate marketing, an affiliate’s app or product or game is displayed in your app and every time a user interacts with that, you get paid.


There are several popular methods of affiliate income generation. A few of the most common ones are:

Cost per Click ( CPC ) : In this model, you get paid for every click on the ads displayed in the app.

Cost per Mile ( CPM ) : In this model, you get paid for every 1000 views of the ad.

Cost per View ( CPV ) : Here you charge the advertisers for the number of ad views.

Cost per Install ( CPI ) : You get paid every time an user installs an app that you promote.





Advertising is one of the most common and easiest methods of revenue generation for free apps. This is usually done through a third party ad network like Google AdMob. This is quite straightforward. The free app just has to display the ads and everytime the user clicks on the app or views it or downloads the app/buys a product, you get paid. You can also run ad campaigns for a certain period to generate ad revenue.


There are different ways of displaying ads in an app. Some of the more popular ones are:

Banner ads : These ads are usually displayed at the top or the bottom of the screen. They usually facilitate the unobstructed use of the app. These ads can be of varying sizes and are quite popular.

Interstitial ads : These are full screen pop ups that are displayed at specific time frames. Usually there will be a close button on top that will let the user close the ad if it does not interest him. 

In-app videos : These ads are displayed automatically and in most cases they can be like a reward video for some in app features. Sometimes the users are rewarded with an extra point or an app currency which can be utilised in the app, if they watch the full ad video. This is a popular monetization technique.

Native ads : Native ads are seamlessly integrated into the apps’ layout. They can be sponsored content or videos and are generally less intrusive for the users. 





Freemium Upsell






Freemium apps are available free of cost for download. But in order to use a number of advanced features, a premium has to be paid. Users can avail of all the basic features on the app without paying anything. This is a good method to get new users as the users can download the app for free and try it out before they decide to make a purchase. This is commonly used for health, education or other productivity apps, where the users can get the advanced feature-rich app at a particular cost.



Transaction Revenue


Transaction revenue is possible in the case of apps which provide a platform, where users do digital transactions on a regular basis. This is not only common in the case of e-commerce apps, but travel booking apps, meal ordering apps are a few other examples. In order to charge a transaction fee, a third party payment gateway API has to be integrated into your app.

A few key pointers to keep in mind before deciding the best monetization technique for your free app are the type of app, target audience and competitor analysis. As we have already discussed, there are a number of app monetization techniques available. Understanding which is the perfect one for your app is the key. Also, remember not to over-use any of these techniques. The most crucial element for the survival of the app is to retain a customer. So ensure that the user feels comfortable while using your app and that the revenue generation methodologies are not intrusive and subtle in nature.

Now that you have been empowered with the understanding of monetizing your free app, go ahead and find the right mobile app development company in India to transform your idea into a working mobile app.



mobile app development , app development , mobile app development company in India


SEO analyst at Wiinnova Software Labs

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