How Mobile Developers Make Money from Free Apps

5 Primary Ways to Make Money from Free Apps

1. Advertising

1) Native ads

2) Interstitial ads

3) Banners

4) In-app/in-stream video ads

5) Incentivized ads

  1. the location of the targeted audience, since, for example, a rewarded video for American users may cost ten times as much as for users based in other countries;
  2. the product’s popularity, largely dependent on the publisher’s promotion efforts;
  3. user engagement level, since users should interact with the app frequently to generate enough impressions and ad clicks;
  4. the platform (iOS ads may be up to 30% more expensive than ads displayed in Android apps);
  5. the payment model you have selected (more about it in the next chapter);
  6. the affiliate network company’s pricing.

2. Affiliate income and referral marketing

  • CPM (cost-per-impression or cost-per-mille, where ‘mille’ is Latin for ‘thousand’). The advertiser is usually charged every 1,000th time the affiliate ad is displayed. The average payments per 1,000 impressions vary, e.g.:
  • CPC (cost-per-click). The publisher receives the payment based on the number of clicks on an ad displayed, typically on a CPM basis.
  • CPV (cost-per-view). These campaigns are usually applied to video ads. The payment is based on the number of video views or other ad interactionі, such as clicks. The more interactions, the more you are paid.
  • CPI (cost-per-install). With this model, the publisher receives payment each time their user installs an advertised product. Chartboost and Playhaven are examples of third-party networks that have the software necessary for this model. The fee ranges from $0.80 to $3.00.
  • CPS (cost-per-sale). The publisher receives a fixed commission or percentage of the sale after each completed purchase. Amazon Associates is one of CPS networks. A publisher selects a product to advertise and profits from all redirected purchases and through advertising fees.

3. In-app purchases

  1. Consumable virtual products can be purchased and used only once within the app, e.g., power-ups, health points, and extra bonuses. Most games offer virtual currencies called ‘coins,’ ‘gems,’ or ‘gold.’
  2. Non-consumable products do not expire and remain in permanent usage. For example, users can buy stickers and icons, ads may be blocked, or new game levels unlocked. In an educational app, they might pay to open additional functions or tips.

4. Subscriptions

5. Freemium upsell

Monetization Methods for Specialized Applications

Sales of goods and merchandise

Transaction fees

Sponsorship

Crowdfunding

Some Final Tips

  • The monetization plan should align with your product’s business purpose and be relevant to your targeted audience. Only a clear picture of the potential users allows you to tailor the product to their needs. It’s vital to know what delights and what irritates them.
  • Since only a small percentage of users will bring you money by interacting with ads or making in-app purchases, it’s critical to attract as many users as possible to increase the odds. Publishers should diligently invest in their app advertising, provide regular updates, and use revenue models that deliver value to users whenever possible.
  • It’s essential to conduct market analysis and learn from your competitors’ experiences. Search for similar products and find out what they offer, their UX/UI design, and, more importantly, their monetization methods.
  • Any monetization model can profit apps only as long as people use them. If ads or in-app purchases prevent users from enjoying a product, they may abandon it altogether. App developers should select monetization methods that not only return income but also provide users with good app experiences, additional features, and valuable abilities.

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