How Free Apps Make Money

Curious how free apps make money? It all comes down to their monetisation strategy. In this article we'll explain some of the top monetisation strategies for driving in-app revenue. These monetisation strategies will give you the tools and tactics to stand out in the mobile app world. It is predicted that global gross app revenue will reach $102 billion by 2020, and in this article we'll give you the tips you need so some of that ends up in your pocket too. I'll also let you in on three trends that app developers need to know to be able to monetise their apps successfully within the ever-changing mobile landscape.

5 Ways Free Apps Make Money

1. In-app purchase

In-app purchases are typically used with the freemium model. While the app is available for free downloads, users are given the option of purchasing virtual or physical products, or paying to unlock additional features or new content on the app.

This method is commonly implemented in most gaming apps. With gaming apps, a key consideration is presenting the right offers to the right players at the right time. Rather than display numerous options at every stage of the game, you’ll need to assess the purchases that different types of players are likely to make, and display these accordingly.

In-app purchases are also implemented by shopping and e-commerce apps. Etsy is a great example – the app’s simple on-boarding process and personalised product suggestions provides users with a seamless and unique purchase experience, and enables businesses to achieve a shorter sales cycle.

2. Subscription

With subscription-based apps, users are required to subscribe to gain access to exclusive content or unlimited usage. Content-based apps are the first type of apps that come to mind when we think about subscription models. One of the top meditation apps for example, Calm, offers a selection of mediations, stories and music tracks that are available for free, but most of its content is only accessible for subscribed users.

Music streaming apps like Spotify also implement this model, providing subscribers with exclusive content, additional features like sharing playlists with other users and ad-free music.

The second category are service-based apps. A wide-ranging array of apps fall under this category – from learning resources (Babbel) to management apps (Monday) and dating apps (Tinder).

The latter reportedly generated a whopping $285.3 million in revenue in 2016, with over 1 million users paying for additional features like unlimited swipes, Super Like or Tinder Boost, where individuals get to jump the queue to appear at the front of the feeds of other users.