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How Do Apps Make Money

Written by

basit850

February 26, 2024

Content

With the increasing number of apps available worldwide, one can’t help but wonder: how do you make money from an app?

The mobile app market was worth $208.5 billion in 2022 and is expected to reach $777.4 billion by 2032, showing a growth rate of 14%. It is a highly lucrative opportunity, and naturally, you will want to capitalize on it. However, 9 out of 10 apps are available for free download, raising the question: how do apps make money if they are free? That’s exactly what we will explore in this blog.  

Paid Vs Free Apps

Let’s begin by exploring how free apps generate revenue without advertisements.

Free Apps:

Most free apps on the Apple Store and Google Play operate on the premium model. According to Statista, approximately 97% of apps on Google Play and 94.5% on the Apple App Store are free. It is also noteworthy that the Apple App Store is more profitable than Google Play.

Paid Apps:

Paid apps earn money as soon as people download them. Additionally, users who pay for an app often use it regularly since they have invested in it.

This loyalty creates a dedicated user base, which is important for generating a good income.

However, the problem is many users don’t want to pay for an app without testing it first. In fact, according to a Google study, 50% of mobile users have never paid for an app. That’s why there are more free apps than paid ones in app stores. 

How To Make Money from Apps?

Apps have various ways to make money – and extend beyond just charging an upfront fee. Surprisingly, free apps can be incredibly profitable!

But how does it work? how can a free app end up earning thousands or even millions of dollars

The answer lies in the app monetization strategies. App monetization means finding ways to make money from your app. While charging an upfront fee is a straightforward way to monetize your app, there are many other effective strategies to choose from.

But before we start, let’s first explore the concept of app monetization.

How To Make Money from Apps

What is App Monetization?

App monetization is the process of generating revenue from your mobile app. It includes different strategies to attract users to download your product and increase their app usage, purchases, or upgrades.

App monetization strategies usually include some type of advertising.

How To Make Money with an App: Top 7 App Monetization Strategies

The advantage of monetizing an app is that there are numerous ways to do it. Depending on the app’s type, some strategies may be more effective than others.

Some of the most popular ways to make money from apps are:

1. Freemium Model:

One of the most effective ways to make money from free apps is by using the freemium model. Instead of charging users upfront, freemium apps offer basic features for free. However, users have to pay a fee to unlock premium features.

Within the freemium model, there are various monetization strategies:

·   In mobile games, users can buy game items using in-app purchases.

·   Productivity apps provide a premium subscription option, which removes feature limitations within the app.

2. Premium Apps:

If you are wondering, “How to make money on apps without ads?” The answer is by charging users to download the app. While not everyone wants to pay upfront for an app, many users are willing to do so if the app meets their needs.

To succeed with a premium model, it is essential to satisfy a market niche with loyal customers. Once a premium app becomes the top solution for a particular need, the premium price is not a major concern.

3. In-App Purchase Model:

This app revenue model allows free-to-download mobile apps to earn money by selling items or services within the app. These could be anything from virtual game characters to real consumable products.

Games are the most common example of this pricing strategy, where players make digital purchases to buy game currency or in-game virtual items like special loot, abilities, or cosmetic items. The well-known game Candy Crush Saga made over $600 million in 2022 using this model.

4. In-App Adds and Sponsorships:

Most apps on the market use the in-app advertising model to generate revenue.

App advertising varies from simple banner ads to full-screen ads and video rewards, coming in different shapes and sizes with various revenue levels.

Depending on the app, its users, and associated products, mobile ad networks may provide various incentives to display their ads to engaged users. Starting a Google Adwords campaign is a simple and effective way to determine potential earnings.

5. Paid Subscription Model:

Feature-rich apps that cater to a wide range of users often use an app subscription model to provide a personalized customer experience. Alternatively, some subscription apps might offer a free trial for a limited time before requiring a subscription plan, similar to how you get a certain number of free articles before signing up for a news subscription.

Subscriptions can be very effective for retaining long-term users, especially if you provide good value for a fair price.

6. Email List:

With active email users expected to reach 4.37 billion in 2023, creating email lists from your app users can be a good way to build multiple revenue streams and support digital marketing strategies. This is effective because most email users rarely switch email addresses and frequently check their inboxes.

7. Ecommerce:

For many apps, e-commerce is a common way to generate revenue.

In an ecommerce model, your app becomes an online marketplace for whatever you are selling. Some apps go beyond this to aggregate shopping results, like those apps that help users search for items from different retailers. E-commerce apps are also widely used for affiliate marketing.

Want to Create an App that Generates Revenue? Connect with Us for Expert Mobile App Development Services.

steps How To Make Money from Apps

How to Select the Right Monetization Model for Your App

Every app is different; choosing the right monetization strategy requires systemic planning.

Here’s a step-by-step guide to help you choose the best monetization model for your free app.

·   Identify your App’s Unique Value:

Determine the purpose of your app and the value it offers to others.

·   Analyze your Users:

Understand the preferences, needs, and behaviors of your app users.

·   Learn from What Already Works:

Look at similar apps to understand successful monetization strategies. Analyze competition and market trends to refine your app’s value proposition and monetization approach.

·   Consider Hybrid Strategies:

Combine different m monetization methods to maximize revenue.

Conclusion:

In this blog post, we have covered how to make money from mobile apps. What’s important now is to select the best monetization model for your app.

Hashlogics is a leading mobile app development company that helps its customers and clients optimize the latest technologies for better ROI. We drive innovation by helping you build exceptional experiences through business apps. With a track record of delivering hundreds of successful business apps across various industries, we can turn your vision into reality.

If you’re interested in learning more about what could work best for your app, feel free to reach out to us.

basit850
Copy Writer at Hashlogics

Want to work with us?

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