How Do Free Apps Make Money: App Monetization Guide

In 2024, the app industry will continue to evolve at a rapid pace, with free apps playing a dominant role in the mobile ecosystem. With over 6.3 billion smartphone users using mobile devices daily, Smartphone penetration and app usage are growing at a significant rate. It is showing no sign of slowing down.

From In-App Purchases and Advertisements to the Freemium Model and innovative monetization strategies, free apps have revolutionized the way app owners generate revenues.

There are now 1.14 billion tablet users worldwide and they have increased up to 36% in the last 6 years which is a significant growth. In Fact, research shows that the average American checks their phone 262 times a day.

Isn’t it a bit shocking! 262 times means they check their mobile once every 5.5 minutes. Today, we see people are more addicted to their phones than other people. We constantly check our mobile to see messages, notifications, social media updates, stock prices, or any shopping deals. Mobile phones have become an integral part of our lives, and we can also say they are irreplaceable.

We use them everywhere—at work, at home, on the go, even in bed. It’s hard to imagine life without them. But What is everyone doing with their phones? A study shows that 88% of mobile time is spent on apps. 21% of Millennials open an app 50+ times per day.

This is the biggest opportunity for entrepreneurs planning to launch their apps. But then a few questions came into our mind like –

How do free apps make money

How to monetize an app

How can you make money from apps

You also need these two things to make your app successful in the market.

1. First, your users must download your app.
2. Second, they must spend a sufficient amount of time in your app.

To answer these common questions and to clear the doubts, I have prepared this guide. We are all aware of the fact that people today use their mobile phones more frequently than in the past. However, relying solely on this Fact and planning to launch an app in the market doesn’t work.

You need to have comprehensive data, which you have to do through market research. You should also have a full knowledge of

• The segment that you are targeting or your app,
• Its demographics,
• Its monetization strategies and
• The tools that you are going to use to generate revenues.

To succeed in the multi-billion dollar app industry, understanding how people download and use mobile apps matters a lot.

In this blog, we will discuss everything related to how do free apps make money and what are the monetization strategies which you can follow for the app.

Let’s start by understanding the difference between free apps and paid apps.

Interesting Fact – Mobile apps are expected to generate over $935 billion in revenue in 2024.

Free vs. Paid Apps

When diving into the world of mobile applications, particularly in iOS app development users are often faced with the dilemma of whether they should opt for free apps or invest in paid apps.

This decision can significantly impact the user experience, functionality, and overall satisfaction derived from the app.

While free apps may seem enticing due to their zero-cost nature, paid apps often promise a higher quality, ad-free experience. I am sure you must be wondering how you can make money from apps, whether they are free or paid. What are the tactics which you should take care? Let’s go a step further and first understand the concept of free apps and paid apps.

Free Apps

Now how to monetize an app that is free. Well Free apps are readily available for download without any initial cost, making them highly accessible to a diverse audience. These apps typically generate revenue through in-app purchases, ads, and subscriptions, offering users complimentary access to basic features while presenting premium features or content for a fee. The freemium model encourages user engagement and retention by enabling users to explore the app without making an upfront investment.

However, the revenue potential of free apps can vary based on the effectiveness of their monetization strategies and the users’ willingness to purchase premium features or content. Despite their extensive reach due to zero initial cost, free apps often encounter difficulties in converting free users into paying customers and maximizing user lifetime value.

Paid Apps

Paid apps require users to make an upfront payment to download and access all features. Only then it offer a clear value proposition and immediate access to full functionality. This model eliminates the need for in-app purchases or ads and provides users with a complete and ad-free experience from the start. Paid apps rely solely on upfront payments for revenue generation, which may limit their revenue potential unless app owners offer additional paid features, updates, or services.

Comparison Table: Free Apps vs. Paid Apps

Moving forward, let’s have a glimpse of the free vs. paid downloads around the world.

When developing a mobile app, determining your monetization strategy is crucial. If you won’t make money from your app, then what would be the purpose behind developing an app? While charging for app downloads may seem like a viable option, it raises the question:

Will users be willing to pay for your app upfront?

To better understand this, let’s take a look at some statistics on free vs. paid app downloads.

This data by Statista clearly states that the majority of people prefer free apps more than the people willing to pay to download the apps.

But this does not mean you should completely abandon the concept of creating a premium app. It depends on the industry segment you are targeting for your app, and your target audience also plays a crucial role in deciding whether the paid funda will work for your app.

Both versions have their own benefits and disadvantages.

If you charge just for the downloads, there may be some users who will pay to download, but the majority of them will skip your page, as people are used to free apps. You can take examples of yours, such as how many paid apps you are using and whether there are any paid apps you use.

If you pay for apps for their downloads, you are among the world’s minority population.

Charging for downloads isn’t the only way to make money with your app.

If you already have a business and you’ve created an app to enhance the customer experience, it’s a good idea to offer the app as a free download.

Or

If you’re starting a new business with a mobile app, you don’t have to charge for the app to make money. There are other ways to generate revenue, like offering in-app purchases, advertising, subscriptions, etc.

Moving forward let’s discuss how to monetize an app for generating revenues.

How to Generate Revenue from Mobile Apps

Monetizing mobile apps is essential for developers and businesses to generate sustainable revenue and ensure the app’s long-term success. With the proliferation of mobile apps across various industries, it has become imperative to explore diverse monetization strategies to maximize profitability.

Here, we delve into popular app monetization strategies to consider for how to monetize an app in today’s time.

1. In-App Advertising

In the dynamic world of app development, in-app advertising stands out as a predominant revenue-generating method for free applications. When users opt for free app downloads, they are frequently exposed to various advertisements.

These can range from banner ads and full-screen pop-ups to engaging video ads. Every interaction with these ads, be it a view, click, or installation of a promoted product or service, translates into revenue for developers. When it comes to in-app advertising, ads are displayed and monetized in various ways.

• CPM (Cost Per Mille) – App developers earn revenue based on the number of ad impressions generated.
• CPC (Cost Per Click) – Here, revenue is generated when users click on the ads displayed within the app.
• CPV (Cost Per View) – Earnings are calculated based on the number of views the ads receive from app users.
• CPA (Cost Per Action) – Developers receive a commission for user actions such as app installations or purchases made through the provided links.

Now, when anyone asks how do free apps earn money you can clearly tell them the above revenue generation models: CPM, CPC, CPV, and CPA.

The world of in-app advertising is not only diverse in terms of monetization strategies but also in ad formats:

Interstitial Ads

Interstitial ads are full-screen ads that cover the interface of the host app or website. They usually appear at natural transition points, such as when a user is moving between content pages or levels in a game. These ads are –

• Full-screen ads
• Can be interactive
• Usually displayed at natural break points

Advantages

• High visibility due to full-screen display
• It can be highly engaging if designed well

Disadvantages

• Can interrupt the user experience
• This may lead to higher bounce rates if not well-implemented

Banner Ads

Banner ads are small rectangular advertisements that appear on websites and mobile apps. They can be static or animated. These types of ads are –

• Small rectangular ads
• Positioned on websites or apps
• Can be static or animated

Advantages

• Less intrusive than interstitial ads
• Can be cost-effective

Disadvantages

• Lower click-through rates compared to other formats
• Banner blindness can reduce the effectiveness

In-Stream Video Ads

In-stream video ads are video advertisements that appear before, during, or after video content on platforms like YouTube or streaming services. They are the –

• Video ads
• Integrated within video content
• Skippable or non-skippable

Advantages

• High engagement due to video format
• Targeted to relevant content

Disadvantages

• Risk of viewers skipping the ad
• Can be costly to produce high-quality video content

Native Ads

Native ads are advertisements that match the look, feel, and function of the content of the media on which they appear. Native apps can –

• Blend seamlessly with content
• Often labeled as “sponsored” content
• Can appear as articles, videos, or other content types

Advantages

• Less intrusive and more user-friendly
• Higher engagement rates

Disadvantages

• May be perceived as deceptive if not clearly labeled
• Can be time-consuming to create high-quality native content

Rewarded Video Ads

Rewarded video ads are video advertisements that users choose to watch in exchange for some form of reward within an app or game, such as in-game currency, extra lives, or content.

Here are the characteristics of rewarded video ads –

• Opt-in video ads
• Offer rewards to users
• Integrated within apps or games

Advantages

• High engagement and completion rates
• Positive user experience due to voluntary interaction

Disadvantages

• It can be costly to implement rewards
• May not appeal to all users

Examples of Popular Apps Effectively Using This Strategy

Apps like Spotify, Instagram, and TikTok utilize in-app advertising by displaying various ad formats such as banner ads, interstitial ads, and rewarded videos to monetize their platforms. These are the ways in which these brands have earned tons of money. Now, if someone asks you how do free apps earn money you can clearly showcase the examples of these brands.

Interesting Fact – The average smartphone owner uses 10 apps per day and 30 apps each month.

2. In-App Purchases

In-app, purchases are the second most preferred mode of monetization method for free app owners. Here, users can buy certain goods or services through a mobile application or game.

These purchases often enhance the user experience, unlock additional features, or provide virtual goods like in-game currency, power-ups, or special content.

Here are the Characteristics of in-app purchases –

• Transactions can be made within an app or game.
• Can be consumable (e.g., in-game currency), non-consumable (e.g., unlocking a feature), or subscriptions (e.g., premium content or services)
• Integrated payment systems like Apple’s App Store, Google Play Store, or third-party payment gateways

Moreover, it creates an additional revenue stream for developers and enhances user engagement and retention by providing value-added features or content. It also allows users to customize and personalize their experience.

So how can you make money from apps through in-app purchase model. Let’s understand it by discussing its types.

There are three types of in-app purchases:

• Consumable In-App Purchases
• Non-Consumable In-App Purchases
• Subscription In-App Purchases

Consumable In-App Purchases

Consumable in-app purchases are items or services that users buy and consume within the app. These purchases are typically one-time use items that do not restore automatically and are designed to be used up.

Examples

• In-game currency
• Virtual goods like power-ups, lives, or energy
• Stickers, filters, or themes in messaging apps

Usage

• Consumed immediately upon purchase
• Usually, it can be purchased multiple times

Non-Consumable In-App Purchases

Non-consumable in-app purchases are items or features that users buy once and can use indefinitely. Unlike consumable items, non-consumable items do not expire or deplete over time.

Examples

• Unlocking a premium version of an app
• Removing ads
• Additional content like levels, characters, or storylines in a game

Usage

• Purchased once and owned permanently
• Restored across multiple devices associated with the user’s account

Subscription In-App Purchases

Subscription in-app purchases allow users to purchase access to content or services on a recurring basis. Subscriptions can provide ongoing value and exclusive benefits to subscribers.

Examples

• Access to premium content, features, or services
• Ad-free experience
• Regular updates, new levels, or exclusive content in games

Usage

• Renewed automatically at regular intervals (e.g., monthly, yearly)
• Can be managed and canceled by the user through their app store account settings

Examples of Popular Apps Effectively Using This Strategy

Games like Candy Crush and Clash of Clans offer in-app purchases for virtual items, boosts, and upgrades, generating significant revenue through microtransactions.

3. Affiliate Marketing

Whenever we have a question in mind for how to monetize an app affiliate marketing is one of a prominent source. Affiliate marketing involves promoting products or services of third-party brands within the app, creating opportunities for developers to earn additional revenue through commissions on successful referrals or sales.

How it Contributes to Revenue Generation

• Developers earn commissions for every successful referral or sale through integrated affiliate links and partnerships.
• By strategically integrating relevant affiliate offers, recommendations, or advertisements within the app, developers can monetize user engagement and provide users with valuable and targeted content that aligns with their interests and preferences.
• Building strong partnerships with reputable brands and optimizing affiliate marketing strategies based on user behavior, preferences, and purchasing patterns can significantly enhance conversion rates and affiliate earnings.
• Continuous monitoring, optimization, and diversification of affiliate partnerships and offers can further boost revenue and maximize the monetization potential of the app.

Examples of Popular Apps Effectively Using This Strategy

Cashback apps like Ibotta and Rakuten partner with retailers to offer users cashback rewards and earn commissions on purchases made through affiliate links within the app.

Interesting Fact – The Apple App Store has 1.96 million apps available for download.

4. Freemium Model

The freemium model is a popular monetization strategy used by many mobile apps and online services. In this model, the basic version of the app or service is offered to users for free, while advanced features, additional content, or premium services are available for a fee. Let’s discuss its Characteristics –

• The basic version of the app or service is free to use
• Premium features or content are locked behind a paywall
• Users can upgrade to a premium version or make in-app purchases to unlock additional functionalities

Advantages

• Attracts a large user base with a free offering
• A low entry barrier encourages initial adoption
• Potential for high revenue through in-app purchases or premium upgrades

Disadvantages

• The conversion rate from free to paid users can be low
• Risk of user dissatisfaction if the free version lacks essential features or is overly limited
• Balancing monetization and user experience can be challenging

Examples of Popular Apps Effectively Using This Strategy

Apps like Slack, Dropbox, Duolingo, and Evernote offer free versions with limited features and premium subscriptions with additional functionalities, attracting both free users and paid subscribers.

5. Subscription Model

Subscription models offer users access to premium content, features, or services for a recurring fee, providing a consistent revenue stream for developers and businesses.

Here, users pay on a monthly basis or yearly basis to avail of the services. With this model, app owners receive a fixed revenue on a monthly and yearly basis.

Now, they only have to take care of the user-friendliness of their app and the services they provide.

They have to implement appropriate strategies to retain users in their app. Only then can their subscription model work successfully.

People frequently say that the Freemium and Subscription models are the same; however, there is a significant difference.

The Freemium model allows you to download software for free and utilize its basic functions continuously with no time limits.

On the other hand, subscription-based apps often include a free trial period. This enables customers to test the software before deciding whether to keep using it for a fixed charge.

The key difference is that Subscription-based apps don’t allow users to access the app further once the trial period ends. You can only use the app once you take its subscription.

The subscription model is often employed by industries such as entertainment, media, news, and various services. However, it is not as widely adopted. Only 5% of successful apps incorporate subscriptions into their monetization strategy.

Examples of Popular Apps Effectively Using This Strategy

Apps like Netflix, Amazon, Spotify Premium, and The New York Times utilize subscription models to provide users with ad-free experiences and exclusive content, generating consistent revenue from monthly or annual subscriptions.

6. Sponsorship and Brand Partnerships

The sponsorship model is a less commonly used monetization strategy that involves partnering with a sponsor relevant to your niche and establishing a compensation arrangement. In exchange for financial support, the app may feature the sponsor’s branding, promote its products, or direct users to its website.

For instance, if you’ve developed an app focused on diet planning, you could approach nutrition brands for a potential sponsorship agreement. Negotiating a sponsorship deal can be challenging, which is why many apps opt for simpler and more direct monetization methods.

Here are the Characteristics of the sponsorship model –

• Collaboration with a sponsor or brand related to your app’s niche or target audience
• Financial compensation in exchange for brand visibility, product placement, or user engagement
• Customized partnership agreements tailored to meet the needs of both parties

Advantages

• Additional revenue stream without directly charging users
• Enhances brand visibility and credibility through association with established brands
• Potential for long-term partnerships and continued support

Disadvantages

• Requires time and effort to identify and negotiate sponsorship deals
• Risk of compromising user experience if brand integration is not executed thoughtfully
• Dependency on sponsors for revenue, which may fluctuate based on market conditions or sponsor priorities

Examples of Popular Apps Effectively Using This Strategy

Fitness apps like MyFitnessPal collaborate with fitness brands and nutrition companies to feature sponsored content and advertisements, offering users valuable insights and recommendations while generating revenue through brand partnerships.

How to Define the Best App Monetization Model

Choosing the right monetization model is crucial for the success and profitability of your app. Whether you choose to go with

iOS app development or you take Android app development services your monetization model plays a crucial role in deciding the success of your app.

With various monetization strategies available, determining the best approach that aligns with your app’s goals, target audience, and market trends can be challenging.

Here are seven easy steps to help you define the best app monetization model for your mobile application.

1. Understand Your Audience and Market Trends

Begin by conducting thorough market research to understand your target audience, their preferences, behaviors, and willingness to pay for premium features or content. Analyze market trends, competitive landscape, and successful monetization strategies adopted by similar apps in your industry to identify opportunities and potential challenges.

• Conduct surveys, interviews, and user testing to gather insights into user needs, expectations, and willingness to pay.
• Analyze app store reviews, ratings, and feedback to identify common complaints, suggestions, and areas for improvement.
• Monitor industry trends, emerging technologies, and competitor strategies to stay informed and identify innovative monetization opportunities.

2. Evaluate and Select Appropriate Monetization Models

Based on your audience insights, goals, and market analysis, evaluate and select the most suitable monetization models that align with your app’s value proposition, user experience, and revenue goals. Consider combining multiple monetization strategies to create a diversified revenue stream and maximize profitability.

• Assess the pros and cons of various monetization models, including in-app advertising, in-app purchases, subscription models, affiliate marketing, freemium model, and sponsorship and brand partnerships.
• Consider your app’s content, features, user engagement levels, and target audience preferences when selecting and combining monetization strategies.
• Calculate potential revenue, costs, and profitability for each monetization model to determine the most lucrative and sustainable options for your app.

3. Analyze Your Competitors and Assess Potential Risks

Before diving into the app industry, especially in the competitive gaming marketplace, it’s essential to carefully evaluate your options. Research your competitors to understand their strengths and weaknesses, which can help identify potential opportunities for your app.

Are your competitors providing a good user experience while displaying ads? Or would implementing a paid subscription model be more beneficial? Sometimes, choosing a less conventional monetization strategy in a specialized niche market can lead to more profitability.

4. Implement and Optimize Monetization Strategies

Once you have selected the monetization models, implement them strategically within your app to ensure a seamless and engaging user experience. Continuously monitor, analyze, and optimize your monetization strategies based on user feedback, performance metrics, and revenue data to maximize conversion rates, user satisfaction, and revenue generation.

• Integrate chosen monetization models within your app’s interface, content, and user journey without compromising user experience or value.
• Test and optimize ad placements, in-app purchase prompts, subscription offers, affiliate links, and sponsored content to enhance visibility, relevance, and conversion rates.
• Utilize analytics tools, A/B testing, and performance tracking to monitor key metrics, identify opportunities for improvement, and optimize monetization strategies based on data-driven insights and user behavior.

5. Establish and Monitor Key Performance Indicators (KPIs)

Regardless of the monetization model you choose, profitability should be a primary goal. Here are essential metrics to evaluate the performance of your app’s monetization strategy:

• Downloads: Indicates initial interest by tracking the number of times the app is downloaded.
• Monthly Active Users (MAU): Measures ongoing popularity by tracking unique users within a month.
• Average Revenue Per User (ARPU): Calculated by dividing total revenue by MAU, this metric reveals the average revenue generated from each user.
• Lifetime Value (LTV): Estimates the total expected revenue from a user over their lifetime by multiplying ARPU by the user’s average lifespan.
• Customer Acquisition Cost (CAC): Determines the cost-effectiveness of acquiring new users by dividing marketing expenses by the number of new users gained.
• Retention Rate: Reflects user satisfaction and loyalty by tracking the percentage of users who continue using the app over time.
• Engagement Rate: Measures user activity and interaction levels within the app.
• Conversion Rate: Indicates the app’s effectiveness in achieving its goals by tracking the percentage of users who complete a desired action.

Set clear targets for these KPIs before launching your app and monitor them closely once it hits the market. Being realistic and comparing your metrics with current market trends and competitor performance can provide valuable insights, especially during the initial release phase.

How do free apps earn money in today’s digital era? Here, these KPIs serve as navigational tools to help you steer through the competitive landscape and make informed decisions to optimize your app’s monetization strategy.

6. Engage and retain Users Through Value-Driven Content and Experiences

The content that you showcase in your app plays an important role in deciding the revenue of your app. Focus on delivering high-quality, valuable, and personalized content. Make sure to add relevant features to enhance user engagement rate.Build strong relationships with your audience, encourage user loyalty, and foster a community around your app to ensure long-term success. Create and curate compelling features, encourage in-app purchases, and drive subscription conversions.

Engage with your audience through regular updates, notifications, personalized recommendations, and interactive experiences to maintain interest, encourage usage, and promote user investment in your app. Encourage user feedback, reviews, and referrals, and implement user-generated content. Also, focus on social sharing and community-building initiatives to enhance user satisfaction and loyalty. Leverage word-of-mouth marketing to acquire new users and expand your app’s reach and revenue potential.

7. Learn From Successful Models

When uncertain about your app’s direction, analyzing and learning from similar successful apps can offer valuable insights. This approach not only provides a glimpse into your competition but also helps you understand prevailing trends in the mobile app market. A fully researched strategy can lead you in the right direction, and no one can stop you from earning through your app.

User reviews can be particularly informative in this regard. They can offer valuable perspectives on their experiences and through this you can easily identify potential pain points. One-star reviews citing intrusive ads or poor premium experiences can help you decide your app monetization strategy. Keep a key eye on user behaviour and quickly resolve their issues if you want to survive in this tough competition.

Interesting Fact – 98% of mobile app revenue across the globe is generated by free apps

12 Best Tools for Monetizing Apps

Monetizing your app can be tricky but also very beneficial. There are many tools out there to help you make money from your app. We’ve put together a list of 12 great tools that can help you earn more from your app. These tools can help you improve your app, make more money, or find the right mix of both.

1. Google AdMob

Google AdMob is a leading mobile advertising platform that enables developers to monetize their apps through various ad formats, including banner ads, interstitial ads, and rewarded videos.

AdMob offers developers a robust solution to maximize ad revenue and enhance user experience. It is because it has several options that help it to perform this, like advanced targeting options, real-time analytics, and seamless integration with Google’s vast advertiser network; all these help AdMob to provide a seamless experience.

Key Features:

• Multiple ad formats and customization options
• Advanced targeting and optimization capabilities
• Real-time analytics and performance tracking
• Integration with Google Analytics and Firebase for comprehensive insights

2. AdPumb

AdPumb is an innovative mobile advertising network that provides developers with a wide range of ad formats, including native ads, interstitials, and rewarded videos.

With flexible integration options, advanced targeting, and real-time analytics, AdPumb offers developers a comprehensive solution to monetize their apps effectively and maximize revenue.

Key Features:

• Diverse ad formats and customization tools
• Advanced targeting and segmentation capabilities
• Real-time analytics, reporting, and optimization tools
• User-friendly dashboard and integration options

3. Audience Network by Meta

Audience Network by Meta (formerly Facebook Audience Network) allows developers to monetize their apps by displaying high-quality, targeted ads from Meta’s extensive advertiser base. With native, banner, and interstitial ad formats, along with advanced targeting options and real-time bidding, developers can optimize ad placements and maximize revenue while maintaining a seamless user experience.

Key Features:

• Diverse ad formats and customization tools
• Advanced targeting and optimization algorithms
• Real-time reporting and analytics
• Seamless integration with Meta’s advertising ecosystem

4. Google AdX

Google AdX (Ad Exchange) is a premium programmatic advertising marketplace that connects publishers and advertisers, offering developers access to high-quality ad inventory, premium demand, and advanced monetization opportunities. With real-time bidding, advanced targeting, and comprehensive rep rating, AdX enables developers to maximize ad revenue and optimize performance effectively.

Key Features:

• Premium ad inventory and premium demand partners
• Real-time bidding and auction dynamics
• Advanced targeting and optimization capabilities
• Comprehensive reporting, analytics, and insights

5. InMobi

InMobi is a global mobile advertising and discovery platform that offers developers a wide range of monetization solutions, including in-app ads, rewarded videos, and native ads. With advanced targeting, optimization algorithms, and real-time analytics, InMobi helps developers maximize ad revenue, user engagement, and overall app performance.

Key Features:

• Diverse ad formats and customization options
• Advanced targeting and optimization algorithms
• Real-time analytics, reporting, and insights
• User acquisition and retention solutions

6. Unity Ads

Unity Ads is a comprehensive monetization platform designed for Unity developers, offering seamless integration with Unity games and apps. With high-quality video ads, rewarded videos, and advanced targeting options, Unity Ads enables developers to monetize their apps effectively while enhancing user engagement and retention.

Key Features:

• High-quality video and rewarded video ad formats
• Seamless integration with Unity games and apps
• Advanced targeting and optimization tools
• Real-time analytics, reporting, and performance tracking

7. SmartyAds

SmartyAds is a full-stack programmatic advertising platform that provides developers with a wide range of monetization and advertising solutions, including display ads, video ads, and native ads. With advanced targeting, real-time bidding, and comprehensive analytics, SmartyAds helps developers optimize ad placements, maximize revenue, and enhance user experience effectively.

Key Features:

• Diverse ad formats and customization options
• Advanced targeting and segmentation capabilities
• Real-time bidding, optimization, and analytics
• Comprehensive reporting and performance insights

8. IronSource

IronSource is a leading mobile monetization platform that offers developers a wide range of monetization solutions, including in-app advertising, rewarded videos, and interstitials. With advanced targeting, optimization algorithms, and real-time analytics, IronSource helps developers maximize ad revenue, user engagement, and overall app performance.

Key Features:

• Diverse ad formats and customization options
• Advanced targeting and optimization algorithms
• Real-time analytics, reporting, and insights
• User acquisition and retention solutions

9. AppLovin

AppLovin is a leading mobile marketing platform that offers developers a wide range of monetization and advertising solutions, including in-app ads, rewarded videos, and interstitials. With advanced targeting, optimization algorithms, and real-time analytics, AppLovin helps developers maximize ad revenue, user engagement, and overall app performance.

Key Features:

• Diverse ad formats and customization options
• Advanced targeting and optimization algorithms
• Real-time analytics, reporting, and insights
• User acquisition and retention solutions

10. Appodeal

Appodeal is a comprehensive programmatic Ad mediation platform that enables developers to maximize ad revenue by integrating multiple ad networks and demand sources. With automated ad optimization, advanced targeting, and real-time analytics, Appodeal offers developers a seamless solution to monetize their apps effectively and optimize performance across various ad formats and networks.

Key Features:

• Ad mediation and optimization across multiple networks
• Advanced targeting and segmentation capabilities
• Real-time analytics, reporting, and insights
• Seamless integration and user-friendly dashboard

11. MobFox

MobFox is a leading mobile advertising platform that offers developers a wide range of monetization solutions, including display ads, video ads, and native ads. With advanced targeting, real-time bidding, and comprehensive analytics, MobFox helps developers optimize ad placements, maximize revenue, and enhance user experience effectively.

Key Features:

• Diverse ad formats and customization options
• Advanced targeting and segmentation capabilities
• Real-time bidding, optimization, and analytics
• Comprehensive reporting and performance insights

12. Epom Apps

Epom Apps is a mobile monetization platform that provides developers with a wide range of ad formats, including interstitials, banners, and native ads. With advanced targeting, real-time analytics, and seamless integration, Epom Apps offers developers a comprehensive solution to monetize their apps effectively and maximize revenue across various ad placements and formats.

Key Features:

• Diverse ad formats and customization options
• Advanced targeting and segmentation capabilities
• Real-time analytics, reporting, and insights
• Seamless integration and user-friendly dashboard

How Much Do Free Apps Earn?

Do people spend money when using a free app? Well, the answer is yes, they do!

A lot of factors state that. Let’s understand it by the figures given below.

As of Q3 2023, the average consumer spend on mobile apps per smartphone was around $5.05, up from $4.86 in Q3 2022. Here, you can see that most of the money they spend is on gaming apps as compared to others.

Now how do free apps make money and what monetization strategy they follow?

Free apps utilize diverse revenue models to boost their earnings. how can you make money from apps quickly. Here’s a breakdown of some revenue streams:

• In-App Purchases (IAPs): This model accounts for a significant portion of free app revenue. On average, apps with successful IAP strategies can earn between $0.50 to $1.50 per user per month.
• Advertisements: Ad-driven revenue is another lucrative avenue for free apps. A well-placed ad can earn an app anywhere from $0.01 to $0.20 per impression, with click-through rates varying between 0.5% to 2%.
• Freemium Model: This model entices users with free basic features while charging for premium services. Conversion rates for freemium apps typically range from 1% to 5%, with average revenue per paying user being around $5 to $20 per month.

Let’s discuss the key factors also which affect the earning potential of free apps.

• User Base: The size and engagement level of an app’s user base are crucial. Apps with millions of active users can potentially earn upwards of $1 million per month.
• App Category: Earnings can vary significantly based on the app category. For instance, gaming apps tend to have higher earning potentials compared to utility apps.
• Monetization Strategy: The efficacy of the chosen revenue model can make or break an app’s earnings. Apps with diversified monetization strategies often have more stable and higher revenues.

This is the App Revenue Data (2024) which clearly shows the potential of making a free app.

Note – Over 90% of available apps are free to download, making free apps the primary source of revenue for app marketplaces.

Latest App Monetization Trends in 2024

1. In-app purchases (IAPs) and Virtual Goods

In-app purchases (IAPs) and virtual goods continue to be a dominant monetization strategy, allowing developers to offer additional content, features, and enhancements within their apps. With the rise of mobile gaming and the increasing popularity of freemium models, IAPs and virtual goods offer developers a lucrative revenue stream and enable them to monetize user engagement effectively.

Key Trends:

• Expansion of in-app economies and virtual marketplaces
• Introduction of exclusive and limited-time offers to incentivize purchases
• Integration of NFTs (Non-Fungible Tokens) and blockchain technology for unique and collectible virtual goods

2. Subscription Models and Premium Content

Developers are increasingly using subscription plans and offering special premium content to create a steady income and give users access to exclusive features and content. As more people want personalized and ad-free experiences, subscription-based models give developers a reliable and flexible way to make money.

Key Trends:

• Diversification of subscription tiers and pricing models
• Introduction of bundled subscriptions and membership programs
• Integration of AI and machine learning to personalize content and recommendations for subscribers

3. Ad Mediation and Programmatic Advertising

More and more developers are turning to ad mediation and programmatic advertising platforms to boost their ad earnings. These tools help them place ads better, ensure more ads get shown, and increase their ad income from various networks. With ad technology getting better and a focus on improving user experiences, developers are using these methods to make their monetization plans work even better.

Key Trends:

• Integration of header bidding and real-time bidding (RTB) technologies
• Adoption of server-side ad insertion (SSAI) for seamless and personalized ad experiences
• Emphasis on privacy-centric and consent-based advertising solutions in compliance with regulations and user preferences

4. Hybrid Monetization Models and Diversified Revenue Streams

App developers are getting smarter about making money from their apps by using a mix of different ways to earn. By using in-app purchases, subscriptions, ads, and affiliate marketing together, they’re building strong and flexible ways to make cash. This approach not only gives users more choices but also helps developers adapt to what’s popular and meet their business goals more effectively.

Key Trends:

• Integration of multiple monetization strategies within a single app or platform
• Introduction of dynamic pricing, offers, and monetization incentives to maximize user engagement and conversion rates
• Emphasis on data-driven decision-making, analytics, and optimization to identify and capitalize on emerging monetization opportunities and trends

WRAPPING UP

Free apps, when strategically monetized, can be highly profitable ventures. With in-app purchases, advertisements, and the freemium model, free apps can generate substantial monthly revenues ranging from a few thousand dollars to several million. However, achieving such financial success requires a well-planned monetization strategy and a deep understanding of user behavior and preferences.