The trend of earning money using mobile apps is unstoppable. While some developers experimented with different permutations and combinations, others quickly enriched it.
Yes, without a doubt, the craze of earning money through freemium apps is unbreakable. While some developers experiment with multiple permutations with no success, others have won the jackpot overnight. Of course, creating an app is not easy, but in this modern age, if you follow the right steps and rules, you have the potential to create a million-dollar app.
Top 7 Proven Monetization Strategies
Here, we have compiled a list of mobile app monetization strategies for 2022 after analyzing several case studies.
1. Freemium
The freemium model is gaining traction, and it now dominates both the Google Play and Apple App Stores. Instead of charging customers immediately, freemium apps give them access to basic functionality. However, users will have to pay a price for access to premium services.
Within the freemium paradigm, there are a few different types of revenue strategies. In-app purchases allow users to purchase game items in mobile games. A paid subscription is often available for productivity apps, which removes the convenience constraints of the app.
Use the freemium model if you want to reduce user acquisition costs while ensuring that customers will stay with the app and make occasional purchases.
2. Advertising & Affiliate Marketing
Mobile advertising is the easiest and most popular way to make money from a free app these days. Currently, 7 out of 10 free apps make money by displaying ads and promoting other businesses. You can charge: If you want to use this most frequent method of free app monetization.
- CPM (cost per mile) or cost per impression: For every 1,000 views of the ad, you will be paid.
- CPC (Cost Per Click): You are compensated when users of the app click on display ads.
- CPV (Cost per view): Advertisers are charged based on the number of times their ads are viewed or interacted with.
- CPI (Cost-Per-Install): When a user of your app downloads the app you are promoting, you will be paid.
As you can see, there are a variety of in-app advertising values and techniques for displaying ads to app users. You can show ads to your app users in five different ways:
● Banner Ads or Display Ads.
Banner advertising appears at the top or bottom of the mobile device screen, allowing app users to enjoy your app without any restrictions. However, such ads have a low engagement rate (0.1%).
● Video Ads.
These ads are displayed to stop the use of the app and during the last 10-30 seconds. This ad type also includes rewarded video ads, which reward the app user for watching the entire ad video.
● Native Ads.
Native ads, such as sponsored content or videos, are seamlessly integrated into the design of the app and do not disrupt the user experience. As a result, people find Native ads less annoying than other types of ads.
● Interstitial Ads.
This type of ad appears as a full-screen pop-up when a user opens or closes an app. As a result, the consumer has the option to close the ad or click on it to know more about the deal.
3. Sponsorship and Influencer Marketing
This type of app monetization is comparable to ads, but it is more deeply integrated within the app. Let's understand. In addition to running ads, you can place a Sponsor's logo or icon on the splash screen, footer, or integrate Sponsored Content directly into your App with special offers. Find sponsors who share the same target demographic to make this type of monetization model more profitable. For example, if you have a fitness app you can look for sponsors among fitness centers, personal trainers, or healthy diet websites.
Influencer marketing differs from traditional sponsorship in that you will work with a personal opinion leader who is well-known among your target audience, rather than a company. As a result, such an influencer will promote your app to their followers and attract new users. You can also invite an influencer to be an app ambassador, which is a common strategy used by well-known firms.
4. In-App Purchases
In-app purchases (IAPs) allow users to purchase more features, functionality, and virtual items in the game. This often results in users gaining access to exclusive content and services, such as virtual money. This strategy, which is a subset of the freemium model, is used by free games such as Candy Crush Saga and PUBG Mobile, as well as apps such as VSCO.
You can sell a variety of things with this app monetization approach, such as:
● Consumable IAPs
Consumable IAPs are one-time use items such as virtual currency, power-ups, longer gameplay, or an additional feature. In mobile games, these purchases are common.
● Non-consumable IAPs
Non-consumable IAPs, such as the ability to remove ads or a premium photo filter, are often permanent features customers buy into apps.
● Subscriptions
It gives users repeated access to services or additional features for a specified period of time. These are popular with streaming and news apps and can be renewable or non-renewable.
In-app purchases are one of the most important sources of money for free apps, and they are increasing year by year. One of the reasons is attributed to the rapidly increasing purchasing power of two generations of tech-savvy people.
However, in-app purchases also have their challenges. For transactions to run properly, an IAP needs to do more work on the backend. Another consideration is that when your customers pay you for something, you should make sure they get the greatest possible experience; This includes both in-app and off-app services such as customer support. Most importantly, you have to pay a significant portion of the sale - 30% as commission to Google Play and App Store.
5. Subscriptions
By using a premium subscription, you can earn money on free apps. Only 5% of apps with strong user engagement, such as productivity, instructional, music, or video streaming apps, operate with this paradigm. These types of transactions require the integration of third-party payment gateways such as Stripe or PayPal. As a result, no commission is charged by the app shops.
This is how app subscriptions work:
- The user gets one month to try out your software after installing it for free. If the user wants to continue using the app after the trial period is over, he/she will have to purchase a subscription.
- Hence, there are two types of subscriptions:
● Non-renewing subscription:
A non-renewing subscription occurs when a customer purchases an in-app subscription for a set period, such as one, three, or six months. After the subscription time expires, the subscriber has to manually purchase a new subscription to avoid any incidental charges. Seasonal apps, such as gardening, sport, or hunting, benefit from this form of app monetization.
● Automatically renewing subscriptions:
An automatically renewing subscription means the app will bill the user once a month, six months, or once a year. Users can access the app only after filling in their credit card information to ensure that they will purchase a subscription after the trial time expires.
6. Crowdfunding
Crowdfunding has been quite popular in recent years. If you have a great idea there is a crowd behind you. Kickstarter, Patreon, Crowd Supply, Fundable, Indiegogo, and Chuffed are examples of crowd-funding sites. (And, of course, gratitude to those who made small but significant contributions.)
In fact, crowdfunding app is different from other revenue generation strategies. This method can help you get the money you need for app development and marketing.
on the other hand, applications such as non-tangible apps have historically performed poorly in crowdfunding campaigns. Over the years, this has changed. Some mobile games have exceeded their $100,000 goal, while non-gaming apps like education, social, dating, productivity, and others have received even more positive feedback. A language study app called Fluent Forever has raised nearly $580,000 on Kickstarter.
7. App Merchandise & E-commerce
This is another strategy that explains how to make money from freemium apps.
The eCommerce industry is expanding at a breakneck pace. By selling your own branded things within your application, you can participate in this growth. Amazon does a lot of the work for you, such as selling, selling, paying, and shipping, and you get a cut of the profits.
Angry Birds is a successful example of an app that used this monetization method to earn money. Even if your software has the potential to make millions of dollars, it has to be popular first. You will not be able to use this business model unless you have a loyal fan base that is willing to pay for the merchandise.
Real-Life Examples of How Freemium Apps Make Money
There are countless apps in the market that generate millions of dollars in revenue.
WhatsApp is the best example as it started as a premium software that charged $1 for each download. What is the revenue model of WhatsApp? This was later changed to a separate revenue strategy, allowing customers to download the program for free. With over 2 billion users, WhatsApp offers unlimited options for in-app advertising.
Facebook is another excellent example of a free application. Despite this, the corporation makes millions of dollars from its apps by taking advantage of in-app ads. According to some research, advertising accounts for 98.5% of the company's revenue, while payments and other feeds account for only 5% of the total revenue.
TikTok, which is in the news these days, also makes a lot of money, but it does so in a very different way. The company offers in-app coins that can be used to purchase digital goods. Users can buy 100 coins at $0.99, 10,000 coins worth $99.99.
Regardless of the monetization approach you choose, the only way to secure long-term growth and revenue for your app is to keep innovating and improving it. Users are the lifeblood of any software, and you must ensure that your app meets all their needs. Users will be devoted to your app and brand for a long time if you do it this way.
Wrap-up:
The future of freemium apps looks promising! As a result, your mobile app investment is worthwhile. If you have a free app idea, then go ahead and implement it now, monetize the app using the strategy listed above and stay ahead of your competitors.
Yes, compared to paid apps, free mobile apps have a bigger market share. There are several free mobile app monetization strategies available, each of which has a different user engagement rate and generates a different amount of revenue. We propose that you choose a revenue plan based on your app's expertise, purpose, and target audience.
You can use a combination of monetization strategies to increase the profitability of your free app:
- You can run ads and charge users for the ad-free version of the app, making it a win-win for both you and your users.
- In-app purchases and subscriptions, as well as advertising and subscriptions, can all be mixed and matched.
With so many different revenue models for making money with applications, it is important to realize that each has its own set of advantages and disadvantages. It's also a good idea to test these strategies and think about what your competitors are doing. Once you do, it will be easier to choose the best one. So, now you can better understand how free apps make money. If you have an app idea that you think will be successful, you should approach an app development business to develop it.
Which monetization model is best suited for your app? The answer lies in the questions that pertain to the intricacies of your business goals. The mobile application development services at Cypherox have a record and reputation for adopting innovation out of thin air. To keep your freemium app users happy, we'd like to strike the right balance between monetization and experience.
