How Free Apps Make Money in 2024 – Explore Effective Strategies

Last updated on May 28th, 2024

In recent years, the mobile app market has experienced an extraordinary explosion in popularity. This boom is largely fueled by the widespread adoption of smartphones and tablets across various demographics and regions of the world. The accessibility and convenience of these devices have transformed the way we consume digital content, leading to a surge in mobile technology usage. This surge has, in turn, directly led to a significant increase in the number of free applications available for download across various app stores. These applications cater to a wide and diverse range of consumer interests and needs, from entertainment and education to productivity and health.

While the availability of such a vast array of free apps is a boon for users, developers face the formidable challenge of generating sufficient revenue to sustain their business operations. This challenge is pivotal, as revenue generation is crucial not only for covering ongoing expenses – such as server costs, maintenance, marketing, and staff salaries – but also for investing in the research and development of new and innovative applications. The ability to innovate and stay ahead in the highly competitive app market is essential for a developer’s survival and growth.

In this comprehensive article, we delve deeper into the mobile app market’s dynamics and explore eleven effective revenue generation strategies that developers of free apps can adopt in 2024 and beyond. These strategies range from in-app advertising and in-app purchases to subscription models and partnership opportunities, each offering its own set of benefits and challenges. By implementing these strategies thoughtfully, developers can ensure their business’s financial health and continued growth, ultimately contributing to a vibrant and diverse app ecosystem for consumers worldwide.

A Quick Overview of Freemium Apps Vs. Paid Apps Market Dynamics

To fully understand the revenue generation strategies for free apps, it is essential to first understand how the freemium app market differs from the paid app market. In simple terms, a freemium app can be downloaded and used for free, with additional features or content available for purchase within the app.

Freemium Apps Vs. Paid Apps Market Overview

• Initial Cost to Users: Freemium apps are free to download and use, attracting a larger user base initially. Paid apps require an upfront purchase, which can deter some users from downloading.
• Revenue Streams: Freemium apps primarily rely on in-app purchases, subscriptions, and advertisements for revenue. Paid apps generate revenue from the initial purchase price, with some also offering additional in-app purchases.
• User Engagement: Freemium apps often see higher engagement rates due to the low barrier to entry. Paid apps must justify their cost with high-quality content or unique features that keep users coming back.
• Market Size: The freemium model dominates the app market, with a vast majority of apps on popular platforms like the App Store and Google Play being free. The paid app market is smaller, catering to niche users looking for specific functionalities or an ad-free experience.
• Conversion Strategies: Freemium apps require effective conversion strategies to persuade users to make purchases within the app, while paid apps need compelling marketing to convince users to buy the app upfront.
• Long-Term Value: Freemium apps have the potential for ongoing revenue from active users over time. Paid apps, unless they offer in-app purchases, generally see a burst of revenue upon purchase, with limited financial engagement thereafter.

Also Read: How Do Food Delivery Apps Make Money?

11 Most Popular Revenue Models for How Do Free Apps Make Money

• Advertising Model: 

This is the most common revenue model for apps that are offered for free to the user. In this model, the app relies heavily on displaying a diverse array of advertisements, ranging from banner ads to full-screen video ads, as its primary means of generating income. Companies pay the app developers a fee to showcase their products or services within the application, hoping to catch the attention of the app’s diverse user base. By embedding these ads into the app’s interface, developers ensure that users are exposed to these advertisements during their interaction with the app, thereby increasing the likelihood of user engagement with the advertised products or services. This method of revenue generation not only allows the app to remain free for users, thereby enhancing its accessibility and encouraging greater usage, but it also provides a continuous stream of revenue for developers.

Interstitial ads: These are full-screen advertisements that seamlessly appear at natural transition points within the app’s user experience, providing a smooth integration that doesn’t disrupt the user flow. Commonly, you’ll see these ads in between levels of a game, offering a moment of engagement while the user is already invested in the app’s environment, or when users navigate from one feature to another within the application, marking a natural pause in their activity. Their prominent placement and strategic timing can be highly effective in capturing user attention at moments when they are most receptive, thereby significantly enhancing brand visibility and recognition.

Banner ads: These are smaller ads that typically appear at the top or bottom of an app’s interface, often featuring a static image or short text description. They are less intrusive than interstitial ads and can be easily ignored by users who are not interested in the advertisement. However, their constant presence throughout the app’s usage can still create brand awareness and potentially lead to conversions for companies.

In-app video ads: These ads are becoming increasingly popular as they offer a more engaging and interactive experience for users. They can range from short 15-second videos to longer, more in-depth advertisements that allow for better storytelling and brand messaging. In-app video ads often have higher conversion rates compared to other ad formats due to their ability to capture and retain user attention for a longer time.

Native ads: These are advertisements that seamlessly blend into the app’s interface, making them appear more natural and less intrusive. They often match the design and aesthetics of the app, creating a cohesive and non-disruptive user experience. Native ads can be in various forms such as sponsored content, recommended articles, or product listings. Due to their non-intrusive nature, native ads are often considered a more user-friendly and effective form of advertising.

Rewarded Videos: These are advertisements that provide users with an incentive—such as in-app currency, extra lives in a game, or additional features—in exchange for their time spent watching a short video advertisement. This advertising strategy can be particularly beneficial for companies as it guarantees the user’s active engagement with the content. Unlike traditional ads, where the viewer may not be paying full attention, these reward-based ads capture the user’s interest, leading to significantly higher conversion rates. Furthermore, this type of ad enhances the overall user experience by offering a tangible reward that adds value to their app usage, making it more than just an ad but a beneficial exchange. This approach not only promotes a positive perception of the advertised product but also encourages continued app engagement, as users feel appreciated and rewarded for their time.

• Subscription Model:

Another increasingly popular monetization strategy among digital platforms is the subscription model. In this approach, users are required to pay a recurring fee, often monthly or annually, to gain access to premium content or features within an app or website. This model has gained a lot of traction and is particularly prevalent among news outlets, music streaming services, and various other media-based platforms.

By offering exclusive content, such as in-depth articles, high-quality videos, or ad-free music streaming, and features that are not available in the free version, companies can generate a consistent and predictable stream of revenue. This not only helps in maintaining the operational costs but also in investing in the enhancement of the content and features offered. Moreover, this model provides users with a more personalized and enriched experience, adding value to their everyday lives.

Furthermore, the subscription model fosters a sense of loyalty and retention among users. Subscribers are more likely to continue using the app or service to make the most out of their investment in the premium features. Over time, this can lead to a strong, loyal user base that not only contributes to the revenue directly through subscriptions but also indirectly by advocating the service to potential new users through word-of-mouth. This dual benefit of generating steady revenue while enhancing user experience and loyalty makes the subscription model a highly attractive strategy for many companies in the digital content and service sectors.

• Selling Merchandise Model

Another way for companies to generate revenue in the digital space is by selling merchandise. This model involves offering physical products, such as t-shirts, mugs, or phone cases, with the brand logo or content-related designs on them. Many content creators and influencers have leveraged this model successfully by creating their merchandise lines and promoting them to their followers.

This model not only provides an additional stream of revenue for companies but also serves as a form of marketing and brand promotion. By wearing or using products with the brand logo or designs, customers become walking advertisements for the company, further increasing its reach and visibility.

• In-App Purchases Model

The in-app purchases model is commonly used in mobile apps and games, where users can purchase virtual goods or premium features within the app. This model relies on the freemium approach, where the basic version of the app is available for free, but additional features or content require payment.

This strategy has proven to be highly successful, as it allows companies to attract a large user base with the free version and then generate revenue from a smaller percentage of users who are willing to pay for additional features. In 2020, in-app purchases accounted for over $70 billion in revenue globally.

• Sponsorship Model

An increasingly popular revenue-generating model for digital content and service companies is leveraging sponsorships. This strategy involves forming partnerships with brands or advertisers to feature their products or services within the company’s content, offering a mutually beneficial arrangement.  Sponsorship deals can vary widely in scope and execution. They might include simple brand mentions or more integrated product placements within videos, podcasts, or across various social media platforms. Additionally, these partnerships can extend to sponsored blog posts or even comprehensive marketing campaigns designed to engage viewers.

This model not only serves as a significant source of income for content creators and service providers but also offers an effective way for them to expand their audience reach. By tapping into the sponsor’s existing customer base, companies can introduce their content to potential new followers, thereby enhancing both visibility and engagement. Furthermore, these sponsorships often lead to increased credibility and trust among viewers, as the endorsement of a reputable brand can positively influence consumer perception.

• Affiliate or Referral Marketing Model

Affiliate or referral marketing is a lucrative revenue-generating model that operates by recommending customers to another company’s products or services, subsequently earning a commission for each sale made through the referral. This approach has gained immense popularity among digital content creators such as bloggers, YouTubers, and social media influencers who have cultivated a loyal and engaged following over time.  By meticulously selecting products and services that they genuinely believe in and would confidently recommend, these creators can leverage their influence to promote these offerings to their audience. In return, they earn a percentage of the sales generated through their unique referral links, providing a mutually beneficial arrangement. This model not only allows content creators to monetize their platforms but also offers companies a cost-effective method of increasing exposure and reaching potential customers through trusted endorsements.

Cost per acquisition or Cost per action (CPA):

Another popular pricing model utilized in online advertising and sponsorships is cost per acquisition or cost per action (CPA). This method involves paying the sponsor a predetermined amount for each customer who takes a specific action, such as making a purchase, filling out a form, or signing up for a service. Unlike the traditional pay-per-click model where companies pay for each click on their advertisement, CPA only charges for tangible results, ensuring a more effective use of advertising budgets. This model can also incentivize content creators to produce high-quality content that will drive more conversions and generate higher earnings.

Cost per click (CPC):

Cost per click (CPC) is a performance-based advertising model where companies pay content creators for each click on their sponsored link or banner ad. This method is commonly used in search engine marketing and social media advertising, allowing businesses to target specific keywords or demographics and only pay when someone clicks on their advertisement. CPC can be an effective way for companies to increase website traffic and conversions, but it requires careful management and optimization to ensure a good return on investment.

Cost per view (CPV):

Cost per view (CPV) is a pricing model used primarily in video advertising, where companies pay content creators for each view of their sponsored video. This method can be beneficial for businesses looking to increase brand awareness, as each view counts towards the total number of impressions and exposure. CPV is also commonly used in influencer marketing campaigns, where the influencer’s followers or subscribers are the target audience for the sponsored video.

Cost per install (CPI):

Cost per install (CPI) is a pricing model used in mobile app advertising, where companies pay content creators for each user who downloads and installs their app. This method is commonly used by app developers to increase the number of installations and users for their mobile applications. CPI can be an effective way to reach a targeted audience and drive app downloads, but it requires careful targeting and tracking to ensure a good return on investment.

• Collecting and Selling Data Model

In the realm of online advertising, beyond the conventional methods previously outlined, there exists an alternative, yet controversial, model that involves companies actively gathering and selling consumer data to other businesses primarily for targeted advertising purposes. This data collection process is extensive, capturing a broad spectrum of information such as individuals’ browsing history, search queries, demographic details including age, gender, and location, preferences in products and services, and even behavioral patterns.

What is often overlooked by many is the fact that users, in most cases, remain completely oblivious to the fact that their personal information is being collected, amassed, and commodified in such a manner. This lack of awareness raises significant privacy concerns and ethical questions regarding consumer consent and the transparency of data collection practices.

Despite these concerns, this practice of data collection and targeted advertising offers substantial benefits to businesses. It enables them to create highly customized and effective advertising campaigns that are meticulously tailored to the specific interests, needs, and behaviors of distinct audience segments. Leveraging such detailed and comprehensive consumer profiles allows advertisers to significantly enhance the relevance and impact of their promotional messages. This increased relevance not only boosts engagement among target audiences but also has the potential to substantially improve conversion rates, driving sales and fostering brand loyalty.

Furthermore, the effectiveness of these targeted advertising campaigns is often reflected in the higher return on investment (ROI) for businesses. By reaching consumers with a higher propensity to be interested in their products or services, companies can efficiently allocate their advertising budgets, ensuring that their marketing efforts are not wasted on disinterested parties. This strategic approach to advertising underscores the growing importance of data in crafting marketing strategies that resonate with consumers on a personal level.

• Freemium Upsell Model

One particularly effective business model that fully utilizes the power of targeted advertising is the freemium upsell model. Here, companies strategically offer a basic version of their product or service for free. This is not just a gesture of goodwill but a calculated move to attract a broad and diverse user base. Once this base is established, the company then leverages targeted advertising, a sophisticated technique that tailors promotional content to the individual preferences and behaviors of users. This focused approach allows for the promotion of additional features or upgrades that are more likely to convert free users into paying customers.

The success of this model is evident in the triumphs of companies such as Spotify and Dropbox. Both have masterfully used targeted advertising to not only engage their extensive user bases but to also upsell their premium services effectively. By analyzing user interests and usage patterns, these companies can pinpoint and promote features that resonate on a personal level with each user. For example, Spotify may suggest premium features like offline listening or ad-free music to users who have shown a high level of engagement with the app, while Dropbox might highlight its advanced storage solutions and collaboration tools to users frequently sharing and accessing large files.

• Physical Purchases Model

Another effective use of targeted advertising is in the realm of physical purchases, which is particularly relevant in today’s digital age. In an era where consumers are inundated with seemingly endless options for buying products and services, it becomes increasingly challenging for companies to stand out and reach their target audience effectively. The vast sea of online content means that traditional advertising methods might not be as effective in capturing the attention of potential customers. However, targeted advertising offers a compelling solution by enabling companies to tailor their marketing efforts to match user interests, behaviors, and demographic profiles precisely.

For instance, a clothing brand looking to promote its latest collection could leverage targeted advertising to reach users who have previously shown an interest in similar styles or brands. This strategy is not about casting a wide net but rather about precision—identifying and engaging with individuals who have already expressed an affinity for related products. By utilizing data gathered from various sources such as social media platforms, online shopping history, and search engine activities, companies can craft highly personalized advertisements. These advertisements are not only more engaging but are also more likely to resonate with potential customers because they reflect a deep understanding of their personal preferences and online behavior.

Moreover, targeted advertising can extend beyond just interest and behavior; it can also factor in geographic location, age, gender, and even the time of day, making the advertisements even more relevant and timely. For example, a local cafe might use targeted ads to promote a breakfast special to nearby residents in the morning hours. The power of targeted advertising lies in its ability to use sophisticated analytics to inform and refine marketing strategies, ensuring that promotional messages are not only seen by a wide audience but by the right audience. This level of customization and precision in advertising was unimaginable just a few decades ago, yet today, it stands as a testament to the advancements in digital marketing technologies and strategies.

• Transaction Fees Model

In addition to targeted advertising, another common revenue model for online marketplaces is transaction fees. This model involves charging a percentage fee on each successful transaction made through the platform. For example, popular e-commerce sites like Amazon and eBay use this approach, taking a cut from every sale made by their sellers.

The advantage of this model is that it allows the marketplace to generate revenue without having to sell any products or services themselves. Instead, they act as a facilitator between buyers and sellers, taking a percentage of each transaction for providing the platform and its features.

However, this model also has its drawbacks. As the marketplace grows and more transactions occur, the fees collected can add up quickly for sellers. This may lead to dissatisfaction and even discourage some sellers from using the platform in the long run.

• Crowdfunding Model

Crowdfunding, a revenue model that has significantly gained popularity in recent years, represents a modern approach to funding projects. This method involves soliciting financial contributions from a wide audience, usually facilitated through digital platforms such as Kickstarter or Indiegogo. To engage potential backers, creators must develop a compelling pitch that clearly outlines their project’s value and, often, offer rewards or incentives to encourage contributions. This could range from exclusive early access to the product to personalized items or experiences for higher-tier backers.

The appeal of crowdfunding lies not only in its potential to generate necessary funding but also in its power to validate business ideas and engage a community of supporters early in the product development process. Before even launching a product or service, individuals or businesses can gauge market interest and cultivate a base of customers who are emotionally and financially invested in the project’s success.

However, the path to a successful crowdfunding campaign is fraught with challenges. The sheer number of projects seeking funding means that standing out is more difficult than ever. It requires not just a great idea, but also a strategic marketing plan that includes an engaging campaign video, regular updates to backers, and effective use of social media to reach potential supporters beyond the immediate network. Furthermore, setting realistic goals and fulfilling rewards as promised is crucial for maintaining trust and credibility in the crowdfunding community.

Despite these hurdles, for many entrepreneurs, artists, and innovators, crowdfunding remains a viable and attractive option for bringing their visions to life. It democratizes access to capital, allowing more diverse ideas to be explored and developed without the need for traditional financing methods.

Read More: Total Cost To Build A Food Delivery App Like EatClub

Best App Monetization Methods According to Mobile Publishers Worldwide

The rise of mobile apps has opened up a world of opportunities for developers to monetize their creations. While some choose to offer their app as a paid download, many others turn to various forms of advertising and in-app purchases to generate revenue. As the competition in the app market continues to grow, developers need to understand all the available monetization methods and choose the ones that best suit their app and target audience. Here are some of the most popular app monetization methods used by mobile publishers worldwide:

How to Define the Best App Monetization Model [3 Easy Tips]

• Evaluate your app’s value proposition

Before deciding on a monetization model, it is important to understand the value proposition of your app. What makes it unique? What problem does it solve for users? Knowing the key features and benefits of your app will help you determine which monetization methods align best with its purpose and target audience.

• Download and observe the monetization methods of your competitors

Researching and studying the monetization methods of your competitors can give you valuable insights into what works and what doesn’t in your specific niche. Take note of how they implement ads, subscriptions, or in-app purchases, and evaluate their user reviews to see how well these methods are received.

• Understand your app’s target audience

Your app’s target audience plays a crucial role in determining the most effective monetization methods. For example, if your app caters to a younger demographic, you may want to focus on in-app purchases rather than subscriptions as young users are less likely to commit to long-term payments. On the other hand, if your app is targeted towards professionals or businesses, offering a subscription model may be more viable as they are willing to invest in tools that can improve their productivity or efficiency.

How can iTechnolabs help you to build free apps?

iTechnolabs an expert mobile app development company specializes in developing high-quality, user-friendly mobile applications that can help you achieve your business goals. Our team of experienced developers and designers can work with you to create a free app that not only meets your needs but also effectively monetizes through various methods. We understand the importance of finding the right monetization model for your app and offer expert guidance and support in this aspect. Our team stays updated with the latest trends and strategies for in-app monetization, ensuring that your app is equipped with the most effective methods to generate revenue.

• Customized App Development: iTechnolabs creates apps tailored to your specific business needs and goals, ensuring your app stands out in the competitive market.
• Expert Monetization Strategy: Our team offers expert guidance on the most effective monetization strategies, helping you choose the right mix of ads, subscriptions, and in-app purchases.
• Market Analysis: We conduct in-depth market analysis to understand your target audience and competitive landscape, which informs the development and monetization strategy.
• User-Friendly Design: Our designers focus on creating intuitive and engaging user interfaces, enhancing the overall user experience, and potentially increasing app revenue.
• Ongoing Support and Updates: iTechnolabs provides continuous support and regular updates to keep your app current with the latest technology trends and user expectations.
• Performance Optimization: We ensure your app is optimized for performance, leading to better user retention and a higher rate of monetization success.
• Analytical Tools Integration: Integrating advanced analytics tools, we help you track user behavior and app performance, offering insights to fine-tune your monetization strategy.

Are you planning to build free apps?

Choosing iTechnolabs for building your free apps brings a multitude of benefits, central to which is the company’s adeptness at crafting customized solutions that perfectly align with your vision and business objectives. By focusing on user-friendly design and expert monetization strategies, iTechnolabs ensures that even free apps have the potential for revenue generation through thoughtfully integrated ads, subscriptions, and in-app purchases. Additionally, the ongoing support and updates provided by iTechnolabs guarantee that your app remains relevant and functional in the fast-paced tech landscape, thereby enhancing user retention and satisfaction. With the integration of analytical tools, you gain valuable insights into user behavior and app performance, empowering you to make data-driven decisions to optimize your app’s success continuously.

• Expertise in Monetization Strategies: iTechnolabs possesses a deep understanding of various monetization models suitable for free apps, ensuring that your app maximizes its revenue potential without compromising user experience.
• Customized Solutions: The customization capabilities of iTechnolabs mean that each app is uniquely tailored to match your business objectives, enhancing the likelihood of its success in the competitive market.
• User Experience Design: Special emphasis on creating intuitive and engaging user interfaces translates to higher user retention rates and potential increases in app revenue through improved user satisfaction.
• Continual Support and Regular Updates: With iTechnolabs, your app remains up-to-date with the latest technological advancements and security features, thereby sustaining user interest and app relevancy over time.
• Performance Optimization: iTechnolabs ensures that your app operates smoothly across various devices, minimizing bugs and reducing load times, which are critical for retaining users and encouraging transactions.
• Integration of Analytical Tools: The incorporation of sophisticated analytics tools by iTechnolabs allows for real-time tracking of user engagement and app performance, offering actionable insights to refine your strategies and boost app profitability.

Important: How to Build an Online Food Delivery App Like Zomato

Conclusion:  

With iTechnolabs as your mobile app development partner, you not only gain a top-quality app but also access to an array of services and expertise aimed at optimizing its performance and maximizing its success. By continuously gathering data and monitoring user behavior, we work with you to make informed decisions that drive the growth of your app. With a focus on user experience design, regular updates and support, performance optimization, and analytical integration, iTechnolabs is your one-stop solution for creating a successful app that stands out in the competitive market.

FAQ Regarding App Monetization Methods

How does a free app make money without ads?

There are various ways that a free app can generate revenue without displaying ads. Some common methods include in-app purchases, subscriptions, and sponsorships. For example, an app may offer additional features or content for purchase within the app, allow users to subscribe for regular access to premium content or services, or partner with other companies for sponsored content or promotions.

Is it hard to make an app?

The difficulty of creating an app depends on the complexity and functionality of the app, as well as the developer’s level of experience and expertise. However, with the help of professional app development companies like iTechnolabs, you can transform your idea into a fully functional, high-quality app without needing extensive coding knowledge or experience. It is important to thoroughly research and plan your app before development to ensure its success.

How much money do apps make per download?

The amount of money an app makes per download varies greatly and is dependent on various factors such as the app’s monetization method, target audience, marketing strategies, and competition. Some apps may make a few cents per download while others can earn hundreds or even thousands of dollars. It is important to consider multiple revenue streams and consistently gather data to optimize your app’s performance.

How much money does a free app make from ads?

The amount of money a free app makes from ads also varies greatly and depends on factors such as the ad network used, the type of ads displayed, and user engagement. In general, the more popular an app is and the more active users it has, the higher its potential for ad revenue. However, constantly bombarding users with too many ads can negatively impact user experience and lead to lower retention rates.