Every day, millions of people access and use apps. Whether it is for entertainment purposes such as games or music, or purposes such as weight loss or money management, applications have become an inclusion into the life of people worldwide. Billions of apps are downloaded onto smart devices daily, and topping the charts continuously are apps that are available to users for free.
This, however, confuses users who often question how companies that offer free apps make their money. When they aren’t gaining immediate profit from sales, what are the other avenues that allow them to continue thriving and improving the app?
Purchasing In-App Features
One of the ways that free apps make the most money is by the inclusion of in-app purchases. In this, users are prompted to unlock premium features for a fee that isn’t included in the general app. What incurs an extra cost is dictated by the creative team behind each app, and driven by what the user would most like to purchase. In games, this is usually more lives, currency or app time. It can also extend into the purchasing of more levels, or bypassing difficult levels. This may seem trivial, but apps worldwide drive a large majority of profit by these means.
This isn’t just limited to add-ons within the app, but can move into user subscriptions to unlock the full app benefits. This is usually done through a monthly payment, deducted from the user’s credit card so they can continue to access the top level of the app.
‘Taste Test’ Apps
Apps that are free can also be a teaser of what is to come. In this, the app that is listed with no price is just a cut of an already established, larger app that is listed separately. This may take the user through the first 10 levels of the game, or allow them to gain access to one aspect of the app of interest. After they’ve participated, they may be prompted to purchase the second version, which is the full app with all features.
One of the most obvious ways that apps achieve monetary gain is by allowing companies to do in app advertisement. This is when advertisement space is sold within your free app to outside companies. This method can garner a large amount of profit, but is usually determined by the amount of traffic that your app gains in order to make the arrangement worth it. Built in advertisement relies on viewership and clicks, which means that you need to have an active user base in order to gain significant revenue from these advertisement bodies.
Apps that do have outside advertising tend to make money through a paid feature available to get rid of them and continue the app experience without it.
User and Competitor Research
Although this is not strictly a way to gain money, it is important to understand your market in order to achieve results. There are thousands of thriving apps that are available to users for free, and all are usually gaining revenue. Ensuring you research and critically examine the ways apps within the store are making money is important to enhance your own strategies.
While it isn’t obvious how much money your competitors are gaining from advertisements, it is worthwhile to identify the different types of monetisation strategies they use, and how they are displayed to the user throughout the app. Through this examination, you can identify what your competitors are doing and whether you are missing major opportunities within your app. You can also see what elements you enjoy of their app as a user, and what doesn’t work in order to improve your own app.
More than that, you need to have an understanding of your key customer base. This helps with the optimisation of your app design and marketing, and helps to increase the likelihood of a traffic growth. Through the research of your audience demographics, you will be able to refine advertising to remain relevant to your user interest. One factor that must be taken into consideration is how your advertisement or paid features hinder or highlight the user experience.
Although it can be difficult, there is incredible worth in having an app sponsor. If you are lucky enough to do so, you are relatively set in terms of money. Usually, there is some sort of upfront payment, and a more paired marketing technique in order to gain exposure and profit for both teams.
The process of gaining an app sponsor is not easy, and can take months of meetings and presentations to potential backers.
More than that, it would be wise to ensure that your app, brand and values align with those of your sponsor to ensure the best outcome.
In order to have a successful free app, there needs to be a focus on refining the strategies you use in order to gain profit with consideration to user experience. Whatever monetisation avenue you go down, it is important to monitor your app data and user information to better optimise your techniques. By constantly evaluating and upgrading the techniques you use, you will find the best methods that fit with both brand and users.
Through all of this, remember the purpose of your app. Whether it is meant to entertain your users, or offer them a way to better manage everyday tasks, user satisfaction is key to success. If advertisements, sponsorship or payment notifications get in the way of their experience it can deter users and ruin your credibility. Ensure it is weaved seamlessly within the app, and fits in with the expectations they may have of your brand.