How Free Apps Make Money_ 6 Tested Strategies That Works

How free apps make money

After you have spent so much of your time and money on developing your mobile app, it’s finally time to launch your amazing mobile app in the app stores. You’ve created an amazing app with so many unique features and you’re pretty sure that users will love it. You’ve already followed the ‘pre-launch’ marketing strategy to create a pre-launch buzz and you’ve also invested your valuable time on creating videos of your mobile app.

Now it’s finally time to make some money. Before you launch your app you have to decide whether you will be launching a free app or a paid app. This is the crucial part, and yet, some developers, as well as marketers, don’t truly understand the importance of doing research before making this decision. Most developers think that because they’ve developed a quality app people will definitely want to purchase it, so they end up launching their mobile app as a free app. But they forget to take into account a number of key reasons why launching a paid app is not such a good idea:

Why You Shouldn’t Charge Users to Download Your App: 

  • Very few downloads

Majority of the users don’t download paid mobile apps even if they have a low price.

  • Limited monetization options

If users are already paying for a mobile app and you add extra monetization options, users will get annoyed and probably abandon your app altogether.

  • Higher User Expectations

You will have to work extra hard to make sure that your app functions flawlessly, after all, people are paying for your app.

  • Impact on Ratings

When users review a free app they tend to be less critical as compared to a paid app. So if you opt for the paid app, it will be comparatively hard to build your brand’s reputation.

After reading the above points you might feel inclined towards launching a free app, but, you obviously will be wondering ‘how you would possibly make money with a free app. Read on to find out how you can launch a free app and also make real money.

6 Tried and Tested Monetization Strategies for Free Apps

In-App Purchases

In-app purchases can be availed by mobile app users to experience the premium features of an app. This strategy allows users to add certain features in their app that will increase the complexity and improve the user experience. For example, if you have a gaming app and every hour a player gets ‘2’ lives. Most players will definitely wish that they could get some more lives to play the game. Developers can take advantage of this situation and offer unlimited lives for an entire day for just 5 bucks. You can also provide premium features and game boosters to enhance the experience of your app.

It’s important to note that not everyone will spend on in-app purchases. You will have to find a way to make your app really engaging so that users get hooked to your app and they keep coming back for more. Games do an excellent job while working with this strategy, they know exactly how to entice users to upgrade to premium features to improve the gameplay.

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Source: Appverticals

This is one of my favorite free app monetization strategies. I personally think the Candy Crush gaming app does an excellent job while utilizing this marketing strategy. Candy crush offers its players paid lives, tasty game boosters, and extra moves.

Furthermore, users also have a choice to continue playing the game for free or invest some money for the premium experience.

After in-app purchasing, advertising is the simplest app monetization strategy. All you have to do is run ads on your mobile app and get paid from that ad company. Studies reveal that currently, 7 out of 10 mobile apps use in-app advertisements to make money. There are 5 types of ads that you can run on your mobile apps, I’ve rounded them up below:

  • Video Ads

Word play

Video ads are played in return for an in-app reward. For example, the ‘Word Story’ app provides its users with extra coins for watching an ad.

  • Banner Ads

These ads appear in various sizes and are displayed at the top or bottom of the screen. Banner ads are less intrusive to user interaction with the app and are directed towards a targeted audience.

  • Native Ads

Native ads are created to fit in with the main concept and design of an app and naturally appear within the app. Native ads aim at promoting a product or a service.

  • Interstitial ads

Interstitial ads are full-screen pop-ups shown at natural app transition points like pausing a game or when the app is opened or closed. Users can opt to skip this ad if they don’t feel like viewing it. The main difference between banner ads and interstitial ads is that ‘interstitial ads’ cover the entire screen and look more engaging.

  • Incentivized Ad

Incentivized ads are created to develop a positive feeling for the user. Users love getting rewards but hate watching advertisements. But, if they get rewarded, then they would be more willing to perform certain tasks. Usually, Incentivized ads are online surveys, newsletters, app downloads, etc.

Email Marketing

Even though email marketing is a very old technique, if used correctly, it can generate very powerful results. It’s fairly easy to implement and it works best when you ask email addresses of customers during the signup process. As a result, you can collect emails and effectively send them notifications and guide them to other products and services that will allow you to make money. Email marketing is especially helpful if you’re facing a reduction in your user retention. With the help of email marketing mobile app development companies send follow-up emails to re-engage your users and also create a user-interest in their products and services.


Below I’ve rounded up some methods to help you collect email addresses.

  1. The easiest way is to simply ask users for their email using a pop-up box while signing up or making a purchase.
  2. Another very easy approach is to enable ‘login with Facebook’ and then collect the user’s email. But, don’t forget to notify the user that you plan on sending them emails with their email registered on Facebook.
  3. If you don’t intend to use the above two strategies, you can always use some third-party SDK tools to collect emails for you.


Sponsorship is the process of sponsoring or promoting another company’s products or services in return for money. Suppose you have an eCommerce app that sells sneakers, and another company wants you to sponsor their t-shirts. So the other company would get brand awareness, audience outreach, and more sales, and in return, you would make some money.

Sponsorship can be a very powerful app monetization strategy if the app publisher targets the right audience and only considers sponsors who have the same target audience.

Physical Purchases and Merchandise

E-commerce businesses use free mobile apps to sell products and branded merchandise. These products could be toys, pants, cell phone cases, etc. With the help of affiliate marketing free mobile apps can make a lot of money. The ‘Angry Birds’ gaming app is the perfect example of an app that got a boost in its revenue from branded merchandise.

people shopping

Amazon also provides the ability to generate revenue by creating a Merch self-service program that enables a mobile apps company to sell branded t-shirts from within the app. It’s a very easy program that allows the app owners to create and sell amazon’s branded items within their app. The production, delivery, selling, and all other logistics are managed by Amazon. All you have to do is promote the products and you will get your share of the revenue. The entire process is very simple and easy.


Another popular method used to make money from free apps is by ‘Crowdfunding’. In this method, companies share their ideas on platforms like CrowdFunder, AppsFunder, and Kickstarter to get donations and funds from investors to develop and promote their mobile apps.

There are four types of Crowdfunding depending on various business requirements:

Equity: Its primary focus is on companies in which investors provide funds for shares or complete ownership of a company.

Rewards-based: In reward-based crowdfunding, backers contribute funds in exchange for rewards and incentives.

Donation: In this type of crowdfunding backers donate funds in return for small incentives or nothing at all.

Lending: Investors give funds with an agreement that the loan will be repaid with interest.

Wrapping Up

There are numerous mobile app monetization strategies, but so far in-app advertisements are the most popular. After in-app ads, in-app purchases and subscription models are the highest-earning monetization models. At the end of the day, the strategy you adopt entirely depends on the type of app that you have developed. Before you decide on a monetization strategy, you will have to find the following information:

-What value your app will provide to the users

-Who will be your target audience

-Who is your competition

With the help of the above information, you can create a well-planned business strategy for customer satisfaction as well as your monetary gains. Above I had rounded up 6 successful monetization strategies for free mobile apps. And by now you should have a clear understanding of how free-apps make money and the different monetization strategies that work wonders.

Author Bio:

Khloe Hunter is a Digital Marketing Executive for Appverticals an expert mobile application development company. She has expert writing skills and an extensive experience in blogging as well as marketing. She loves to write about new & upcoming technology, mobile apps, web app, marketing and business.


Khloe Hunter

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