Ours is a mobile-driven age. Modern people hardly let their smartphones out of their hands, whether they are going by public transport, waiting in the queue at the dentist, or even just walking along the street. Thanks to applications “living” inside smartphones, we can participate online in a wide range of activities — from work and studying to entertainment and shopping.
Given such reliance of contemporary civilization on this IT product, it is no wonder that the mobile app market is considered one of the most profitable business niches nowadays. However, mouth-watering prospects of high revenues in this realm may seem a low-hanging fruit, budding entrepreneurs should have a clear vision of how to make money with mobile apps before they invest in creating and launching their first mobile app. This article aims to manifest the main ways apps make money for their creators and gives advice on choosing the best app business model for your mobile software piece.
Table of contentHow Do Apps Make Money?: World’s Trends6 Proven Strategies for Getting Profit from an AppHow to Choose the Best App Monetization Model5 Common Monetization Strategy MistakesZooming in on the Most Profitable App TypesTop App Monetization Tools 2022Consider Weelorum Your Trusted PartnerFinal Thoughts
How Do Apps Make Money?: World’s Trends
If you want to know how app developers make money, you should first look at the statistics that serve as a key to understanding the state of the industry today and global trends that will shape its contours in the nearest future. As recent surveys claim, the App Store has almost 2.2 million iOS-powered apps to offer, whereas Google Play can boast of an even greater collection of over 2.65 million Android-based items.
These numbers are tremendous, and they generated an exorbitant figure of 230 billion downloads last year, which is only likely to grow for years to come.
If app creators were paid per download, all of them would be wallowing in money. However, as 2022 data shows, 97% of Android apps are free to download, with 91% of iOS apps trailing not far behind. Evidently, offering a paid download is not about how to earn money from an app in the cut-throat competition symptomatic of the contemporary app market. Instead, app owners choose other methods of monetizing their brainchild. Then, how do apps earn money without charging users upfront for their download?
6 Proven Strategies for Getting Profit from an App
Here are the most widespread ways to make money from apps.
1. In-App Advertising
Including ads in your product is the most popular method, utilized in 37% of solutions, to monetize them.
This sector is continuing to grow annually by 4%, yielding an 8.4% increase in income between 2021 and 2022. In-app advertising is an umbrella term covering several types.
- Native ads. Typically, users don’t like ads, so they try to skip them as soon as possible or block them altogether. If you manage to create ads that don’t look like ads at all and don’t hamper the app’s flow, the odds are that people won’t treat them in the usual way. And native ads excel in it. They represent the most organic approach to presenting adverts, which consists of the seamless integration of an ad into your product as an element of a publisher’s content.
While opting for this ad type, be sure you don’t fall for adware. This software throws ads to the gadget screen but has an adverse effect on the performance of the app. It clutters the UI, messes with search engines, infests notifications, and generally eats up the system’s resources. Besides, it may compromise the app’s security, exposing sensitive data to unauthorized people. That is why, make sure you stay away from such malignant know-how.
- Banner ads. These are pictures with texts and images that pop up in a certain part of the screen to be most conspicuous to viewers. To make this ad format less obtrusive and more effective, you should aim for their personalization so that people pay more attention to them.
- Video ads. Such promotional clips accompanied by loud sounds are included in an app and can’t be skipped. Typically, they contain a link following which users can download the product. Although they provide a high level of customer engagement (especially when they offer bonuses), they are rather annoying and should be used carefully.
- Interstitial ads. This type of ad is designed to catch the users’ attention in the most non-disturbing manner. They are shown across the entire screen but appear while the app is loading, on a pause, or between game levels. Unlike video ads, these can be closed or tapped. Interstitial ads are also a tricky instrument that requires a well-thought-out implementation strategy, especially in terms of the frequency and timing of the ad.
- Incentivized ad. This ad model is also known under other names (value exchange, sponsored, or rewarded) and is based on the system of rewards a viewer gets if they follow a link or do something else the advertiser wants them to. A typical per-ad bonus is not some tangible asset but a sun in virtual cash, a discount on the product, or an extra life for your character (if it is a game app). This system proves to attract more converts (27% on average) as people enjoy getting some perks here and now and not sometime in the future.
2. Crowdfunding Model
When you need to raise money, this scheme is just what the doctor ordered, and that is why cash-strapped startups often employ it. Several crowdfunding platforms (GoFundMe, CrowdFunder, and Kickstarter, to name a few) can help you in this endeavor. Yet, how much a mobile app will earn through this model is a question that has no definite answer, so it is advisable to utilize this model as a supporting revenue channel.
3. Sponsorship Model
This method is all about cooperation with other brands your target audience is well aware of. This category includes influencers your product users respect in the modern digitized world. If they do, they are likely to listen to and believe what their cult figure says. Once you find such agents (celebrities, opinion leaders, or popular bloggers), you can offer them a barter deal when in exchange for discounts or other benefits, they will promote your app. This kind of model doesn’t require any heavy investments and can come as a variety of incentivized ads.
Among other monetizing ideas, this one commends itself to cloud services, news portals, and streaming apps. How much money do apps make by employing this model? Quite a lot, and their earnings expose a robust growth pattern.
As a rule, they offer a minimal free version (known as freemium) with a limited number of features or for a short period only and offer access to a full-fledged app for a monthly or annual fee.
Most electronic newspapers (for instance, The New York Times and The Wall Street Journal) rely on this scheme. However, for game apps, it is still a largely untapped monetization channel, although some studies claim that it can yield twice more money in comparison with in-app ads.
5. Affiliate or Referral Marketing
In this model, it is not you who search for third-party agents to promote your product but act as a promoter for third-party goods yourself. Many blue-chip companies in the IT industry (like Amazon) set up affiliate programs to turn referral marketing into a regular income source. There are several pricing schemes practiced in this domain.
- Cost-per-action. Also known as pay-per-action or pay-per-performance, this method presupposes payment for the number of users downloading an app, signing up, making an in-app purchase, or doing other things the advertiser expects them to.
- Pay-per-click. Here, advertisers pay for every user who clicks an ad to be taken to the destination the advertiser wants. While being quite foolproof to launch, it cannot be that cost-efficient for the affiliate because people may sometimes click an ad by accident.
- Cost-per-view. As is clear from the name, you pay for every view of a video ad. The view counts only if a user watches the ad for at least 30 seconds (or all of it, in case it is shorter) or interacts with it. In this way, advertisers avoid paying for instances when a person closes it too swiftly or skips it after clicking.
- Cost-per-impression. Its other name is cost-per-mille (the latter word in Latin means “a thousand”) gives away the essence of the model: an advertiser pays for thousands of displays of the ad. Conventionally, it is good for flexible strategies envisaging upscaling.
- Cost-per-install. Here, only downloads count, which makes this model one of the priciest ones.
6. Data Collection and Selling
In the process of functioning, software solutions collect heaps of personal data, and apps are no exception. Such information is typically related to their demographics, social media accounts, and user behavior. Many researchers and enterprises would give anything for such dossiers, which gives you an excellent chance of capitalizing on them. Alternatively, you can keep the data for your own use to serve as actionable insights in the shaping of marketing strategy, consumer segmentation, and other activities aimed at enhancing your sales and augmenting the UX of your app.
As you see, you have some solid options as to how to earn money with an app. But which ones should you pick?
How to Choose the Best App Monetization Model
Before diving into how to make money with mobile apps, you should follow this foolproof roadmap.
Step 1. Consider Your Goals
If you decided to launch an app just because someone thought it would be a great idea to have one, the project wouldn’t fly. Before diving headlong into it, you should have a clear understanding of what you are going to achieve with your new app (the so-called discovery phase). This ultimate purpose will largely determine the monetization techniques that you will select. In case your major objective is quick income, in-app advertising will be the optimal choice. But once you already have an app and just plan to expand your audience, the subscription model will suit you to a tee.
Step 2. Know Your Target Audience
The project goal is directly related to the target audience that will use your app. This should not be just identifying the circle of people that will operate your product. You should discover their needs, preferences, pain points, and motifs that condition their user behavior. Plus, you should be aware of their financial state and readiness to pay for products or services. All these factors (especially the latter two) dictate the choice of a monetization approach.
For instance, gamers are sure to wait the necessary 30 seconds of the sponsored video ad to get game bonuses. Yet with, say, IT professionals who make use of a productivity tool, this trick won’t work.
Step 3. Look at Your Competitors
However unique you may consider your future app idea, there is a slim chance that a similar product doesn’t already exist in the niche. Checking on such solutions is good in two ways.
First, you tap the market and see how crowded it is. In case you have hundreds of apps to compete against, perhaps it is wiser to re-consider your initial intention and change the game plan. Second, you will be able to look at how app creators make money and take their approach into account as a model to follow.
Step 4. Identify the Value
When looking at the upsides and downsides of your rivals’ solutions, you can see how your product is different from theirs. Being more advanced or solving the problem better is a must-have for a new app to conquer the market. Without evident fortes, monetization of such an app (even if it is free) will be a tough road. To make sure your product outstrips the competitors in the value it brings to users, you should build an MVP first. Obtaining feedback will allow you to fine-tune the final product with an eye to the test users’ comments and wishes, supplying the app with nice-to-have features they would like to see in it.
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Step 5. Select Assessment Metrics
Whatever monetization method you will opt for, it is mission-critical to determine the indices that will testify to the success or (God forbid!) failure of the chosen approach. The KPIs that will gauge the monetization strategy efficiency depends on the business goal your app is meant to reach. So you can adopt the number of downloads, conversion rate, or average spending as a measurement unit and be ready to trace it while your app is in the market. If the numbers are low or don’t show the expected growth, consider changing the monetization method.
While following this algorithm, it is important to avoid mistakes many app creators make.
5 Common Monetization Strategy Mistakes
What are the typical bad calls related to mobile app monetization?
- All at once. It is tempting to utilize as many monetization techniques as possible. Yet, more doesn’t equal better. In this endeavor, a simple addition of several methods doesn’t yield the augmented sum. It is better to opt for the most appropriate monetization strategy that is likely to render the best result in your particular case.
- Too frequent ads. Annoyed users is what you need least of all, but many app creators forget this simple truth and pepper them with ads way too often. You should figure out the optimal frequency of ad appearance and try to make them come and look as natural as possible.
- Neglecting promotion. Counting on people to discover your app themselves spells a surefire failure of the app as a business project. Even the best monetization practices won’t help you a lot if it stays out of sight.
- Asking too much. Be reasonable in defining your pricing. Trying to rip off, you may end up with an empty coffer. But the opposite is not really better. Aiming too low, you will hardly be able to go big-time in this highly competitive domain.
- Ignoring analytics. A monetization policy is not something defined once and for all. You should measure its efficiency regularly and modify it in case the KPIs aren’t satisfactory. If they still stay low after some time, never doubt to overhaul the strategy completely.
Even if you manage to escape these pitfalls, you can’t be 100% sure your app will hit it big until you study the market and identify app types that are likely to yield the most profit.
If you want to avoid mistakes,
be sure to seek help from professionals.
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Zooming in on the Most Profitable App Types
What are the categories of mobile app solutions that have the greatest popularity among users?
By all accounts, this is the most wanted app type by far.
Since ancient times, people of all ages have liked to play games. In our profoundly digitalized world, the games people play are mostly those they have on their mobile phones. And it is your chance to capitalize on this passion. In this sector, you should, first of all, decide on the game genre.
According to data.ai, the most revenue-promising mobile games are simulations. They range from sandbox to idol-training games, but all of them manifest a spike in consumer spending — 57% for Roblox or 110% for Uma Musume Pretty Derby. Strategies (aka march-battle games) aren’t much behind, with the spectacular 32% growth. Somewhat more modest (21%) is the surge in role-playing games, although some of them experience an overwhelming boom indeed (for instance, Genshin Impact grew by 500%!).
Yet, chasing success, you don’t have to go for intricate plots and breathtaking visual effects. Sometimes, a simpler game like Coin Master can beat their more sophisticated rivals by a mile.
2. Social Apps
In the 21st century, most of us (4.26 billion as of 2021, to be precise) lead two lives — one physical in the real world and one virtual in the digital one. Such tremendous popularity of social networks urges astute entrepreneurs to emulate the success of Facebook, Instagram, or Twitter and come up with an app that would bring people together. However, with the advent of LinkedIn and TikTok, the niche seems to be oversaturated. Can you somehow worm in?
In fact, yes. Today, users go for avatar social apps (like Litmatch, REALITY, and ZEPETO), communicate via chat apps (Discord is a good sample of it), or spend a lot of time on video streaming platforms (for instance, Bigo Live). Therefore, it is a good chance for startups to try themselves in this domain.
3. Entertainment Apps
Modern people are hungry not only for communication but for amusement as well. The best proof of it is the 1+ billion downloads of entertainment apps last year, where viewers watch films, listen to podcasts, and scroll through memes. Here one must mention such behemoths as YouTube, Netflix, and Disney+ that reap multi-billion revenues on ads and subscriptions.
4. Health and Fitness Apps
The vicious onslaught of the global pandemic brought the issue of health to the limelight and caused a rapid rise in the popularity of apps enabling users to take care of their physical and mental well-being. Besides, being unable to attend gyms, many people were forced to keep fit without leaving their COVID-proof lodgings. All these factors explain the popularity of meditation (Calm is a good example), diet (like MyFitnessPal), and fitness (for instance, Strava) apps, to say nothing of telemedicine solutions.
5. Dating Apps
Despite the ability to stay connected to the whole world, contemporary people still feel quite lonely among this virtual global crowd. That is why they resort to high-tech tools to meet the person they would like to spend time with. This mobile dating drive has manifested a 95% growth within four years, bringing companies in the field over $4 billion last year. That is why making an app like Tinder, Bumble, or Azar with advanced functionalities is likely to be a wise business move likely to generate considerable profits.
Whatever app type you are going to launch, its monetization can be greatly boosted if you leverage tools specifically designed for it.
Top App Monetization Tools 2022
Among dozens of solutions available in the market today, there are some that excel at their monetization mission.
- Facebook Audience Network. This tool enables app monetizing via targeted ads and can be used for both Android- and iOS-powered products.
- Apple Search Ads. With two versions (basic and advanced), the tool can be employed to raise products to the top of the search in the App Store.
- Amazon Advertising. It targets Amazon customers by offering ad solutions aimed at attracting and engaging them.
- AdMob. This tool, designed to increase in-app purchases, offers a set of technologies to obtain high-quality customer insights.
- StartApp. It focuses on prioritizing ads and enhancing click-through rates.
- Fyber. Making emphasis on rewarded and video ads, this tool serves as a common marketplace for connecting advertisers, users, and developers.
Given the roster of options, it is clear that the right choice can be made only by IT experts.
Consider Weelorum Your Trusted Partner
As a seasoned vendor with dozens of completed projects under our belt, we at Weelorum know what software to use for effective free app monetization. Yet, the scope of services we extend to our clients isn’t limited by this task. We offer end-to-end mobile app development that covers all aspects of this endeavor — from ideation and discovery to after-launch support and maintenance.
Our company has a complete staff of experts for the implementation of an IT project of any scope and complexity. They possess the necessary expertise to work with cutting-edge technologies, which they apply to achieve maximum business outcomes within stipulated time and budget. Contact us to take the first step of the journey toward the mobile app of your dream.
There are billions of mobile apps in the market, and most of them are free to download. Such a situation has nothing to do with the charity, since their creators know a dozen ways of how to make money from mobile apps — from placing in-app ads to selling data collected by the software. If you choose the right monetization strategy and utilize the proper tools, you will be able to bring a stream of revenues into your coffers.
How do apps make a profit?
Customers must pay to download them, but the lion’s share of apps are free. Their creators resort to other means of monetizing them.
How do I make money using app development?
The most popular monetization method is to insert adverts of different types into the apps.
Do free apps make a lot of money?
As a rule, they do, but the sum varies depending on the target audience, the type of app, and whether the chosen monetization strategy has been successful.
How do free apps without ads make money?
Their owners can offer a subscription to customers, cooperate with affiliate partners, sell customer-related data, find sponsors, or go for crowdfunding.