How Do Apps Make Money – A Complete Guide with Methods

Generating ground-breaking ideas for mobile applications is a mammoth task. However, turning your idea into a live application is where the real challenge begins. Moreover, there should be ample motivation to spend time and money creating the app. But the fact that so many people are paying money to turn their ideas into .apk files shows that it has monetary benefits. It is just that not many people know how do apps make money.  

Now, you might be someone who has an excellent idea for a mobile app, but you might not know how it would create a positive impact on your financial situation.  

In this guide, the aim is to teach you how your application can make money. The mobile application development services industry has come a long way since its inception. The potential of earnings from mobile applications makes it not only a secondary source of income for many but also works as a primary income. And yes, even free apps can make you a lot of money.   

As more people try to jump into the industry to make money, these questions are becoming essential to answer before you start the process of developing an idea for your mobile application.   

However, before we start with how it can make money, there are other things to consider that we will discuss first.  

Things to consider about a mobile application  

Every mobile application has a purpose, and you first need to determine it. It is one of the prior decisions you make before selecting the monetization model you will follow.  

Create An Idea 

Firstly, you have to decide the details of the application. To begin with, understand the problem, the probable impact on the market, how this application will serve the customers, and their needs.  

When you have answered all these questions, you can decide on the right way to monetize the application. For example, you can opt for a service or content application model. 

Create a buyer persona  

Your mobile app must solve a problem. That is the only reason people will download it. For example, A video game gives users something to do in their free time or appeals to their passion for gaming.   

Then, understand your target audience who will use the application and pay for the services.  

Go Through Competitor Analysis  

One way to understand how far your application can go and its overall functionality is to do a complete and thorough competitor analysis. Not only that, but you will also find it easier to determine the monetization business plan for your application through this process.   

The analysis will help you determine how to make an app that makes money. 

You can take the time to understand what your competitors are doing and use the information to create a solid business model. To find loopholes in competitors’ processes that you can exploit, you must analyze them thoroughly. This research work will help you in starting your marketing plan.  

Take a Pick of Technologies  

The technologies you use for your mobile application will determine their security level, effectiveness, and overall functionality. Moreover, businesses that rely on older technology like a traditional business mobile app will only get 70% of the amount paid for the mobile application. Mobile applications that use the latest technologies like blockchain get you 85% of the total app profit.   

Choose the correct mobile application development company to make the application because it will decide how well it works. 

Now that you know what, you will need to create the appropriate game plan. It is time to understand how you can earn from these mobile applications. 

How do apps make money – 6 methods of monetizing your application.   

The pricing strategy of an application does make a difference in how much money will stop, so let’s get familiar with how do apps make money for businesses. 

In-app advertisement   

Have you ever asked yourself how do free apps make money?  

It is through advertisements. It is a highly secure method of getting money without charging your users. The users can download and use the application for free. However, every time a user interacts with the advertisements on the application, you get money for it.  

It is a revenue model that is highly profitable, and it is considered one of the best methods of earning money through mobile applications.   

You can choose how or what kind of advertisements you show on your application. For example, there are banner ads, native ads, videos ads, etc. Now, the range is very diverse if you are wondering how much an ad impression can bring you. Depending on the ad, it can go as low as 0.10 dollars per impression to as high as 10 dollars per impression. In-app 

In-App purchases and freemium model  

If you do not want ads on your application because they can annoy customers and make them leave, then opt for the freemium model.  

In this model, the application is free to download and use. However, you will need to make purchases with real money for specific virtual elements. It is how apps make money without showing ads. 

It can include various benefits, like extra lives, gears, no ads, game currency, gated app content, etc. 

The freemium model does offer your potential customers a free trial and lifetime use. However, they must make purchases if they want to enjoy the entire application. It is an excellent method to get traction and more downloads, and as people are already using your application for a long time, they are more likely to take a plunge and pay for premium services. 

Gaming mobile applications use such tactics to get sales. One prominent example of success here is Clash of Clans, as, at one point, it earned 1M USD daily only through in-game purchases. 

Subscription (Software-as-a-Service) model  

We all have become overly familiar with the subscription model over the years. Some subscription services users use daily are Netflix, Amazon Prime, and Peacock. 

The subscription model is ideal for cloud-based services that include audio or video content. It is among the most lucrative monetization models you can use on your application. The fee you charge can be weekly, monthly, or yearly. Hence, Spotify, Audible, and other streaming services deploy the model to earn an income. 

However, the subscription model is not for everyone. Currently, very few businesses are using the monetization model as people are unwilling to add another regular bill to their current spending. 

Hence, the subscription model is among the least used ways apps make money, and for a good reason. 

Sponsorship Model 

Sponsorships are another method to earn money on mobile applications. However, you will only get sponsorships when the application has enough footfall. Businesses want their product to reach the maximum number of people. So, look for mobile applications that create content in their niche but are not a direct competitor. Then, they offer sponsorships where you can create your content and at the same time promote their product on the mobile application.  

There are two ways to run a sponsorship model: 

If the sponsored post leads to a sale, then the revenue is divided into equal parts.  

Set a sponsorship fee monthly. 

Weather channel apps use the model to survive in the market. 

Crowdfunding Campaign 

One of the most profitable methods to monetize apps for free is through crowdfunding. It includes asking people for money for your idea and getting them to invest in it.  

As a method, it works two-fold. For one, you will not have to share ownership of the product with anyone else. Instead, you can offer clients who invest in creating the product a free copy. You not only get the money to turn your idea into reality, but you also get the first users of your product through the campaign. Moreover, it helps you understand whether people truly want your product to exist or not. 

Some applications that allow you to publish ideas and get funding include CrowdFunder, KickStarter, and Fundable.  

Many applications like the Hello Earth game came into existence through the crowdfunding campaign. The idea creators were able to hire app creator company through fundraising. 

Affiliate links  

Affiliate linking is much like sponsorship, but the difference is that mobile application owners can give advertising rights to several interested parties. It is among the most effective methods of getting appropriate income if you do not have one wealthy sponsor to back the cost of mobile application development services. Then, put the reference links of the users on the application for people to see.  

Depending on your negotiation, you will get a percentage of the income from any sale through your application. If you have a niche and suggest products people will buy, it can become a great source of income. However, it will depend on the conversion rate you offer to the businesses. 

Bonus Method: 

There is one more way to earn money, however, many would believe it to be unethical, though it is legal. 

Collecting and Selling Data 

Apps need to collect significant users’ data, and many businesses and research centers need this information.  

Hence, many mobile applications use the information to sell user behavior data and make good money out of it. The information they share can include email addresses, personal preferences of users, and social media accounts.  

Companies can sell the data they collect with permission to other companies and researchers. Moreover, businesses can use the raw data for their use. 

Instagram, for example, uses raw data to determine the best advertisements to show to individual users. It uses the relevant data and sells the service of displaying ads to others. It is a profitable business model that gets revenue through various sections. 

Distribution of Paid and Free Apps 

Not all businesses offer a free application for use. Several companies can give you a free one-week/one-month trial but then ask for payment before using the service. Other companies offer a money-back guarantee to users who opt for their services. However, there are more free applications online than paid ones. And the simple reason for this fact is that people are unwilling to pay for a service they are not familiar with. It is only after they have used the service that they are willing to make any type of transaction.  

The percentage of paid apps remains at massive disparity at any given time. It is a free app with paid models that get higher downloads and more money. 

Now that you understand how to get money on apps, it is time to wrap up. 

What to Expect in the Mobile App Development Industry in the Future? 

Now that you know how do apps make money, it is time to look at their future. Mobile applications have seen significant revenue, and that is likely to continue in the future. Gaming applications seem to earn the most money. Now, the world is getting ready to introduce technologies like Augmented Reality, AI, and Virtual Reality, changing how we have experienced the technology. 

In essence, the potential of the mobile app, when made through the correct app development firm, is endless.  

We are a leading mobile app development company in Canada and several other countries. It has allowed us to leverage the latest technologies to create bespoke apps for several businesses. Contact us to know more about our services and hire us to create the best application for you.