While many people have no idea that free apps can make money, those that do wonder how. Well, you need to know how to capitalize on your new users. Leverage the free downloads and you will make an even better revenue stream than paid apps.
When you have priced your app, you will make less money compared to a free app with in-app purchases. So, how exactly do free apps make money?
With in-app purchases, users unlock features or buy extra stuff like coins or gold. Among the top ten grossing apps in 2011, 6 of them were free. They drove millions in sales through in-app purchase.
Your in-app purchases can be one time, where one unlocks a feature or ongoing where a user buys a certain number of coins for a specific amount. You could earn an outstanding amount, but your app should also be incredible to get more users.
If you are in the news feeds market, you can set up subscriptions, monthly or otherwise.
Freemium upsell requires you to create two versions of your app; a free one and a paid one. You can pair the Lite and HD/Regular versions together. Include a link to your paid app in your free app. When users click the link, it will redirect them to the iTunes store.
People download your free app, they get an idea of what you are offering, and if they like it, then they will buy the full version which has more functionality and game play.
Ads can be quite lucrative but to make them worth your while, you will need a significant amount of traffic. With a lot of traffic, you can have a stable source of revenue. The largest ad networks are Admob and iAds—but iAds pays better.
You may only get like $2 for every 100 downloads, but it mostly depends on how many users will click on the ad. Ads may not pay much, but you can get a significant amount if you market your app thoroughly.
Cost per install is a new marketing strategy, and it works like cost per acquisition (web marketing). As the name suggests, you pay for every install that you get. A good example is Chartboost—a third party with software that you install in your app. When you are playing a game, you will always see a “Get it now” pop up that prompts you to install another game.
A developer looking to promote their app will pay Chartboost $3 for every user that installs the app through Chartboost. If you can provide that install, Chartboost will pay you, say $1. Incorporating these CPI companies is not difficult, but you need to talk to your developer before you do it.
Finding a sponsor for your free app is a sure way of earning yourself money and gaining brand credibility. If it’s a new app, you can white label it for a certain amount, and if it is an existing app, you can update the graphics to their brand for whatever amount you decide.