How to Make Money From Mobile Apps

Everyone wants to learn how to make money by creating an app for free.

Mobile apps are an excellent way for business owners to improve their operations. They are also an excellent platform if you believe your idea will be the next big thing, similar to Instagram or Snapchat.

Whatever your motivation for developing an app, I’m sure you have something in common with other potential developers.

You all want to Make Money From Mobile Apps. However, planning your app revenue strategy before you begin app development is critical. Without establishing your app monetization models, you risk wasting time and money.

First and foremost, I applaud you for conducting research before beginning to develop your first app.

I’ve seen far too many people who were naive enough to believe that simply creating an app would generate income. That is not correct.

Here’s an example. Will you automatically make money if you start a new business? Certainly not.

It all starts with an effective monetization strategy in mobile app development and other businesses alike. Not sure where to start?

Fortunately, you’ve arrived at the correct location. As a mobile application industry expert, I have the knowledge and experience to point you in the right direction.

How Does an App Make You Money?

Throughout this guide, we’ll discuss the best app monetization strategies and provide examples. However, in general, apps make money in the following ways:

• In-app purchases
• In-app advertising
• Sponsorships
• Affiliate links

Unless you’re selling a product, service, or subscription, you’ll most likely make money with your app through advertising or affiliate programs. Even if your app is free and you don’t charge users to download it, you can make money with these methods.

App Monetization Strategy: What Are the Most Effective App Monetization Methods?

Apps account for 90% of mobile device time.

Consumers clearly enjoy using apps, so the opportunity exists.

The key is determining how to select the ideal app that will pique user interest and ultimately result in downloads.

However, you should be aware that downloads do not always directly translate to dollars.

Building an app is costly, and there will be hidden development costs along the way.

So, before you invest all of your money in your new app idea, make sure it will generate a profit.

Here’s what you should know.

App Monetization Models: In-App Purchases vs. a Mobile Site

For those of you who already have a business, I’m going to assume that you have a website.

Hopefully, that site has been optimized for mobile devices (for your sake).

Websites that aren’t mobile-friendly will turn visitors away, so if you haven’t already done so, make it a priority.

Let’s talk about the customer experience and how it relates to their purchasing habits now. This will be crucial in your app monetization strategies.

Do you believe that users prefer to purchase on a mobile website or directly through a mobile application?

Apps triumph. This is why.

The most common response from respondents was convenience.

The other top responses reflect convenience and increase user satisfaction.

Your customers expect everything to be done quickly.

As I previously stated, speed can be an issue if your website is not optimized for mobile devices.

However, this is not an issue when users navigate through your app.

Consider your app to be a business. The simplest way to make money is to keep customers satisfied and returning.

Aside from speed and convenience, a mobile purchase’s checkout process is also much simpler.

In-app purchases in free mobile apps are charged to the customer’s credit card on file with the app stores (Google Play Store or Apple App Store account). This is convenient for app users because they do not need to enter credit card information to make in-app purchases.

Consider how simple it is to purchase something within an app if your customers have Apple Pay enabled on their devices.

With a single click, you’re done. That is simple for the customer. That is how free apps generate revenue.

How does this differ from a mobile website?

We’ve already established that speed is important, but let’s pretend your mobile site is already fast.

What else could slow down the customer?

They will have to enter all of their information because their cards and accounts will not be linked to your mobile site.

The customer must either login to their PayPal account or enter credit card information.

Overall, it’s just a longer process that causes the user more trouble.

Furthermore, typing all of that information on a small screen leaves room for errors, which can further slow things down.

Don’t misunderstand me. I’m not saying your mobile site shouldn’t have a checkout page or ways for customers to pay with credit cards.

All I’m trying to say is that in-app purchases are preferable.

The platform on which you launch your app is also important.

iOS vs. Android In-App Purchases

Examine the distinctions between iOS and Android purchases.

The average purchase per user on iOS platforms is more than twice that of Android.

That doesn’t mean you should pick one over the other.

While iOS has a higher average purchase, Android dominates in terms of total users.

There were 432 million smartphones sold in the fourth quarter of last year, according to data from the NPD Group.

The iOS software was installed on 77 million of the 432 million phones, while the Android platform was installed on 352 million.

The two platforms combined for 99% of the market, but Android accounts for 81.7% on its own.

Having said that, 16% of Android developers earn more than $5,000 per month from their mobile apps, while 25% of iOS developers earn more than $5,000 from app earnings.

App Monetization Strategy For Physical Products

We briefly discussed this earlier, but I wanted to continue to elaborate.

To successfully sell consumable products through an app, you must think like a mobile shopper.

In the last six months, 79% of smartphone users purchased something online. This figure rises year after year.

You are not required to become the next Amazon. I’m going to show you an example of a lesser-known company that understands how to use their mobile app to increase sales and profits.

If you sell a physical product, you can follow their lead and apply their strategies to your app.

I’m referring to the company Touch of Modern.

Mobile devices account for 70% of the company’s. Approximately two-thirds of those sales come directly from their app. So, how do they do it?

Each month, approximately 150,000 to 200,000 users download this app. 57% of their customers are repeat customers.

It’s a winning formula when you can focus on both customer acquisition and customer retention at the same time.

Touch of Modern’s success is due to their checkout flow.

When you download the app, you’ll create a profile that saves your information securely.

Customers can then start shopping as soon as they open the app.

They employ a straightforward navigation screen. Customers can easily search for and scroll through items of interest.

When they find something that piques their interest, they can click on the product to learn more.

The user will now see a more detailed description of the product as well as a larger photo.

They can add what they see and read to their shopping cart with a single click if they like what they see and read.

Once in their cart, the customer can check out with a single click.

That’s all.

Their app streamlines the shopping and purchasing process into three simple steps.

When compared to a mobile eCommerce site, there is significantly less friction here.

Furthermore, Touch of Modern can communicate with its customers more effectively through the mobile app.

To encourage more purchases, they send app users notifications with daily deals and discounted items.

In the end, this strategy works.

If you already sell products on your website and mobile site, you can increase your revenue by developing a mobile app.

Monetization Methods For Free Apps vs. Paid Apps (Free App Monetization Strategy)

Another thing to think about is whether or not you’ll charge users to download your app.

On average, you would obviously make more money per download.

It may appear to be a nice way to make some quick money, but if they have to pay, you may turn them away.

The Apple App Store offers 90% of its apps for free. Free apps generate revenue.

That doesn’t mean you have to take that path.

Paid apps are an excellent way to increase customer loyalty. They may be more likely to use it and make additional purchases if they are willing to make the initial purchase just for installation.

However, if you’re a well-established brand with retail channels and existing customers (such as Touch of Modern), it’s probably in your best interest to make your app available for free.

People download those apps to save money and get discounts, not to spend more money just to be able to shop.

Keep in mind; your app will also have competition.

So customers realize that they can find something similar and potentially better for free, rather than paying to download yours.

If you’re offering an app for free, you can find other revenue channels. Check out this data from Statista:

You may get a lot more downloads with free apps, but the users may be less engaged. There is no commitment if they do not pay. They may download your app, try it out once, and never use it again.

While they may appear discouraging, you should not take them seriously.

It costs you nothing to have users download your app only to never use it.

Sure, you’d prefer active users, but it’s not going to hurt your business in the long run.

If you’re debating whether to release a free or paid app, I’d recommend a free download.

It will increase your chances of getting more downloads and earning money from other sources.

Here’s a look at the ad CPM rates in the United States for various mobile app advertisements.

If you can sell advertising space on your app, there is definitely money to be made.

Keep in mind that these are just averages and are not set in stone.

If you have a large number of active daily users and your app grows in popularity, you can negotiate a higher rate with advertisers.

Freemium Upsell

Free apps generate revenue. The freemium model, which is popular in startups and gaming apps, is always an option. The free version of your app may include display ads, pop-ups, sponsorships, video ads, banner ads, or other ways to generate app revenue from your target audience using this method. You can earn money by charging top advertisers a monthly sponsorship fee.

However, offer paid versions of the app with premium features such as removing mobile ads. The ad-free version provides a superior user experience.

Some of the most successful apps make money by selling premium app content. Others have a free app version and a paid app version.

Here’s an illustration. Consider how a popular dating app accomplishes this on their platform. You’ve probably heard of Tinder. Users can use the app’s basic functions for free after downloading it. However, they provide premium content and functions in exchange for a monthly subscription.

The concept is extremely simple. Users create an account and upload photos of themselves.

They will see photos of other users who match their search criteria based on their location and preferences (age, gender, etc.).

They swipe right if they like another user’s profile. They swipe left if they don’t.

When two people swipe right on each other, they become connected and can begin a conversation.

Everyone who downloads this app will have free access to these features. However, there are some limitations. If users swipe right on too many profiles in a day, they will be unable to search for another 24 hours.

Subscription Models

Upgrades and subscriptions are another way to make money from a free app. The subscription model is ideal for generating recurring revenue.

This is where a premium subscription can help.

Users who want to have unlimited likes can upgrade their accounts to gain access to this feature.

Other benefits of the upgraded subscription include a change in location, rewinds, and an ad-free experience.

This same business model and pricing strategy can be applied to your app. Allow users to download and use the app for free, but reserve the best features for users willing to pay.

Advertising

Another popular monetization strategy is the display of in-app advertisements. This is one of the simplest methods for earning money from an app right away.

Unless you have affiliate marketing partners, the play here is to display your ads through a third-party ad network. These ad networks will display ads to your users automatically, and you will be compensated accordingly.

The exact monetization model depends on the ad type and your network agreement. For example, you only get a fixed fee for ads based on the number of views they receive. Other times, you may be paid more if a user clicks on the ad or takes an action based on the ad.

Interstitial ads, banner ads, in-app video ads, and native ads are the four main types of mobile ads.

Referral Marketing

Another type of mobile advertisement is referral marketing. You’ll be advertising a third-party product or service in your app with referral programs.

Many referral programs pay more than traditional advertisements. This adds to what I was saying earlier. You will usually be promoting a referral link, and the payout will be based on one of the following models:

• Cost Per Action or Cost Per Acquisition — This metric measures how engaged users are with the ad after installation. This could include things like signing up for a free trial, purchasing a product, or creating an account.
• Cost Per Click (CPC) — As the name implies, the CPC model pays you based on the number of times users click the advertisement in your app.
• Cost Per View (CPV) — With CPV models, you are paid simply for displaying the advertisement. You will be paid per view as long as it is viewed by a user. These are typically lower paying because the user is not required to click the ad or take any action.
• CPI (Cost Per Install) — This is a type of action. You would be compensated each time a user clicked an advertisement that resulted in the installation of another app.

Referral marketing programs can be extremely profitable if the right partners are found.

Here’s a quick recap on how free mobile apps make money:

• In-app advertising (native ads, banner ads, and in-app ads like the Weather Channel App and other such apps)
• App purchases (products or service apps)
• Offer in-app purchases (like an upgrade in gaming apps)
• Freemium apps 

Regardless of your app concept, you can still launch a free mobile app, drive free app downloads, and have a profitable app. Some of the most popular mobile apps are free and continue to receive a large number of app downloads.

Conclusion

Not every app makes money.

If your intention is to simply build one without a monetization model and then sit back and collect your money, you’re in for a rude awakening.

Before you begin developing an app, you must have a strategy and a goal, just like a business. It may take some time to get it right. The best monetization model for you and your app may differ from mine and my own app’s monetization model.

Some platforms may be more suitable for you than others. Users of apps behave differently. As a result, it would not be surprising if you had more success selling paid apps for your iOS apps than for your Android apps. To make money with your Android app, you may need to use another monetization model, such as a freemium model or in-app advertising. The results will vary depending on the app stores.

Apps are preferred by mobile users over mobile websites.

While your company needs a mobile-friendly website, an app can improve the customer experience significantly.

Yes, there will be some initial costs when you build, develop, and launch your app.

However, you can save time and money by developing an app using the appninja platform.

If you sell physical goods, having a mobile app will help you make more money.

Mobile apps have the lowest shopping cart abandonment rates when compared to desktop and mobile websites. Why?

The entire process is simplified for the customer. Instead of entering all of their information, they can buy something with just a few clicks.

You’ll also need to decide whether to make the app available for free or charge users to download it. In the end, the choice is entirely yours. However, I would recommend providing free downloads.

App owners and developers can still profit from in-app purchases, advertisements, and subscriptions that provide premium upgrades.

If you follow this guide, you’ll be well on your way to creating a profitable mobile app.