6 methods, How do Apps Make Money

The article deals with 6 methods how apps make money. Goals, pros and cons of every strategy are described here in details.

Most customers and developers creating, adopting and developing apps still count on not only bringing a useful service to the world, but also think how to make money and at least return the money spent on the apps’ creation.

Nowadays, there are several strategies how apps make money.

Nevertheless, there is no the one and only method, which would fit any app, because every strategy has its own advantages and disadvantages.

Every customer has an important task to select a suitable technique how he is going to make money (or it may be the developer’s task, if this is the same person).

Selecting a strategy how an app will make money


A bit later we’ll discuss 6 most popular and profitable ways of monetization, but now let’s try to answer several questions, which are sure to help you choose.

  1. Which problem and how does your program solve it?
  2. What is so special in your app and why people will pay for it?
  3. What do you think are there any other advantages of your software?
  4. How well can work the already chosen way how your app makes money?

Besides, it’s significant to define and learn how to readjust your desires to draw people’s attention to your desires to make money.

Some monetization ways allow making money right after you release your program, while other methods secure the gradual increase of users and profit after a certain period.

How apps make money?

  1. Free applications filled with advertisements.

    It’s one of the most widespread ways how you can make money on your program.

    There are no limits in downloads.

    • The developer’s aim is to gather as many followers as possible.
      The data concerning their behavior is analyzed and transmitted to those advertisers, who are able to give money for placing their advertisements.

    • As a result, you will make money, offering an advertising spots in your application.

      Besides, you may work on your own or use automatic optimization.

    • The advantages of such way to monetize the app:
      • Free mobile apps can really fast gather rather big database of people, which are attracted by free apps.
      • The size of market in the sphere of mobile advertisement has exceeded the volume of traditional advertising on the radio, in magazines and newspapers.
      • A popular app can very quickly gather the data about the users’ behavior patterns, which many advertisers need.
      • This method is effective, if only targeted advertising is used.
    • Drawbacks of such method:
      • This strategy of making money is too well-known and many people are irritated by ads, and it may cause their loss.
      • Mobile ads are limited in size by the gadgets’ screens.
      • This method does not work with niche programs, which were created to help people to do some limited number of functions (advertisements will look unnatural there).

    Read also: Android Apps to Make Money

  2. Freemium.

    As s rule, Freemium apps have a set of basic functions and additional, which a user can buy for money.

    • The main idea of this approach is to attract people to the app providing them with the basic settings.

      Since time, some people will want more and they’ll buy additional functions.

      The most important here is to gather many followers and make them interested for as long as possible.

    • As a result, Freemium allows attracting people by the basic version of the app, so that the program fans could buy additional possibilities for money.
    • Advantages of such scheme:
      • This way of how the app makes money allows gathering huge number of users relatively fast.

        Moreover, some of them will work with the program for months.

      • Those, who will try the possibilities before purchasing, will probably become loyal to the program.
      • This is a very flexible decision, which may be implemented in most apps.
      • You can combine it together with the advertising model.
    • Disadvantages of such scheme:
      • If you offer small quantity of basic functions, the users will probably leave you.
      • If you offer too many basic functions, people will not buy the complere version.
  3. Paid apps.

    This is another very widespread business-model.

    It presupposes paying money to get access to the app.The fee may vary from $0.99 to $999.99, and the developer makes money on every new buyer.

    • The key to success is the developer’s skill to offer the possibilities of the app in a favorable light, so that he could interest buyers from the very beginning.

      The catalogue, as a rule, shows the program’s “killer features”.

      These are literally the words of the offer, which you cannot resist.

    • As s result, this business-model works according to the “pay and take” principle.

      Those teams, which are sure they are able to persuade users pay for it, can easily use it.

    • The pros of such method are:
      • Each new download brings money, which is transferred to the developer.
      • People, who paid for the app, will probably often use it – the money has already been spent.
      • In the paid app there are no ads, which will irritate the users.
      • This model stimulates the developers to devote all their attention to the app and simplifies the calculation of ROI.
    • The cons of such method are:
      • It’s rather difficult to sell apps, because the competition in the app stores is extremely high.
      • 90% of paid programs are downloaded not more than 500 times a day.

    Interesting: Make Money with Your Smart Phone

  4. Purchases inside games.

    Apps, which make money this way, sell their goods – virtual or real.

    It may be clothes, accessories – real things, which the users need.

    However, it may also be virtual goods, such as characters, their clothes, playing currency.

    • As a result, such business-model allows opening another way how to sell goods and services.

      Besides, it may be also a way how the app makes money – you can sell virtual currency and different kinds of bonuses.

    • The advantages of such way to make money:
      • This is a rather flexible business-model, which can be successfully implemented by the companies, which work in the eCommerce-/mCommerce-spheres.
      • Purchases inside games are perfect options how you can sell services having the minimum risk.
      • The possibility to buy virtual goods may increase the users’ level of loyalty.
      • The margin is often rather high, because the sellers do not have additional expenses, such as renting a place for real stores.
    • The disadvantages of such way to make money:
      • More often than not, app stores collect certain share from income to themselves from the virtual (but unreal) items, which were bought in the program.
      • The USA government and the EU have recently made Google and Apple write more details about the goods from the apps to protect the users’ rights more.
  5. Subscription.

    It’s another common business-model, which is very much alike to Freemium.

    Nevertheless, here it concerns more about how the users get access to the content, but not to the program’s abilities.

    Usually subscription (paywall in some cases) presupposes getting some content free of charge.

    However, if the user wants to get more, he must ay – usually there is a payment, which covers full access for a definite period of time.

    • As a result, this model allows the user trying the program before buying it.
    • The pluses of such way to make money:
      • Subscription secures the constant flow of money for a long term.

        Moreover, when the time expires, it’s usually automatically prolonged, if the user does not mention another way to pay.

      • Most users are rather loyal to the apps of such format.
      • Subscription motivates the developers to browse the most topical and interesting content.
    • The minuses of such way to make money:
      • Such business-model may be used in the limited number of apps.
      • It may be a difficult task for the developer to define when and where he should place paywall.

    On a note: How to Make Money on Android?

  6. Sponsorship.

    Among all presented ways how apps make money, this one is the newest.

    Here the advertiser rewards people for doing certain tasks in the app.

    Brands and agencies are the instruments here.

    The program developer receives a certain percent of reward, which is presented to users.

    • As a result, the app allows attracting plenty of users by both its functions and the reward from the advertiser.

      Besides, the share from the reward goes to the program developer.

    • Three advantages of sponsorship:
      • It is a very flexible business-model. It may be used in various apps in large numbers.
      • The users, which received reward, will always stay loyal.
      • The program developer receives money, the advertiser gives to the audience all information about himself, and the users receive rewards and bonuses.
    • The disadvantages of sponsorship:
      • Such business-model has not been thoroughly tested by the developers and marketing specialists because of its novelty.
      • The team requires the presence of a strong specialist in the sphere of sales and personal sponsors’ convincing.

Remember that the ways how apps will make money must be developed and implemented in the apps before they are released.

Besides, the main ways how apps make money are described above.

You are able to combine them, because it’s not obligatory to use only one way.

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