How to monetize a free app: top ways, top mistakes

Every person interested in developing apps wants to know how to monetize a mobile app and turn it into a source of income. It is important to think over a monetization strategy before starting the development of the application in order to organically fit it into the UX and provide opportunities for further development. Nowadays, there are many ad variants to utilize in a mobile app.

In this article, we’ll take a look at some of the most effective ways to monetize an app.

Advertising in a free mobile app

In-app advertising is a proven monetization option. Users download free apps actively, and developers profit from showing ads.

In such a strategy, it is important to collect as much data as possible about the target audience. The data is analyzed and provided to advertisers willing to pay for ad placement.

Advertising organically fits into games, social networks, news and entertainment applications, instant messengers. The Facebook app is a good example. This social network collects arrays of data about users and shows them targeted ads.

Pros:

  • A free mobile app can quickly engage an audience.
  • The strategy is effective in the case of targeted advertising.

Minuses:

  • Advertising in the mobile app is limited to a small screen.
  • It is possible that some users refuse the application if advertising annoys them.
  • The publisher will not make a profit if users have set the ad blocking option.

Freemium app

Freemium app is free in the basic version. And all additional options can be purchased. The success of Freemium apps depends on the number of loyal users who are willing to pay to expand the functionality. An example of Freemium is the Angry Birds game. The application is free, but some “goodies” (for example, the expanded capabilities of angry birds) are hidden from the user until they are paid for.

Pros:

  • Freemium apps attract many loyal users who are willing to use them for months.
  • The Freemium principle is very flexible and fits most mobile products.

Minuses:

  • It’s important to find a balance between basic and paid options. If the free functionality is too small, users will abandon the mobile application. If it’s too big, they won’t buy additional options.

Free Trial

The idea behind Free Trial is that the user gets access to all the functions of the application during the trial period. This is usually 30 days. After the user has experienced all the benefits of the product, they will most likely want to purchase the full version.

The Deezer Music mobile app, for example, is free, but there is also a premium paid profile that you can test for 30 days. There are no ads in the Premium profile, but there are options for downloading your music, playing it offline, and many other bonuses.

Pros:

  • A free trial period allows you to enjoy all the advantages of the application.

Minuses:

  • The developer has only one chance to convince the user to buy the full version.

Subscribe

This monetization strategy involves buying useful content: movies, books, educational videos, and so on. An example of a mobile app with a subscription is Umano. The program provides users with access to news. If you want to get unlimited access, you have to pay for a subscription.

Pros:

  • Subscriptions generate a steady stream of cash flow from users and also motivate publishers to provide interesting and relevant content.

Minuses:

  • This method of monetization is not suitable for all types of mobile applications.

In-app purchases

Applications monetized in this way sell real goods (clothes, accessories …) and virtual ones (play money, characters). An example is the MeetMe mobile app, a dating service. This is where users can pay to increase profile visibility.

Pros:

  • A flexible model of monetization, optimal for e-Commerce and m-Commerce.
  • In-app purchases can increase user loyalty.

Minuses:

  • Information about paid services must be transparent, this is required by the user protection program.

Mistakes in application monetization

Making an app that makes money is incredibly difficult. And in matters of monetization, it is very easy to make mistakes.

Here is a shortlist of what you may face:

  • Choosing the wrong strategy. Each type of app requires a different monetization strategy, that’s clear.
  • Unscaled model. How and when will users spend money on your game or app? How will their payments be repeated and why would they want to make them over and over again? All this must be answered even before the product is created, and all the answers received must be put into the main mechanics and functions.
  • Lack of analytics. Which ad space is making you the most money? Why do users pay for that feature and not pay for another one? Who do you show ads to and who do you sell in-app purchases to? All these questions need to be answered.

Let’s summarize. The system of mobile applications is becoming more and more complex. It is not necessary to use just one monetization scheme; it is more expedient to experiment and select hybrid models.