How Do Apps Make Money? 6 Tactics You Should Know About

Chances are your phone and PC are full of free apps that you use on a daily basis.

If so, you might be wondering, 'how do apps make money when they're free?'. With over 4 million apps available for download from the major stores, someone must be making money from apps.

The truth is that the combined income of free apps supersedes that of their paid counterparts.

Read on to discover how to make money from apps.

1. In-App Advertising

In the same way that free newspapers generate income from ads, free apps can charge companies to get their products and services in front of potential customers.

It's hard to believe that someone is paying for you to hit the 'x' on those annoying ads that pop up while playing your favorite mobile game or while working with a desktop app. Truth is, those ads are what finance most of the apps you use.

Banner ads and full-screen popups are two of the most popular ways for advertisers to reach out to you. The app owner charges a fee every time the ad pops up or when you first download the app.

Many apps give you the choice to disable these ads for a small fee, which means more money for the app owner too.

2. How Do Apps Make Money From Their Users

Subscriptions are one of the most prevalent ways to make money from people using an app.

The most widely-used tactic in this regard is the free subscription. This type of monetization tactic usually comes in one of the following forms:

• A free trial period
• Free use until a certain level

News services, audio, and video streaming and cloud services often come with this type of monetization strategy.

3. In-App Purchases

In-app purchases are another popular way to generate income from apps. These items or tools make it easier to achieve your aims within the application.

If you've ever played games on apps, you'll know all about this. Often, you can buy shortcuts to successful play by paying the coins, gems, or weapons needed to get to the next level.

4. Data Collection

Most app owners don't stoop to selling your personal details to market researchers. However, they can make money from analyzing user behavior within the app.

For example, the app could record which kind of ads you click on, or how long you view an advertisement before closing it. This information is important for advertisers using A/B testing to determine which ads work best.

5. Freemium Features

This model is similar to the trial period type of tactic. Free users only have access to basic features of the app unless they pay for an upgrade.

Freemium models are popular for niche apps, where the average user may not need an all-bells-and-whistles application. However, as their interest increases, they can upgrade their app with premium features at a cost.

6. Referral Marketing

This marketing model involves earning income from promoting a third-party affiliate's product or service.

There are a few ways to use referral marketing, for example:

- by promoting another application

- with in-app advertisements

- advertising products or services via an in-app-store

With referral marketing, the app publisher usually gets paid according to one of the following types of campaigns:

Cost-Per-Impression (CPM)

This type of referral marketing bases payment on the number of impressions generated by the app. Usually, the advertiser pays for every 1,000th impression.

Cost-Per-Click (CPC)

The app publisher gets paid based on the number of times their users click on a display ad.

Cost-Per-View (CPV)

Whenever a user interacts with the ad, for example by watching the video, the app publisher receives payment.

Cost-Per-Install (CPI)

The app publisher receives payment every time a user installs the promoted app from the featured ad.

To maximize revenue, affiliate network companies, like AdMob and Flurry, specialize in matching affiliates to apps.

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