How To Make Real Money On Apps

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How do free apps make money?

That’s the question that both app developers and users often ask.

What happens after a user downloads a free app from an app store? How much money do app developers make? If you are asking the same questions and want to know the answers, this article will explain each point in detail.

This guide covers the following factors on how free apps make money:

  • the difference between free and paid apps
  • the best monetization strategies to make money with mobile apps
  • how much money do free apps make?
  • approaches to choosing the best monetization strategies
  • technical tools, APIs, integrations to make money from an app
  • how world-famous companies make money from apps

Let’s jump right into an overview of all details.

FREE APPS VS PAID APPS BUSINESS MODEL

An average user in 2020 has 40 apps installed on their smartphone. For Millennials, the number rises to 67 apps. Around 49% of users open an app over 11 times each day. Overall, we interact with 30 apps each month.

Between 2018 and 2022, global app downloads will face a 25% increase.

When it comes to free vs. paid app downloads, users are hesitant about paying for an app. In fact, free apps take a whopping 96.4% of all app downloads on Google Play. If you release a free application, it automatically increases the chances that users will notice it.

When we look at app stores, we can clearly see that users are more likely to spend more money on mobile games. According to statistics, out of top-10 apps on Google Play with the highest revenue, the vast majority of them are games that you can download free of charge.

You have a lot of options, even if you decide to release a free application. Read on to learn more about each possible solution.

HOW TO MAKE MONEY FROM AN APP: MONETIZATION STRATEGIES

There are eight top monetization strategies that companies are using to generate money with free apps. If you are looking for an answer to the question ‘how do free apps make money?’, this part will explain the topic in all the details necessary for making the right choice.

Statista states that in 2019, there were three leading monetization strategies among developers:

  • subscription model
  • freemium model
  • advertising model

Let’s take a look at how to make money from an app.

ADVERTISING

How do free apps make money, like millions of dollars?

This is the answer to your question. In-app ads are very popular among developers of free apps. Depending on the app type, in app ads revenue can be accounted in thousands of dollars.

Currently, there are 5 main types of free app advertising strategies that you can use to make money with your application:

  • Banners

How do free apps make money with ads without interrupting user experience?

Banners ads are the least intrusive type of in-app advertising. They don’t interfere with user experience, as they still can interact with your application without any limitations. At the same time, Click Through Rate of such applications (the number of customers that click of them) is not that high, around 0.06 percent.

Still, the average banner ad format CPM is around $1.

  • Videos

This type of in-app advertising is more intrusive, as it prevents users from using the app’s functionality. Such videos typically last for 10-30 seconds and can be added into apps and mobile games when there can be made natural pauses. That is why such video ads are often placed after a user finishes a game level.

You can use in-app ads as a form of a rewarding program. For example, users can get more lives in a game by watching video ads.

That is how to make money from an app with in-app advertising.

  • Native Ad

Ads of this type are a little more difficult to make, as such ads should not interrupt the user experience. They should perfectly fit into the app design and overall concept, allowing to naturally promote a brand or a product.

Usually, such native ads don’t create a distraction for users, ensuring a higher level of conversion.

  • Interstitial advertising

Such in-app ads are represented in the form of full-screen pop-ups that interfere with app usage. Ads of this type usually appear when users open or close an application. They have to either skip the add after watching them for a predefined type period or check the offering. Either way, such ads often irritate users as they don’t have a choice to simply ignore such ads without any further actions.

  • Incentivized Ad

The vast majority of users (84%) prefer to deal with this type of in-app advertising. Instead of interrupting ads, they can get rewards for taking some actions, like sharing content, leaving a review, filling out a survey, etc.

Incentivized ads work better combined with the system of in-app currencies and purchases.

While in-app ads are one of the most popular types of free apps monetization, it might be a good idea not to irritate users with too many ads. As a result of irritation, users are less likely to click on ads, decreasing the conversion rate and your app ads revenue.

REFERRAL MARKETING

When you look at the previous monetization strategy, you can see that it is just a part of referral marketing.

As a part of referral marketing effects, you can place some content inside your free app to promote someone’s application, products, services, etc. You get a commission for a number of clicks, app installations, etc.

Referral marketing works as a cost-per-action (CPA model) and includes the following types of rewards that you can get:

  • CPM (cost-per-mille, cost-per-impression) – you get a payment based on a number of impressions. Usually, you are charged every 1,000th time an ad is displayed. Such a model comes from a Latin word mille, which means a thousand.
  • CPC (cost-per-click) – you are rewarded based on the number of clicks made on ads inside your application.
  • CPV (cost-per-view) – you get a reward for each view of a video and ads interaction.
  • CPI (cost-per-install) you get a payment each time a is installed via the ads inside your applications.

How do free apps without ads make money?

The answer to the ‘how do apps make money?’ question doesn’t always include the mentioning of in-app ads. There are four more monetization strategies for free apps that you can use to generate revenue:

  • In-app purchase and a freemium model
  • Subscription model
  • Sponsorship model
  • Crowdfunding model
  • Email marketing
  • App merchandise & eCommerce

These models provide an uninterrupted user experience and don’t irritate customers with unnecessary actions needed to be taken.

Let’s find out how to make money from an app without built-in ads.

IN-APP PURCHASE IN THE FREEMIUM MODEL

The Freemium model is a very popular approach to the monetization of free apps these days. You grant access to the basic features of your application for free and can provide some additional functionality or bonuses for a payment.

Please note that app stores manage such transactions and you only get a commission for every option sold.

In-app purchase strategy can be divided into three types of purchases:

  • Consumables – one-time items that are mostly used in games. Examples include in-app currency, additional lives, etc.
  • Non-consumables – feathers that are used permanently throughout the whole time of the app use. Examples include ad blocking, access to advanced app features. etc.
  • Subscription – you can find a more detailed description of this model below. This monetization strategy allows to get access to some additional in-app content or features for some time, e.g. for a month, a quarter, for a year, or lifetime access.

How do free apps make money with this model?

In fact, they can generate millions in revenue with the help of in-app purchases. The most successful examples include The Clash of Clans, which earned a million a day on purchases, and Pokemon Go, which generated 1.5 million every day and only in a year managed to reach the revenue of over billion dollars.

Still, making money off of apps with a freemium model is no easy task. This monetization strategy is the best solution for applications and games with a huge number of users. Moreover, users may only opt to use the free version of your application and never buy any additional content. You should also remember that app stores take 30% out of every sale you make with your app.

SUBSCRIPTION MODEL

This is a very popular monetization strategy among SaaS, cloud services, audio, and video content streaming services. The subscription model entails getting payment for a weekly, monthly, quarterly, or annual use of your solutions.

Examples of solutions working on this model are numerous and include such world-famous solutions as Netflix, Apple Music, and Google Music. This monetization strategy is also applicable to online news portals and the Wall Street Journal and the New York Times successfully utilize it.

The subscription model is not the easiest approach to how to make money from an app, as you need to provide users with fresh content, regularly add new features, and release updates to incite them to continue using your application.

SPONSORSHIP MODEL

The use of this business model can bring you a lot of money. The only difficulty is finding a sponsor who will give you money in exchange for the promotion of their solution or product.

This monetization strategy works best is you have a unique app idea or have a big user base. It can be approached in two ways:

  • Revenue split generated by the app
  • Monthly sponsorship fee paid to you by app’s funder

CROWDFUNDING MODEL

The answer to the “how do app owners make money?’ started to include this monetization approach lately. Kickstarter, Indiegogo, CrowdFunder, and AppsFunder are the most popular crowdfunding platforms that you can use to make money from free apps.

You should be aware that there are thousands of other applications of such crowdfunding platforms and it is no easy task to get attention to your application. However, you can do it by providing real value with your unique app idea.

EMAIL MARKETING

This is the oldest among strategies that proved its effectiveness decades ago. To send emails to your users, you need to know their email addresses. You can get them in a few ways:

  • Ask for an email address with a pop-up box. You can exchange the email address for free features, in-app currency, and other attractive offers.
  • With Facebook SDK, when customers use social login or sign up.
  • With third-party tools that are designed for email collection and can be integrated into your application.

Don’t forget about GDPR (General Data Protection Policy) and notify users when you collect emails, why you collect them, and how they will be used.

APP MERCHANDISE & E-COMMERCE

This is another approach that explains how to make money off a free app.

The eCommerce industry is growing with unprecedented growth. You can become a part of this growth by selling your own branded items within your application. Amazon takes on a lot of work, including merch production, selling, payments, and shipping, and you get a part of the profit.

Angry Birds is a successful example of how to make money with an app that utilized this monetization strategy. Even though there is a potential to generate millions in revenue, your app should become popular first. If you don’t have a dedicated fan base that is willing to pay for merch, you won’t be able to utilize this business approach.

How do apps make money?

You now know the most profitable and popular monetization strategies with the potential of bringing millions of dollars to you.

HOW MUCH DO FREE APPS MAKE MONEY?

The market of mobile apps is a lucrative niche for a business

As per Statista, worldwide mobile app revenues will account for 581.9 billion in 2020 and the number will grow to 935, 2 billion by 2023.

How To Make Real Money On Apps

Over 25% of iOS developers and 16% of Android developers earn over $5,000 per month with their apps. This number should be considered as a benchmark in the app industry.

Almost 24% of apps generate up to $500,000 in revenue per month, and only 1.5% of apps can bring their owners over $500,000 every month.

As we already mentioned answering ‘how do free apps make money?’ question, subscription, freemium, and advertising are the most popular monetization models among the developers of free apps.

According to Sensortower, as of July 2020, the following apps are the most grossing on the market:

  • TikTok
  • YouTube
  • Zoom Cloud Meetings
  • Instagram
  • Facebook
  • Facebook Messenger
  • Snapchat
  • Gmail
  • Disney+
  • Amazon Shopping

As you can see from the list above, all these apps can be downloaded for free. Still, they generate a lot of money for their creators with the help of successfully implemented monetization strategies.

HOW TO CHOOSE THE BEST APP MONETIZATION STRATEGY

You can find the best strategy for app monetization by following the below 4 steps:

Step 1 – Research the market and find competitors to better understand what is popular on the market, which solutions do not get users’ attention, and what are the most potential app niches.

Step 2 – Determine your target audience and identify which points this audience has, how you can solve it, which interests them, etc. to provide users with relevant content and useful features.

Step 3 – Create a unique app idea and do not try to copy some famous apps or games.

Step 4 – Decide on the app monetization strategy and the best approaches to making money from apps.

After you know which type of app you are going to develop and have a unique app concept, you can use the following tools to present your application to users and get their attention:

  • Clear and catchy name that will be easy to remember and that will convey the idea behind your article.
  • Clear app description that will show the app’s real value to users and entice them to download your application.
  • Eye-catching app previews like app screenshots, demo videos, and other visuals to let users know how your app looks like, which UX/UI offers, and how it will look on their devices.


HOW DO FREE APPS MAKE MONEY: REAL LIFE EXAMPLES?

There are a lot of apps on the market that generate millions in revenue.

WhatsApp is a unique example, as the app started with a paid model and charged $1 per download. How does WhatsApp make money? Later, it switched to another business model and now allows users to download the app for free. With over 2 billion users nowadays, WhatsApps hold unlimited opportunities for in-app ads.

Another vivid example is the Facebook app that you can use for free. Still, the company manages to get millions of dollars from its apps by utilizing in-app ads. According to statistics, ads generate 98,5% of revenue for the company, while payments and other feed generate only 1,5% of all revenue. In 2019 alone, advertising brought almost $69.7 billion to Facebook.

TikTok, which is the talk of the day, also generates a lot of money, however, utilizing an entirely different approach. The company sells its in-app coins that can be exchanged for digital products. Users can buy 100 coins for $0.99 and the prices reach $99.99 for 10,000 coins. In October of 2018, users spent more than $3.5 million on in-app purchases.

Regardless of the monetization strategy, you will choose, you can ensure sustainable growth of your application and revenue only with the help of steady innovations and improvements. No app can make money without users, and you should make sure that your application meets all their expectations. This way, users will stay loyal to your app and brand for a long time.

SUMMARIZING WORDS

Today, you can get a lot of answers to this question. Users are more likely to install a free app rather than a paid application. It makes sense to develop such a solution and implement one of the most popular app monetization strategies:

  • subscription model
  • freemium model
  • advertising model

Regardless of the model you choose, first of all, make sure that your application provides value to users and helps to solve their problems.

You can combine a few monetization strategies to make even more money with your free application.

Apps make a lot of money. Spending on Google Play and the App Store hit an incredible $39.7 billion during the first half of 2019 according to data from Sensor Tower. This was a 15.4 percent increase in the same period in the previous year.

Additionally, app use is growing. In its most recent “State of Mobile” report, AppAnnie found that between 2016 and 2018, time spent in-app grew by 50 percent, while downloads increased by 35 percent. This suggests that there is plenty of proof that many free apps make money.

If you’re wondering how to create an app for free and make money, you’ve come to the right place.

In this article, we’ll first look at how to create an app, and then explore six of the most popular app monetization methods.

Image: William Hook/Unsplash.

Table of Contents

  • 1 How to Make an App
  • 2 How to Create an App and Make Money
  • 3 Six App Monetization Models

How to Make an App

The first step towards app monetization is to go ahead and build one. This means you’ll need a good idea that people will find useful and want to download. If you don’t have a specific idea for an app, you can always think about a problem you have and a way to solve it.

Alternatively, are there any popular mobile apps that you like but think could be improved? If so, why don’t you release an app with the improvement?

The founders of Instagram released the app in part because they loved the filters of Instamatic but thought it would be better if it was easier to share photos. It’s now one of the most downloaded apps ever.

Image: Austin Distel/Unsplash.

If you are planning an app monetization strategy, you should consider this at the start of the design process.

For example, if one of your app monetization strategies is to use ads, you’ll need to build in space to display banners while designing your app.

Likewise, if you want to run a subscription model, you’ll need to consider the features that will be available to all app users, as well as those that will only be available to those who pay.

We have an in-depth article on how to build your own mobile app that you can read here. In the article, we broke the process down into several steps:

First, You Need to Plan Your App

If you already have an app idea, this could be the easiest part of the process. If not, the most difficult. You can check out these 12 ways to generate app ideas if you are struggling.

How To Make Real Money On Apps For Teens

When planning your app, you’ll need to have an exact idea about what it will do and the problem it will solve. You should also think about the target audience and what will appeal to them. You can get good ideas about the type of apps that are successful and make money by looking at competitors or non-competing apps with the same target audience.

This is also a good way to choose your app monetization strategy. If you notice most apps like the one you want to create offer a free version, you will probably struggle to be successful if you want to charge for your app. On the other hand, this could suggest the kind of app you want to make can be monetized through adverts.

Image: Jexo/Unplash.

Next, Choose How You Will Build Your App

The next step in the app development process is to start building it. You have two options here. The first is to go through the whole process of creating wireframes, graphical interfaces, and testing the front and back end processes yourself.

Alternatively, you can use an app builder to take care of the process for you.

While the first option provides more customization, the second option is easier for those without experience in app development.

If You Choose to go it Alone, You’ll Need to Start by Wireframing

If you choose not to use an app builder and go the custom route, you’ll have to start by wireframing. This will help you create the structure of your app. There are plenty of tools that can help with wireframing, including Microsoft’s Visio and Axure. Be sure to test out these wireframes extensively.

Then Design the Visual Elements of Your App

At this point, you can begin designing the visual elements of your app, including your logo, color scheme, and any graphics or animations you choose to use.

You’ll need to do this whether you choose to build it yourself or use a DIY app builder. If you don’t have the expertise required, you can always hire a professional to take care of the process for you. Sites like Upwork are great for this.

Sort Out Your App’s Back End and Front End

The next step is where things get complicated. First, you’ll need to build the back end of your app. Getting this right will ensure your app works as it should. If you have limited software development experience, this is where using an app builder can save you a lot of time and stress.

Following this, you can design the front end, which is the interface users will see.

Finally, Put Your App Through Final Tests

While you create an app, you should be testing it out as you go. However, the final step in app development is to test the finished product.

You should test the app on numerous devices and give it to different people who fit your target audience. This will allow you to collect a variety of opinions about what works and what doesn’t.

If you notice there are any problems, be sure to fix them before releasing your app.

How to Create an App and Make Money

Now you know how to create an app, we will look at different monetization strategies. In this article, we’ve split monetization models into six categories. These are:

  • Paid apps
  • Subscription
  • In-app purchases
  • App advertising
  • Affiliate marketing
  • Mixed monetization methods

The best way to create an app and make money will depend on the type of app you create. Gaming apps make money from in-app purchases. On the other hand, many software as a service apps earn a lot of money through subscription programs. It’s also possible to use adverts to monetize your app.

The good news is, there are plenty of examples of successful apps no matter what monetization model you choose.

Before We Start: What Cut Do App Markets Take?

Even though free apps make money, you need to consider how much the app marketplace you choose to distribute your app on takes. Both Google Play and the App Store have a very similar pricing structure. Let’s take a look at them.

Google Play

  • Google Play takes a 30 percent cut of the cost of all apps and in-app products.
  • It takes 30 percent of all subscriptions for the first 12 months of a customer’s subscription. After this, it only takes 15 percent.
  • Developers have to pay a one-off $25 fee to create a Google Play developer account.

Apple App Store

  • Apple takes a 30 percent cut of all apps and in-app purchases.
  • Like Google, this reduces to 15 percent after a customer has subscribed for 12 months.
  • Developers have to pay a fee of $99 per year to release apps on the Apple App Store.

Six App Monetization Models

Here is a look at six app monetization models you can use to generate app revenue.

Sell Your App

Creating a paid app is perhaps the simplest way to make money from your app because they result in a higher average revenue per download.

All you have to do is create an app and make money from people who download it. Both Google Play and the App Store make it easy for users to pay for apps, so you have a ready-made audience.

However, being successful can be difficult.

If you want to encourage people to download your paid app, you will have to offer a lot of value. It can help if you have an existing audience, you can market your app to or if you have a budget you can spend on promoting your app.

You’ll also have to put a lot of effort into your app market listing as you’ll need to give people a good idea about your product without them actually being able to experience your app.

When pricing your app, there are plenty of things you should consider.

Take a look on the respective app stores at the average price of competitor apps to see how much you can charge. If you want to use advertising to encourage people to buy your app, you’ll have to consider how much it will cost you to get one person to download the app.

As you can see from this screenshot, most paid apps are cheap. On the current list of top paid apps in the U.K., most are under £5 with only two in the top 21 costing over £10. Those are Site Audit Pro and FL Studio Mobile.

Things to Consider: Free Apps vs Paid Apps

While paid apps can be a good way to make money from your app, it can be limiting. First, there is no way for people to try out your service. This can act as a barrier that stops them from downloading your product. This is even more likely to be the case if your brand is unknown, and you may struggle to convince people to pay for your app.

A slight workaround could be to offer your app for free and then offer customers the option to pay a one-time fee to unlock the whole app. Although, on both Google Play and the App Store, this counts as an in-app purchase as the user isn’t paying to download the app.

Overall, you may find that other methods of app monetization are more effective. According to AppAnnie, the highest-grossing paid app on July 3 in the U.S. was Minecraft. However, it was only the 29th highest-grossing app overall. The second highest-grossing paid app is Heads Up, which isn’t even in the top 50.

If you are looking for a way to maximize app revenue, using a subscription or in-app purchases could be a better option than charging users to download your app.

Use a Subscription to Get Repeat Payments

Asubscription is when developers charge users a recurring fee to use the app. The fee is usually monthly, although developers can give users the option to pay for a longer-term—for example yearly or quarterly—upfront for a discount.

This type of monetization is common with software like service apps or apps that provide access to media. Think about streaming apps such as Spotify or Netflix, or productivity apps like Microsoft Office or Dropbox.

Image: Freestocks/Unsplash.

Subscriptions are great for app developers as they can get consistent recurring money from the people using their apps. It works for users, too, as the monthly fee is often modest.

Unlike paid apps, subscription apps are usually free to download. This can be a good way for developers to gain a base of users and earn money. Having a larger number of downloads will also look good on the App Store and Google Play Store.

To encourage people to use the service, it is common for developers to offer a free trial. This will allow them to use the app for free and get an idea of what the app is about and how it can benefit them.

Consider a Freemium Model

Alternatively, apps that use a subscription model can offer a basic tier that provides some of the app for free, and then a paid tier that provides the full-service. This is what is known as a freemium model.

A good example of an app that does that is Medium, which offers users a limited number of premium articles per month, as well as access to the site’s free articles. If users want full access to the service, they have to pay a fee of $5 per month or $50 per year.

This can be a good way to keep people interested who maybe don’t want to sign up for the subscription now, but perhaps could be persuaded to do so in the future.

Beyond this, it is even possible to offer multiple layers of pricing. For example, there could be a free layer, a low-cost layer with some added features, and a layer with premium features that contain everything.

Productivity app Airtable allows users to use the app for free. However, there is also a Plus version for $10 per month, a Pro version for $20 per month, and an enterprise version with custom pricing.

Another type of subscription you could consider is non-renewing subscriptions. These subscriptions provide access to content for a limited amount of time. For example, an app could provide access to seasonal content during a global event.

What to Consider When Monetizing Your App with Subscriptions

Subscriptions are a great way to consistently make money from an app. However, your product has to offer enough value to make users willing to pay for it.

Unlike with advertising-based monetization methods, you won’t create an app and make money from people who use your app for free. Although, it is possible to display ads on the free version of your product and then take them away when the user signs up to a subscription.

In-app Purchases Can Be Highly Lucrative

In-app purchases are one of the most effective ways to make money from an app. According to Apple, there are four types of in-purchase:

  • Consumables are items such as in-game points or currencies that can be used within the app. These are common in games, and they can be used by players to buy new items or access new levels. As the name suggests, these items can only be used once.

A game that has been highly successful at using consumables is Pokemon Go. In the game, users buy Pokecoins, which can then be used to buy various in-game items. Reports from earlier this year suggest Niantic has earned a total of $2.3 billion from the game.

  • Non-consumable items are those that do not expire once a consumer has bought them. Examples of this include extra options in a photo editing app. Once a user has bought these items, they can use them for as long as they own the app.
  • The final two types of in-app purchase are auto-renewable and non-renewing subscriptions.

Image: Onur Binay/Unsplash.

The good thing about in-app purchases is there is essentially no limit to the amount people can spend. Paid apps that have a one-time fee, or even subscriptions with a recurring fee are highly limited in the total amount they can earn per user.

Games that use in-app purchases can be incredibly lucrative. In games, in-app purchases are often used to let users buy items to make their gaming experience better. This has led to free apps like PUBG, Clash of Clans and Pokemon Go consistently being ranked among the highest-grossing apps.

However, it isn’t only games that can effectively use in-app purchases. Other types of apps that successfully offer in-app purchases include photo editor apps offering additional options or filters or messaging apps offering users the chance to buy emoticons or gifts.

For example, the messaging app Kakao Talk is one of the highest-grossing apps globally. While it is free to use, one of the ways it earns money is by selling emoticons that people can use within their chats.

What to Consider When Monetizing Your App with In-app Purchases

The most important thing to consider is whether or not your app can offer something enticing enough as an in-app purchase. If you can’t, it is unlikely that anyone will buy what you are offering or make money from your app.

In general, games have a lot of success with in-app purchases

Another major consideration comes with the controversy around loot boxes. Loot boxes are products users can buy that provide them with a random selection of in-game items. While these are an effective monetization model, many countries are debating whether they are a form of gambling.

Because of this, loot boxes are heavily regulated and even illegal in some countries. You should be sure to check out the regulations of the country you plan to operate in if you want to offer this kind of item.

Use an Advertising-Based Model

Mobile advertising is a huge business. The Interactive Advertising Bureau (IAB) recently said that in 2018, 65 percent of all digital advertising revenue came via mobile platforms. This includes browsers and text messages, as well as apps.

Advertising is commonly used by free apps. For example, news apps or games. It can also be used by apps that also offer in-app purchases or paid versions as a way to monetize non-paying customers.

The best thing about advertising is that it’s a good way to make money from your app without your customer having to spend any money.

The easiest way to get started is through a cost-per-click advertising platform. Some of these include Google’s AdMob or AOL’s SSP. Signing up to one of these will allow you to start placing ads into your app.

Most ads come in the form of banner ads, interstitial ads, or videos.

  • Banner ads are interspersed around your content. They are fairly non-intrusive; this has the advantage of not interrupting the user experience, and these ads are easy to ignore.

In the screenshot below, you can see how podcast app BeyondPod uses a banner ad within the user’s podcast feed. It is almost too unobtrusive, and it is easy to ignore.

On the other hand, YouTube shows much larger banner ads that fit in well with the content the user is already watching. If it wasn’t for the “Ad” marking in the bottom corner, it would be hard to work out if the recommendations were ads or not.

  • Interstitial ads take up the whole screen. They will usually be shown for a certain amount of time or until the user clicks to close the ad. These ads are effective as the user is guaranteed to see it.

The downside here is that these pop-ups are intrusive. Because of this, you should think carefully about when you place an interstitial ad. Good times could be when the user has finished editing a photo or when they are about to start a new level in a game.

An excellent example of this is the advert below from the video editing app PowerDirector. When the user clicks to leave the app, a pop-up appears showing an advert. The advert is almost impossible to ignore as the user has to perform another step to leave the app.

However, it isn’t too annoying because it only appears when the user is leaving the app, not mid-way through a project.

  • Video ads are often either short ads or longer ads that the user can skip after a certain amount of time. Clicking on the ad will take the user to the advertiser’s product. Video ads are useful for advertisers as they are a good way to get across the message of the product.

Video ads are often shown while another video is loading, or before a level in a game. Perhaps the app most well known for video adverts is YouTube, which shows an advert before many videos on the service.

Things to Consider When Monetizing Your App with Advertising

How To Make Real Money On Apps Now

While it is easy to get started with mobile ads, there are some downsides. The most obvious one is that to make good revenues, you will need to have a lot of users.

According to Businessofapps.com, the average CPM (the amount an advertiser pays per one thousand people who see its advertisement) for banner ads is $1, interstitial ads is $3.5, and video ads is $3.

This means it is hard to create an app and make money unless your app has a lot of regular users.

Another thing that could prevent you from making money, is that whenever a user clicks on an advert on your app, they will be taken away from your app. This will reduce the amount of time they spend on your app and could even introduce them to a direct competitor.

Make Money Through Affiliate Marketing

Affiliate marketing is a common type of marketing on the web, although perhaps less commonly found in apps. With affiliate marketing, the app developer will advertise products on their app and then take a cut of the sale when a customer makes a purchase.

Booking or comparison apps are a common type of affiliate marketing. For example, Skyscanner makes it easy for people who want to buy a flight to check prices from a range of providers.

The company gets a percentage of the cost of the flight whenever a user books a journey after being redirected to the booking website through Skyscanner. You can see how it works in the screenshot below.

Another example of how this could work would be a fitness app directing users to the website of a nutrition shop or exercise equipment store and then taking a cut of any sales made. Or a financial planning app that suggests financial products to its users.

The good thing about making money in this way is the number of data apps have about users. For example, in the above example of a financial planning app, the app developers can offer the exact type of product that the user will find useful based on the data they have about the user.

How To Make Real Money On Apps Free

Things to Consider When Monetizing Your App with Affiliate Marketing

Affiliate marketing suffers from many of the same issues as advertisements – you’ll need a lot of users before you can make money.

It can also help if the product you are affiliated with is an expensive one or one that offers a large cut of the total cost of the purchase. While receiving ten percent of a £1,000 flight will get you a nice payday, receiving 3 percent of a pair of £50 running shoes is less impressive.

Use a Mixed Strategy to Monetize Your App

Many of the most successful apps use a variety of monetization methods. This way, developers don’t have to rely on one strategy. Here are some examples of how mixed monetization strategies could make money in practice.

  • A common mixed monetization strategy is to ask users to pay to remove ads. This is good as an alternative to a paid app. It means app developers are still able to monetize free users, while also offering a more lucrative option to those who can pay. To make the paid option more appealing, you can even choose to add in some extras for those that pay. This could work for both one-off payments and subscriptions.
  • Some paid apps, especially games, charge a fee for the app, and then offer in-app purchases on top of the price of the game. Minecraft, NBA 2K19, and the Moment Pro Camera are all apps that have successfully used this strategy.
  • If you plan to rely on adverts as your monetization strategy, it could be a good idea to experiment with both affiliate marketing and regular adverts. If you do this, you can see which type of advertising is most lucrative and then focus on that.

Wrapping Up

This is the end of our guide on how to create an app and make money. Hopefully, you found at least one monetization model you can use for your next app idea.

How To Make Real Money On Apps For Beginners

As you can see, free apps make money if you know what you are doing. In-app purchases and subscriptions can be incredibly lucrative due to the potential for recurring income.

However, many apps can successfully use other monetization methods such as advertising or charging the user upfront.