By Linh Nguyen Mai Khanh | March 24, 2017
If you create apps for your business, it’s logical that you want to set a price to it so you can get back a profit. Plus, free products are usually seen as poor-quality. But in the world of using apps, freemium is a lure. It totally works.
Think about it, 3 most important factors to have a full success app are acquisition, engagement and retention. And freemium is the best tactic to take the first step of acquiring new users. Freemium enables users to experience your app without any barriers of costing. Therefore, making free apps is one of the effective ways to better promote your apps since free apps are likely to get the most downloads.
However, it is a common thought for most people, especially those who are unfamiliar with apps development, that free apps are given away… for free, just for promotion. It is a deductive conclusion as you know, nothing in the business is made for free, and free apps are proven to be profitable. Freemium means that the app download is free, but once your users engage with the app, there are ways to bring back money.
If you still will doubt the possibility to get financial benefits from apps being categorized as free apps, read about some approaches to end up with long-term revenue stream using the freemium model.
In reality, apps often have free version and premium version. Users have to pay money to upgrade to the premium one. The free version, which we see as a free app, are usually just a demo. They provide just enough features that entice the users to pay their money to get advanced features. In other words, the free app is the hook that leads to the profitable catch when the user makes the decision to download the paid version.
The key here is not to give all the best stuff in the free-based offering, but in advertisements for the paid one. If going this route, the app has to be attractive enough to make the users be obsessed and craving for the advanced experiences. So your challenge here is to make users become interested in it and start spending their money.
Another reason that the users upgrade to the premium version is to avoid advertisements. Once the users install the premium version, you don’t need ad support any longer, so you can offer them with the ad-free version of the app. But be careful, it can be a double-edged sword, in case hot-tempered users disturbed by advertisements will uninstall your app immediately.
This method uses the free version of the app as a marketing tool. Although you still have to market the free app, it is easier to get more people who pay attention to the app as free things are always enticing. Use it as a stepping stone and improve your app constantly to convince more users to buy your app.
Another effective approach is to offer your freemium version for a limited period of time, and convert it to paid version afterward. By this way, you create the urgency to boost download growth, while still having an opportunity to get money from paid downloads.
Users may take the premium version into consideration due to the high price. They may find the app interesting, but not convincible enough for them to spend their precious budget. In this situation, you may think of offering your app at a lower price. Instead of that, it is more profitable by offering a free app with the option to make in-app purchases, which offer a more advanced experience or unlock extra features and functionality.
In fact, users feel it more acceptable to have a choice to buy specific features rather than being forced paying for a whole app with no free chance to test the functions. The download count is estimated to be ten times higher when using this method. Moreover, in-app features are likely to bear ongoing purchases, which are the best way to seriously making a profit. You can boost that stream by offering new purchases over time.
Mobile games use the most of this method. Most profitable games allowed for in-app purchasing. For example, they might induce users to get more coins, unlock new facilities, levels, scenes, special powers or weapons via in-app purchases.
While inciting people to go for your premium app version, you still can make a bit of revenue by implementing some ad supports on the free version.
You can work with some ad networks that offer payouts on a CPC or CPM basis (cost per click and cost per thousand impressions respectively), like AdMob, iAds by Google and Apple. It means a cool useful app and an aggressive marketing strategy are required to bring as much traffic as possible. High traffic and a lot of downloads are the clues to make a good profit by this way.
Cost per Install Networks (CPI) is the latest digital advertising campaign being introduced to the mobile app marketing industry. It is specific to mobile applications and the most suitable campaign for app developers, app marketers and advertisers.
In this campaign, publishers put digital ads across a range of media to drive installs for your advertised apps. It is cost efficient because you only have to pay at a fixed rate based on the download count. The more installs your app get, the more cost you are charged. So you have the chance to create a consistent profit that parallels the installation. Benefits are all yours.
Sponsors are another way to make a bit of revenue. With sponsors, you can get your money up front, and if the sponsor is prestigious, their name can prove to elevate the reputation of your brand. You have to find sponsors willing to pay you when you white label the application.
You might approach a sponsor and make them an offer by telling them you have an app that has had several thousand downloads (which you can support with your analytics), and you can then offer to change the graphics to reflect the brand of the sponsor for a set fee. What’s more, you can get the sponsors you work with the market the app for you: It’s a win-win for everyone.
To make money with apps, you can partner with a company with a similar custom base. By integrating their offers in your app, you can get a referral fee.
Most revenues from Android apps and games came from freemium app models. So it is not a risk, it’s a proven method. Making money from free apps is definitely possible, but it will take some work. Knowing the method of making money from free apps, a developer can emphasize on approaches that can monetize your application and lead to greater profits over the course of time.