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How do free mobile applications make profits?

It is obvious for anybody to believe and understand the functioning and financial empire of paid apps, that horde the media platforms. But ever wondered how does that happen with unpaid or free applications?

How do free mobile applications make profits?

Friday July 17, 2020,

9 min Read

How do free applications make profits?

It is obvious for anybody to believe and understand the functioning and financial empire of paid apps, that horde the media platforms. But ever wondered how does that happen with unpaid or free applications?

Unpaid apps have been out manoeuvring paid ones, in the recent times.

The main focus for such mobile app makers is to build a user base, for app data monetization.  A lot goes into the backend of making unpaid frontline apps, popular enough so that capitals can be built. Tactics advertising, email marketing, sponsorship and more vitalities of such apps.

Is it possible to make money from unpaid apps?

Yes, it is possible to make billions for even unpaid apps, and that is what most of the apps today opt for. The idea is, they are not completely free. You maybe do not have to pay for making an account on them initially.

Or do not have any paid systems to follow, after free trials. But still, such apps have known to build a complete financial structure that leads the software core. So, how do they do it? Some basic communication and interactive tactics or methods opt for this purpose.

They include interstitial, video, native, ad advertising, email marketing, sponsorship, subscriptions, in-app purchases, and freemium upselling. Physical merchandise purchases, collecting and selling of app data referral marketing, and the list goes on. For this same purpose, many in-app tools like advertising tools and monetization tools are used to achieve excellent performance.

The application trade in 2020

In the debate of paid apps, vs free apps, 90% of the market with stats, has leaned on the free once. One significant observation that emerges from free applications in trades is that it always manages to build a customer capital way faster than the paid ones.

Only if your paid application is worthy and has an exceptional experience to offer with great content like most of the streaming platforms of Netflix or Prime, will the users be willing to buy them? Other than it is evident that not for every communication app, users would feel the need to.

A survey suggests that free app marketing and revenue generation, in-app ads, and purchasing are good strategies. Yet, about 20% of users click on the generated ad, and as of 2016, 63% of developers chose to advertise in the app for monetization. This depicts the evolution apps trade has been through over the years, and now ads have become an essential part.

Methods adopted for revenue generation in free apps

Let’s begin by decoding and understanding the various strategies adopted for monetizing free apps.


Advertising has always played a significant role, and it is said to influence the user most of the time. With advertising, there are again modules that can be followed to ensure a 360-degree influence.  

These are interstitial ads or full-screen popups, banner, or display ads in all sizes on any app. In-app video ads that load for about a min and native ads. Now every ad has its representation and appears in different schemes.

For instance, interstitial apps are popup ads that appear at specific time frames, and they can be closed by the corner button. They are mostly used on news, games, apps. Banner ads appear in small tabs at the bottom of an app or on the top side, however, they are less intruding and can be closed quickly. Apps like tinder and uber can be a great example of such apps.

With in-app video ads, they are those 30 sec or 1 min compulsory ads, they do not get away before its time ends. They appear automatically, and can also be operated by the user. Lastly, with native ads, they manifest it as sponsored content or animated videos as natural elements.

Email marketing

If you ever sign up for a new app through your email, or leave your un-purchased cart lonely in a shopping app, you would often see your inbox filled with email reminders and notifications from the. This is known as email marketing.

Emails have been a vital part for such apps, and nowadays, to operate your account on any commercial app, like Instagram, or Flipkart or Trello, you need to sign up with your email. These applications make use of the provided data to send you promotion and emails about updating and more.

If users operate your application through this mail to re-check or login, they make money. This is the way giant companies and commercial apps have been utilizing emails as a powerful marketing tool.


Sponsorship placement within an app, is a useful and remarkable strategy. This provides a powerful monetization model if the provider builds the right app niche for only selected users targeting a certain audience.

The main challenge here is to find a correcting funding enterprise or company, with similar interest and target to achieve. The main types of sponsor deals that are followed are agreed revenue split, and monthly sponsorship fee.

Under both of them, one is generated in app sponsorship and other is paid by funder for app maintenance and other business correspondences. This strategy is lucrative for developers to generate and even expand their online audiences in order to promote the app.


The word ``Subscription” sounds quite similar to all of us. For free apps, with some restricted content, subscription is another influencing tactic, that influences a user to go ahead and buy your product. This is seen today in many prolific apps, like Netflix, YouTube, True caller, Google services and more.

What it actually aims at, is first providing a bit of an experience to the user, and then dominates your interest in exploring more. The user can further on, subscribe can unlock other features of the app. 

This kind of revenue generation is beneficial for cloud services, video and audio streaming services. Online newspapers and even magazines make use of this strategy. As per the report of sweet pricing enterprise, 5% of successful apps make use of this principle, making this the least used monetization model among developers.

In- app purchases

In-app purchases initiate the ability to sell a variety of items, right from beauty to gadgets to local custom-made products, a platform for their product promotion and business, including extra bonus, premium content and more.

We have noticed this in commercial apps, like Instagram and Facebook. Such contents are promoted and sponsored in the app, and if a purchase is made through them, the developers generate revenue. So, this is three some deals for the product owners, the social media promoting apps, and customers.

These strategies used fall in the following criteria: consumable, non-consumable, and subscriptions. As per a survey, 50% of the leading applications use in-app purchases to generate their stream of earnings, and this module is likely to take over in coming years.

Collection and selling of data

This might not sound an ethical way of revenue generation for free apps, but ideally it is the most beneficial one. Some companies that offer free Mobile applications, sell their customer database to third parties. The information includes your email details, social media accounts, and preferences.

Do not worry, because it has nothing to do with your sensitive information like mobile number or credential details. Apps generate money, with this practice of collecting and selling data, for different research purposes, but also approaching a wider audience that might be interested.

So, with this, developers make good money, and there are gain two methods of implanting this, by tracking what users do and sell data to outside companies, and by using raw data itself for its own purposes.

Free applications monetization strategies

Mobile app development is a large pool now, and in a time like today it is most beneficial, you can literally have an excellent idea, turn it to an application and monetize it. all in the comfort of your home maybe. But if you still feel uncertain about how actually you can achieve good revenue stability from it, here is more.

As per stats, top 16% of android users and top 25% of IOS users, make over $55,000 per month with their free apps. If you are real champ at coding and can build a top-notch application, there is no chance for you but to get rich with it.

All you need to know is the demand and supply chain in the trends of the software market and initiation of good magnetising strategies. And for monetization purposes, let’s have a brief understanding of the tools that help you do so.

  • In-app advertising for game applications

Young generations today are addicted to gaming apps, and feel about it tremendously. Hence a good way of starting off this is by targeting apps, which are popular gaming software.

For this, in-app advertising for gaming applications can help. Unity tool, is extremely beneficial for this purpose, and targets only ads for gaming platforms. This tool allows magnetising apps' entire play base with an ease.

  • In-app video advertising and monetization tools

The master of it all is ads. It is a community of differentiating ads that actually build the money. It is only segregated by platforms. it is different for a gaming software as opposed to commercial or social media once.

Hence many monetization and video ad tools are ways for earning profits through them. Tools like InMobi, allow you to create better UX focus, that enhances visuals and allows feedback for the pop-up ads, where you can choose to not show them again.

Also, with tools like Interactive, you can combine innovative ads with reports and analytics. This allows users to monetize mobile apps without compromising on UX graphics. Along with this it helps in bringing best inventory campaigns to support the financial plan. Hence with the use of these tools, achieving a better monetization plan has become an ease today.


There are a lot of ways, how free apps can emerge to be successful once, even without having a monetary frontline system. It only takes smart marketing and development strategies to work out well. Advertising holds a great prominence here. Hence if you remove this element, you are basically conducting social service, with no profit.

With advertising, marketing tactics like email marketing of any other digital marketing plan, is of great importance. Once you master the plan of creation and develop a blueprint. Monetization is only an activation switch honestly. Hence go ahead, and monetize your free app, and start your stream of income.