How Do Free Apps Make Money Without Ads - Top 6 Ways

Last Updated
February 23, 2024
How Do Free Apps Make Money Without Ads - Top 6 Ways

There are many ways apps make money. It depends on the industry the app belongs to and the target market. If you are thinking of developing an app, and generating income from it, without ads, you should read this. Let us first discuss what free apps are. 

An app is considered to be a free app, if users download it for free. Users do not have to pay any money to use such apps. Moreover, they can delete it at any time, without paying any charges. Free apps mainly aim to increase user engagement. Users generally download free apps more than the chargeable ones. As of December 2023, around 97% of all Android apps were free, while 3% required payment.

Many users today want to use the app for some time, before deciding whether or not to buy anything from it. However, from the side of the company developing it, free does not always mean, you cannot generate any income from the app. So, that is where we begin today. 

Decoding The App Revenue Model 

A revenue model is basically a monetary framework, which every app development or owning company has to think of. It mainly defines the sources of income. Moreover, it also defines the value offerings of the app. To summarise, whenever someone mentions the word ‘app revenue model’, it means sources of revenue through which the mobile app will make money. 

If you are conceptualizing and developing an app, you have to think about the revenue bit as well. The app revenue model is of interest to investors, whom you might like to invite on-board. Let us discuss the various app revenue models that are available today. 

Types of App Revenue Models for free apps

Freemium App Model 

This is one of the most common types of app monetization models. If you know how to utilize it to its fullest capacity, you can get good returns from this model. This has proven to be a great success across several app stores.

It is basically a unique business strategy that offers users a basic version of the app free of charge. If the user is eager to go for the attractive features, then a price needs to be paid. This is a great approach for the company, and equally beneficial for the users, as they get to try the app for free. 

There are different types of Freemium Models

  • Advertisement – In this model, users can get the free version of the app, but has to bear with advertisements. To avoid seeing the advertisements, users must pay a charge for the premium version without them.
  • In-app purchases – This version allows users to purchase items virtually within the app. For example, an app may offer free editing services with basic tools. For premium ones you have to pay a charge. Apps like Candy Crush and Spotify follow this model. 
  • In-app subscriptions – Here, users will get access to premium content, if they pay for a period, say monthly or annually. Once they stop paying, the app only delivers basic services. Trial periods are often included, after which users have to pay for access. 

Attractive Features Of Freemium Model 

Now that you have a fair idea of the Freemium models, you must learn about its main features in a nutshell. 

  • Increased Customer Base – If your app is free, more people will download it and use it. You stand a better chance to convert the audience thereafter. 
  • Lower Cost Of Customer Acquisition – The Freemium model is more of a way to gain a customer base. It saves a lot of money, when compared to traditional marketing channels. Your potential market or prospects have easy access to your services. And, it also gives them the liberty to upgrade any time. 
  • Better Customer Retention – You should create an attractive app, with great visuals. It will help in the retention of the customers, who may in future engage in in-app purchases. 
  • Greater Lifetime Value Of Customers – Those users who purchase premium features, often stick to the app for a long time, due to trust. So, it helps in generating a steady source of income. 

Subscription-based App Model 

Subscription-based apps are ones that charge users a membership fee. You may have to shell out a monthly sum, weekly sum, or an annual sum. This is the most widely followed model, for apps that offer exclusive content.

Netflix and Amazon Prime follow this model. However, you need to provide high-quality services or content to make this model work. The app must be easy to navigate as well. The subscriptions will create a steady flow of income for your business. It also helps in fostering a sense of community among all the users. 

Attractive Features Of Subscription-based App Model 

  • Platform Incentives – The software company which releases the app may get incentives from the platform, where the app is listed. 
  • Higher Revenue – This type of model improves the cash flow. The revenue brought in by subscriptions is also higher than other revenue models. 
  • Ad-free Experience – Users can access the content uninterrupted. 
  • More Engagement – Users are more engaged, as they use the app for long hours, to get maximum value for money. 
  • Auto Renewals – The subscriptions are often auto-renewed, which increases retention rates. 

Sponsorships and Brand Partnerships 

Having a sponsor behind your app, may not be that common, but exists. Your product, services, and their goals direct the pathway for sponsorship. App companies can use the Sponsor’s logo in different places, for all to see. One can also display sponsor ads.

These sponsors pay you to promote their product or service. It is usually a mutually beneficial collaboration, where you get revenue and the sponsor gets exposure in front of your customer base. You must ensure that the sponsor and your goals align. Marriott and Subway have taken this route. 

Advantages Offered By Such Models 

  • They can provide a continuous revenue flow. 
  • They can help you to build your brand. 
  • Your users may get some exclusive deals from the sponsors. 

Data Monetization Model 

This basically means selling your app’s user data to third parties. Although most people will not like this concept, this is indeed a legal way to make money. However, you must be transparent about such policies, with your user base.

Again, you must ensure to collect correct data, so that it provides value to the companies, whom you sell it. This model can help in generating revenue, without impacting the user experience negatively. It also gives insight into user buying patterns and preferences. Based on such findings, you can improve your app’s features and functioning. Always remember about the transparency bit, with the users. 

Crowdfunding and Donations Model 

This is a process through which apps can raise large sums of money to cover development costs and launch costs initially. Kickstarter is one such platform that assists in getting the funding. However, to get the funding, certain things must be clear. You have to set your goals, on proper measurable parameters. You also need to provide good value to the donors. 

  • The first advantage of this model is that you can validate the app and generate interest. 
  • You can build a community around the app. 
  • You can get feedback from potential users. 

However, you need to set proper goals, and work towards the same, to sound convincing. Failing to do so, may damage both your and the donor’s reputation. 

Hybrid Models 

Such models generally combine two or more monetization models, as listed above. You may offer a free version of the app, with limited features. One may have to pay for additional in-app purchases. One may also subscribe for exclusive content. You should create value for your users, to make either of the above work for you. 

How to Choose the Best App Monetization Strategy?

You can choose the best app monetization strategy, if you keep a few factors in mind. 

  • Target Market – You have to decide beforehand, who your target market is. Their needs and preferences need to be studied closely, to come up with the best. You can choose a monetization strategy to suit the needs of this user base. 
  • App Category – Your app category is of primary significance, before you decide on the monetization model. There are various categories, like gaming, shopping, entertainment, music, and so on. 
  • App Features – Your app's features are also important and worth noting here.
  • Target User Behaviour – How your users use the app is also an important marker here. It will help you to decide how you will monetize. 

Importance of App Monetization in Today’s Times 

After you have ideated an app, you must ascertain its viability. No one just creates an app with resources, for the sake of it. Most business owners create apps for the following reasons:

  • To generate revenue. App monetization helps the development company to generate revenue, cover development costs, and pay salaries. 
  • App monetization without ads, helps in enhancing the user experience, which also improves customer retention. 
  • Offering valuable content or features through in-app purchases or subscriptions can incentivize users to invest in the app, fostering a sense of loyalty and commitment
  • You can also build brand loyalty, through app monetization strategies. Sponsorships and partnerships can help you to give your brand recognition, in the highly competitive market. 

You can identify the right app monetizatiosn strategy that works for you. Research in your market or domain, analyse the competition, test, and then track the metrics, based on closely guided parameters. 

Final Words

If you are developing an app, it is necessary from the business point-of-view to monetize it as well. You can explore multiple options as listed above, like in-app purchases, subscription-based models, brand partnerships, and data monetization, while maintaining a great user experience.