How to Monetize Free Apps – Part 1

We all love free apps. You get to explore and enjoy new technology without paying up-front to download it and try it out—or (even more sneakily) learning that you need to pay to keep using the app once you’ve already gotten started and find out how much you like it.

But on the business end of things, you need to make money in order to keep making the apps that everyone loves and keep driving the world forward through inventive new technology. So how can you monetize your free app?

We’ll outline a few of your options below—but the main thing to know is that when you’re monetizing free apps, you need to make sure there are good incentives for people to download the app in the first place, and you also need to design the app so that users will hit the marks that drive revenue to your business (whether or not they are contributing it directly themselves).

The way to keep track of whether or not you’re achieving those essential goals as you create your app is to plan ahead, and then complete thorough app-testing along the way. Testing your app with real users will inform you about whether their behavior is going to trigger the actions that will translate into revenue for your company.

Here are a few ways you can make money from free apps—along with tips for app-testing techniques that will steer user behavior toward a more profitable experience:

1. Ads. Though they’re not a favorite part of the app experience for users, ads are the most common way for free apps to make money. A report by IHS Markit predicted that in-app ads will be drawing $50 billion in revenue by 2020. You make money according to how many views (or impressions) your ads gets, which means that your motivation is to get a lot of users on your app—and keep them there for long periods, to keep seeing new ads.

2. Purchases. Unlike ads, users don’t particularly mind when an app encourages them to pay for certain benefits—if it’s done right. For example, gamers don’t always like when they’re prohibited from reaching certain levels or enjoying the full capacity of their games unless they spend money. But professionals are often pleased to be able to pay for extras on business tools, and specify exactly which level of your software fits what they’re looking for at that time. Finding the right way that matches your product type and industry is essential if you plan to monetize your work through in-app purchases.

3. Freemium. True, it’s not technically a fully free app if you ask users to eventually pay for your product. But freemium apps are a middle ground between asking users to pay for apps up-front and releasing the ad entirely free; this way, you give users the ability to try out the app and see how they like it, then decide to pay for it after a trial period. This can be a fairly nominal fee to keep your business going, and allow you to provide upgrades for their own benefit. On the other hand, you can ask for donations only on later upgrades of the product. Or, you can simply request donations that will allow you to keep sharing your work to everyone, for free, without any requisite payments. You might be surprised that your fans are willing to support you.

Learn more about how to monetize free apps in the second part of this two-part series; then, try out these tips for yourself by signing up to test your free apps with Eyece.

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