Since the introduction of the first iPhone model and its App Store, mobile apps have become integral in our daily lives. They represent an easily accessible virtual doorway for games, utilities, lifestyle, and work – for the end-users. For creators, though, apps can be seen as something entirely different – a way to develop a profitable product that continuously brings in money. However, if your only goal is to make an app for free, you might be in for a disappointment.
Technically, it is possible to build a self-sufficient mobile app on a low budget, but it won’t have the same feature set and user experience as a more expensive app can. It’s wiser to aim for creating a product with real value and add powerful monetization models to return and multiply your investments. This guide will cover the app development process, timeline, and costs, as well as all the different ways to make money from it.
What is the Difference Between Free Apps and Paid Apps?
There are essentially two types of apps distributed through official mobile stores: free and paid ones. Free apps can be instantly downloaded by any user without any fees required. Paid applications charge a one-time payment for the installation. As both of these models have pros and cons (outlined in the table below), a hybrid option that combines their strong points has emerged – the so-called freemium model. These applications have a free version with limited functionality and extra in-app purchases to gain access to more features and/or content.
|Free apps||Paid apps|
|Pros||– A wider audience reach
– Higher average ratings
– Multiple tools for monetization
|– Easier to track ROI
– More user comittement
– Less competition
– More visibility among the chosen category
|Cons||– Lower user engagement
– More competitors
– Harder to attract a stable and predictable revenue
|– Fewer downloads statistically
– Higher user expectations
– Fewer options for advertising
How to Make a Profitable App?
Technically speaking, if you manage to create a mobile app that returns the investments required for it, you can already consider the product profitable. To make this success last and continue seeing a steady inflow of cash every month, your app has to offer real value to its target audience. A good app is purposeful, stable in performance, and user-friendly in terms of its design and features. To achieve a certain level of quality and make money, the developing process has to go through several milestones.
Conceptualize Your Idea
First, you will need to come up with a concept for your app. Try to narrow down one or two categories that it could fall under: social media, lifestyle, music, fitness, utility, game, etc. You can review existing distributions in App Store or Google Play. Strive to find a pain point that a certain audience might have and offer a solution for it. You might draw inspiration from your own life, create a collective service for local businesses, or simply focus on entertainment.
Research the Market
Once you’ve settled on a primary app concept, you should search for its current implementations. Use keywords or browse the corresponding category, read user reviews, and download similar free apps on your mobile device to try them out yourself. Look for best practices, features that people find useful, and UX elements that work well. At the same time, try to notice discrepancies in logic and structure, and come up with a few missing functionalities that users would find convenient. Lastly, study the existing monetization strategies and pricing models.
Create a Wireframe
With the initial app concept and insights from competitor overview, you can start putting together a wireframe – a screen-by-screen outlook of the app’s structure. Look for free wireframing tools like Figma, InVision, and Miro to save money on this stage. Your goal is to create a seamless sequence of all planned features and figure out the relative positions of different design elements. Prepare a color scheme, some icon ideas, and a selection of references for the designer that is going to put together the front-end part of your app.
Design the Look
If you have no previous coding knowledge, opt for app builders. These are platforms with ready-made templates that you can combine, tweak, and adjust to fit your desired look. However, they usually offer a limited set of standard features and will only work well for a simple app concept. For a more sophisticated interface design and user experience, you will need to approach a front-end specialist.
If you are well-versed in UX and UI yourself or already have someone on the team, you can design the look for free or on a monthly salary basis. Other alternatives include hiring a freelancer or outsourcing the job to an agency. This will require more money but can allow for building more complex mobile apps that are equally responsive to different devices.
Back End Coding
Back-end coding can be a time-consuming stage, especially if you aim to do it for free and complete all the work yourself. A way to save time would be to continue using an app builder that compiles the resulting code. Custom development costs more, but again, can achieve a higher level of customization, a more seamless user experience, and a wider feature set, which can ultimately be a deciding factor in making money after the app is released.
Test Your App
To perform initial testing, you will need an active developer account and a simulator SDK to mimic different user devices. This should highlight major bugs and crashes that your app might be experiencing, however, it can only recreate situations to a certain extent. To observe how the app would work in real conditions, you’ll need to continue with internal testing on a small segment of the potential audience and/or your team.
Modify and Adjust
Testing does not only reveal the obvious performance flaws – it allows you to question the chosen design, element placement, and sequence structure of the app. Rely on user feedback to modify and adjust the app in order to make it more functional, stable, aesthetically pleasing, and convenient. Consider reworking the features that the audience finds unnecessary or hard to master.
External testing implies publishing the beta version of your app to a controlled group of users. The suggested testing duration is between two to twelve weeks both for Android and iOS, with the latter having a limit of up to 10,000 accounts. Keep an eye out for app performance with the increased number of users – it might reveal shortcomings in the supporting infrastructure, like server capacity or the speed of data delivery.
Release Your App
After you’ve made sure that every feature, field, and button works as it is expected, you can put together the information required to release the app. Generally, it includes a description, an icon and name, and some screenshots. You will also have to pay a distribution fee – an annual $99 for App Store and a one-time $25 for Google Play Store – and pass internal moderation procedures.
Market Your App
A marketing model is essential for the app to start gaining visibility – without any promotion, it can lie buried under thousands of other apps at the bottom of store charts. Actively share the app with your current audience and social media subscribers and encourage user engagement. You can also create offline and online campaigns and consider adding PR work or collaborating with influencers or opinion leaders in the relevant industry.
App Monetization Strategy
Mobile apps make money via different models, or, more frequently, a combination of them. You will probably have to test several of these earning strategies to gather enough statistics and decide what works best for your app.
Advertising is basically about letting other people display their products to your app’s audience in the form of different creatives: banners, videos, pop-up windows, etc. People kind of expect to see ads in free apps and are willing to tolerate a moderate amount of them, but are fed up with annoying full-screen banners that you can’t get rid of. This is a powerful strategy that is evolving towards user-targeted content and native ads.
Banner ads can be either static or animated and take up part of the space within the app’s layout. Two common payment models for banners are CPC (cost per click), when the advertiser pays you a fixed commission each time a user actually clicks on the banner, and CPM (cost per mille, or cost per thousand) with a fixed cost for every thousand impressions.
Video ads are common for game apps and can be placed between different levels or follow certain achievements. Another common approach here is an incentivized ad – an advert that rewards a person for opting in to view a video, giving them virtual money or other related goods in return for the view.
Native ads take the form of their surrounding content, blending in with the existing interface elements and content placement on your app. As they are less distracting and more tolerable, these ads achieve higher conversion rates.
In-app purchases represent an upsell model and offer users the option to buy virtual goods without leaving the app. They can be introduced to unlock new features, skip ads or certain levels, or pay for subscriptions. Both Apple and Google take a 30% commission for every purchase. The products you aim to sell have to present real value to users, otherwise, they will not be willing to part with their money.
If you own an existing business and create a mobile app as an alternative to selling products or services through your website, in-app merchandising will allow you to keep the app free and still make money for the distribution of goods.
Subscriptions and freemium models
Stemming from in-app purchases, a subscription model is common for content and lifestyle apps: users are given access to the app’s content for a trial period or can only interact with a limited portion of the functionalities until they subscribe. If you offer discounts for longer-period subscriptions and make the short ones auto-renewable, you’ll be able to earn more money.
A freemium model means the initial app installation is free but in order to use premium functionality: unlock a new level, access premium content, or leverage extra features, users have to make a payment. Application stores often take a percentage of each in-app sale. Freemium apps use paywalls that lead to a subscription or require a one-time fee.
Applied to mobile ads, referral marketing can come in the form of you prompting or rewarding users to share and promote the app to their friends and colleagues. While this type of advertising model may not bring you instant revenue and might even require some initial funds, it is a great way to attract a wider audience and cash in their payment capacity in the long run.
Collecting And Selling Data
Mobile apps deal with a lot of user behavior data that can be anonymized, quantified, and sold. This is a way to keep the user experience intact, besides the need to inform them and get their positive consent for using data.
A crowdfunding model is usually used for initial app development when you already have a receptive audience that will be willing to support the idea: for example, a mobile app for non-profit organizations. However, you can try to continue using it and award crowdfunders with richer in-app functionalities or badges of honor.
Affiliate marketing creates a win-win partnership between publishers and advertisers: as an app owner, you place links to products on the advertiser’s website and get a reward every time a user follows and/or interacts with them. The payment model can be PPC (pay per click) or CPA (cost per action). The action that will lead to you getting a commission is defined between you and the advertiser, but in general, it is making a purchase or ordering a service. For apps specifically, another suitable option is CPI (cost per install) partnerships.
|Advertising||– An array of different payment models
– Easily managed and measured
|– Banner blindness
– Excessive ads might be a turn-off for the users
– Works well only for free apps
|In-app purchases||– Bigger exposure
– More user engagement
– Opportunities to sell your own merchandise
|– Security and parent concerns
– Extra back-end work and customer support required
– Is not applicable to single-purpose apps
|Subscription and freemium models||– A reliable revenue stream
– Lower churn
– Easier to get more initial downloads as they are free
|– Users expect fresh content each month or quality content in general
– App stores charge a higher commission
|Referral marketing||– A chance to organically grow your app audience
– Higher credibility for potential users
|– Hard to measure the effectiveness
– Can take a long time to bring in actual profit
|Collecting and selling data||– Keeps the user experience intact||– Requires transparent opt-ins and higher data security protocols|
|Crowdfunding (an audience sponsorship model)||– The best funding option for an established brand||– Not as stable
– Requires a strong motivation
|Affiliate marketing||– Multiple choices for management and link-tracking platforms
– Low investment
|– Low control over the user-advertiser experience
– The possibilities of unrelated content
The Most Common Monetization Mistakes Mobile App Developers Make
Even though all monetization strategies have the capacity to bring in money, finding the right approaches for your app can take some time. Applying all existing models or exhausting a particular one can feel too aggressive and may prompt users to delete the app altogether. In an attempt to earn more, you can impair the user’s interaction with the app.
Another mistake is completely ignoring the content of products you choose to advertise within your app. Unless you carefully monitor the types of services you promote, you might end up leading people to your competitors or displaying ads that are completely irrelevant to your target audience. Trying to sell shooter games in a meditation app, for example, will not only result in low conversion rates but can irritate users.
How Much Does it Cost to Build an App?
Development cost heavily depends on the chosen coding approach, desired app complexity, and the required feature set. Making an app for free is almost impossible but you can pull that off if you use an app builder with a free trial period and strive to create something very simple. However, you’ll still need to pay a distribution fee to place it in app stores. To continue supporting the resulting product, these platforms charge around $10-$500 per month.
Custom development requires an entirely different order of investment magnitude as you have to pay for the back-end part of the app, as well as for supporting data infrastructure, maintenance, copywriting, and design. You can cut costs by outsourcing. In general, a medium-complexity application costs around $100,000-$150,000. A comprehensive guide to pricing can be found in our dedicated app cost breakdown blog post.
How Much Money Can You Make with an App?
Statistically speaking, the application category that has the highest demand is gaming: according to a 2016 vs. 2021 comparison by Statista, these apps are now making three times more revenue than all other types, growing twice in five years, while mostly being free.
Another interesting graphic to look at is the 2021 distribution of leading App Store apps by revenue – that really shows you that sky’s the limit when it comes to app monetization.
As for exact numbers, there is really no average figure as it heavily depends on app popularity and the chosen monetization models. Last year, the top 200 apps were making $82,500 a day, with the number dropping to $3,500 for a larger app count. A monthly subscription can cost anywhere from $5 to $200, and in-app purchases have the power of
bringing in even more money each day.
Best Tools to Help You Monetize Your App
In case you are keen on pushing your earning strategy forward or have a time limitation to return your first investments, you can leverage existing tools for app monetization.
Creative management platforms (CMP)
CMP are services that allow you to make variations of advertisements tailored to specific audience segments, devices, regions, languages, and a number of other characteristics. Since the general trend is shifting towards personalized ads, this can become an essential tool for better ad performance. An example is a service called Bannerflow.
AdMob is a free platform for setting up and monitoring in-app advertising that runs under Google. It works both for iOS and Android and allows you to create and segment campaigns and track their performance.
Unity Ads is a monetization framework created specifically for games that display native ads tailored to each of the existing players for all Unity-based apps. The service recently partnered up with Meta Audience Network to enable more partnership opportunities for app developers.
Apple Search Ads
Apple offers better placement for your apps in relevant search results for a fixed fee. This could work well for recently released applications that need more visibility in order to start seeing a return of investments.
Leading Trends in App Monetization in 2021
A general monetization trend is not to make advertising too aggressive, trying to present it natively or engage the user into interacting with it. Incentivized and playable ads receive a warmer reaction than simple video clips that a user has to sit through. On top of that, the ad content will become more personable and better-tailored to each user, with a bigger emphasis on app creatives. Still, as people are already tired of seeing ads everywhere, another emerging tendency is to offer an ad-free version of the app on a subscription basis, as Spotify does. Another interesting observation is the shift from download payments to freemium and subscription-based models. Most of the top-performing apps on official stores stick to that model. Unless you have an established brand image and a proven product value, people expect to at least have a glance in the form of a free trial or limited feature access before making the decision of spending their money.