Most of us have downloaded dozens of apps on our smartphones without paying a cent. How do the developers of these free mobile apps make money? This article discusses the marketing strategies used by mobile app developers to make money from apps that users download for free.

We all love being able to download and use our favorite apps for free. But have you ever wondered how the developers of these cool apps make money from your free download? Lots of mobile app developers do app development as a full-time job. So they’re in this for the money too. The truth is that it is very possible to make more money from a free mobile app than a paid one. Apps like Angry Birds make hundreds of millions of dollars every year. How come?

Let us examine the different revenue generating strategies that mobile app developers use to make money from your free downloads.

Advertising: Maybe YOU Are The Product.

There’s a popular saying in the world of digital marketing that…

If you’re not paying for the product, you are the product.

Although the correctness of that statement has been argued back and forth by many digital marketing professionals, we can’t help but see the point it makes when we consider the revenue generating model of “free with advertising”.

In a sense, it can be said that mobile app developers are selling your eyeballs to the highest bidding advertisers. The more downloads an app gets, the more people use it (traffic). And traffic is easily monetized using advertising. This model is a valid business model that has been in place long before mobile apps burst into the scene. Most free mobile apps merely take advantage of it.

Premium Versions: It’s Free. But Not Too Free.

Another popular revenue generating model of free mobile apps is having a premium version as well as a “lite” version. The lite version is the free one and it usually contains enough features to attract your attention and get you hooked. If you want all or more advanced features, you will be directed to upgrade to the premium version – for a fee of course 🙂

Offering lite and premium versions of the same app is a clever marketing model and a ton of apps use it. Sometimes, we see the advertising model mixed with the lite/premium model. Lite versions may use up some real estate on your device’s screen to display ads and you may need to upgrade to the premium version to get the ads removed. This works pretty well too because ads are often annoying. And for an app we like, we’re often willing to pay a few extra bucks to get a no-ad version.

Recommended Reading: 10 Tips For Marketing Mobile Apps On The Cheap

This model is a little tricky because developers need to strike a good balance between features offered on each version. The challenge is to make the lite version interesting enough that people would download and use it, but lacking enough to make people eventually want to purchase the premium version.

Tricky revenue models like this, demonstrate that these days, for indie developers, just being technically good at mobile app development is usually not enough.

In-App Purchases: You Like It. Now Buy More Features.

With this model, the app is basically a free download. But if you want to use it to a fuller extent, you will need to purchase additional features. You can choose the types of features you want to purchase as well as how much of it you want.

This model is similar to the “lite vs. premium” model and quite a lot of games and dating apps use it.

Long Running Trial Versions: The WhatsApp Model.

You can download and use WhatsApp for free, but only for the first year. We all need convincing, don’t we? After the first year, you will have to start paying $0.99 per year to keep using the app. This is guaranteed annual revenue for WhatsApp indefinitely! WhatsApp has been immensely successful using this model and currently has hundreds of millions of users worldwide.

If your app idea is solid and you’re willing to wait for a reasonably long time before revenue comes in, this could just be a model you want to try for your new app.

Conclusion: Free! Really?

It can be argued that no really free app exists. We only consider an app free because we did not pay to download and start using it. Look closely and you’ll find that the fancy free app you just downloaded is intelligently making money off you. That’s why people say…

There’s no such thing as free lunch.