You love your smart phone and the unlimited access you have to free mobile apps, but have you every wondered how developers of mobile apps actually make money from your free download? Apps like Angry Birds report annual revenues in the hundreds of millions of dollars. How is this possible? Mobile app developers use several strategies to make money off your free downloads.
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Advertising
As the modern adage goes, “if you didn’t pay for it, you are the product”. Mobile app developers are literally selling your eyeballs to the highest bidding advertisers. Downloads essentially amount to traffic, and traffic can be monetized through advertising. Most free apps use advertisements of some kind to make money off downloads.
Premium Versions
Apps often offer a free download of their app (often called the “lite” version) which offers some of the features – but not all of them. The only way to get the full app benefits is to upgrade to their premium version. This is a clever marketing tactic, though developers have to strike a good balance of features offered on each version. The challenge with this tactic is to make the free version appealing enough that people want to use it, but lacking enough that they eventually want to upgrade to the premium version.
In-App Purchases
This model is similar to the “lite vs. premium” model. The basic app is free to download, but if you want to use the app to its fullest extent, you will need to purchase additional features.
Free for a Limited Time
The immensely successful text messaging app WhatsApp offers free downloads, but only for the first year. After that, you have to pay $0.99 annually to renew app access. WhatsApp gives away one year free to convince you that you can’t live without their app. Then they make one dollar per year off you indefinitely. WhatsApp has hundreds of millions of users worldwide and produces enormous revenues through the app renewal fees.
Are Any Apps Truly Free?
There’s no such thing as a free lunch, so is there any such thing as a free app? Apps can be considered free because you can download and use them without paying any money. Nevertheless, you should be aware of how developers are planning to make money off your download.