How do apps make money? Person holding phone and money.

Apps can be a source of revenue. Here’s how.

So you have an idea for an app that you think will be downloaded by millions of people and make tons of money. How does it make “tons of money”?

“I’m gonna charge everyone a dollar for it!”- well if that’s the case, then why are there so many free apps on the apps stores? There are far more free apps (they say “get”) than paid apps advertised. If simply charging a dollar was the answer to getting your app downloaded don’t you think there would be more listed on the app store?

Don’t get us wrong there are A TON of apps listed for $0.99 but just look at this screenshot from our iPhone:

apps for free on app store

We had to scroll past some apps we already downloaded for free so that you could see just how prevalent the “get” apps were. Considering the number of free apps, it begs the following question.

How Do Apps Make Money If They’re Free?

Here’s a shortlist of ways apps that are listed for free actually make money:

  1. They have ads

If you’ve ever played a free game on your phone you’ve probably noticed you spend quite a bit of time watching ads in between levels or maybe just to get one more shot at completion. On average, if your app is hosting ads it can make about $0.02 per impression (viewed ad). So if relying on ads alone, how many ads do you need to have viewed to make a living? Well we can’t really tell you how much money you need to live so we invite you to do the math!

2. Selling User Information

This is probably our least favorite way to make money with an app on our list. People don’t like to know that they are a product. Essentially putting a price on your info is putting a price on you and we just don’t like it. If you’re curious to know how much your data is worth to people visit Invisibly. We found it kind of depressing actually. We thought we might be worth more! Everything has a price as long as people are willing to pay. Your email, your phone number, even your address can all be bought. Sad right?

3. The Price Itself

Remember how we discussed putting the app for sale on the store for $0.99? This itself can be a way for you to generate a return. Make an app that adds enough value to people, or a game that is fun enough, and you might just get enough people to download it to make money. Just remember in order to get people’s eyes on your app you may need to do some marketing for it. You can see some of the marketing we’ve done for our own app PopVideo in the videos below:

4. Upsell (In-App Purchases)

Another way to generate revenue from an app is by incentivizing a purchase. For example, oftentimes apps will offer the ability to turn off ads through a purchase. Or maybe you’re playing a game and want to purchase upgrades for your character. Or maybe you want access to certain app features that aren’t available in the free version. There are lots of ways to incentivize a purchase within your app.

5. Making Money By Adding Value

Let’s say you own a business that improves other businesses’ compliance. Let’s say you’re a compliance consultant. When companies partner with you or utilize your services they are provided access to an app that digitizes workplace processes such as ensuring the building is locked or granting employee access to cameras remotely. Maybe there’s a cleaning checklist within the app. Whatever type of compliance consultant service you offer, if your app is the selling point for clients and is bringing in more business, then, in turn, the app is generating revenue.

We hope this list has answered some questions and that you found the article insightful. Please consider checking out our other blog posts below.

If you ever have more questions about apps you can also contact us at hello@matraex.com or give us a call at 208 344 1115.

As a bonus for sticking around here’s a link to our app pitch guide which hopefully helps you come up with some clear and clever ways to share your app idea.