Free apps do not require payment to be used; this is why they are downloaded more than paid apps. Although they are free, they can still generate passive income in several ways.
Collecting and selling data: Emails, marketing information
- Native Ads
- Video Ads
- In game ads
- Interstitial Ad
- Affiliate marketing
- Affiliate marketing
- Fermium methods
- In-App Purchases
- Unlocking parts of the app
A simple way to monetize a mobile app is through display ads. These ads would appear on launch and in between user actions. Ad platforms are the middle man between the advertisers and the publishers. These include; Amazon ads, AdMob, Apple ad tool, Facebook’s app. The advantage is that the App owner does not need to deal with the advertisers on a one to one basis. These platforms will choose the best ads to display in the app depending on the type of app and type of users. Video ads tend to have better clock through rates check AdWorkMedia, Vungle and YuMe.
There are several formulas for display advertising:
- Cost per action (CPA) Base on a particular action the user takes.
- Cost per click (CPC) – Cost per 1000 clicks
- Cost per view (CPV) – Videos and Banner Ads
- Cost per install (CPI) – Pay per action, example installation
Check out these additional tools for display advertising on mobile apps.
- Affiliate marketing platforms such as click bank
- In-App purchases: Androids Apple
Affiliate advertising, Sponsorship and paid placements
Free mobile apps can create a passive income stream by making direct deals with advertisers in the form of a sponsorship. Sponsors would buy all advertising space on a mobile app for a period. The deal could also include special bonuses to the app users designed to include sponsor branding.
Sponsors will only get involved with high-quality apps with 1000s of users. It takes time to manage these relationships which takes out the passive element of earning passive income but on the other hand ad platforms take a cut from the advertising money. A direct deal can increase profits.
These articles have monetization ideas which can also be used in Apps:
Affiliate marketing on Facebook.
Passive income streams from YouTube
Freemium apps are a mixing part of them are free, but other parts needs can be unlocked when the user pays. The idea is to get the user to download the app use it. This is the biggest hurdle if the user is satisfied with the basic functionality he is more likely to buy in the paid parts of the app.
- Unlocking of game levels
- Providing bonus info
- Providing information earlier to the paid users than to the free ones.
- Pay not to see the ads
- Pay not to wait between an action and another one
- Buying virtual money which can only be used in the app
This virtual money can then be used to buy suits, armour, flowers or unlocks further functionality. The advantage of in-game virtual currency is that it makes spending much faster and smoother, thus the users will tend to spend more money.
Paid and Subscription Apps
Paid apps, require the user to make a one-time payment in order to use them. These apps will be downloaded less frequently; internet users now consider themselves entitled to free stuff. Your first app will most likely not be a paid app.
Subscription based apps are the ideal passive income asset. They provide a regular stream of income by the users. On the other hand, the users need to stay satisfied with the app in order to keep using it and paying! Such apps tend to require constant updates which remove the passive element of the game.
Paid and subscriptions base apps are most successful when built in parallel to other apps which have a cult following.
Your first mobile app is hard work, but the second one will be much easier and the third one a breeze. The passive income potential with these digital assets is impressive. Especially when taking into account, the risk-reward ratio involved. This ratio becomes more interesting when the investor can also develop the app themselves.