In one paragraph
In this video, Arsh Singh, founder of ApsteQ, explains six ways free apps make money: ads, in-app purchases, sponsorships, subscriptions, freemium and affiliate marketing. He says in the video that more than 80% of store apps are free and that in-app purchases generate the highest revenue for app owners. The figures date from the 2019 upload, so check current benchmarks before you plan.
Watch on YouTube: How Do Free Apps Make Money? Earning Passive Income With Mobile Apps (channel @arshsingh).
This video was published in 2019, so the market figures below are the ones Arsh quoted then. For the current picture, see our guide to app monetization models, and the newer video How Do Free Apps Make Money? (5 Models That Actually Work in 2026).
Key points
- In the video, Arsh says more than 80% of apps in the stores are free, yet 98% of the revenue comes from those free apps (2019).
- Ads are the easiest start: a third-party network such as AdMob, StartApp or InMobi pays per impression or per click, across banner, video, interstitial and native formats.
- In-app purchases sell virtual items, premium features or locked levels, and he calls them the highest-revenue strategy for app owners.
- Sponsorships work for niche apps: pitch brands to sponsor the launch or the running of the app.
- Subscriptions give predictable recurring revenue, and a common technique is a 14 or 30 day free trial before charging.
- Freemium gives a free version with paid premium features, and he says 15% of free apps have a paid sister version that unlocks everything.
- Affiliate marketing earns commission for promoting other products or services, paid per impression, install or click.
- He says the top 15% of iOS and Android developers make roughly $5,000 a month from free apps, but only 10% to 15% of apps are good quality (2019).
- Apps that already sell a product or service, such as e-commerce, earn mainly from that, and can still add these models on top.
Transcript
Cleaned from YouTube auto-captions: caption errors fixed, paragraphs added, timestamps and channel subscribe prompts removed.
How do free apps make money? How some people earn passive income through mobile apps? In this video I want to share the six proven monetization strategies on how to make money from free apps. If you are planning to launch an app or make more money from your existing app, you will find this video helpful. My name is Arsh Singh and I help launch and scale businesses. First things first, it's been years since the first iPhone app came out And even today the app market isn't showing any signs of slowing down. People have made hundreds if not millions of dollars through mobile apps.
There are around 3.8 million apps on the Play Store And 2 million apps on the App Store And more than 80% of those apps are free Yet the app stores are worth billions of dollars. How? The fact is that 98% of the revenue comes from these free apps Now it's important to note that like any business if you sell a product or service then that would be the primary source of revenue for your app For example, if you have an e-commerce app then selling the products and making a commission would be the primary source of revenue for your business So as an app or a business if you sell products or services then you should be making some money but you can still leverage the monetization strategies that I'm about to share in order to further increase your revenue but not all apps sell a service or product but they still make money.
How? Let's take a look at the most popular and proven app monetization strategies for you to make more money. Number one is ads. Integrating a third-party ad network is probably the most common and the easiest way for you to make money. You can check out the ad networks like AdMob, StartApp, or InMobi which allows you to do just that. As an app owner you get paid based on the number of impressions you get on the Ad or the number of clicks that you get on the ad and the type of an ad that you run. The type of ads typically include banner ads, video ads, interstitial ads, and native ads.
The number two is In-app Purchases This is the most powerful strategies to make money from your app The in-app purchase is a concept where a user purchases a set of virtual items from that in your app. These virtual items could be some special content a premium feature or a restricted level in a game. The in-app purchases generates the highest revenue for the app owners and this strategy is going to dominate in the years to come so if you haven't tried this yet you should definitely try it out The next one is sponsorship.
Businesses sponsor all kinds of things from TV shows to events in order to get in front of their target audience If you're building something in a niche then you can find someone to sponsor your app launch it and run it on behalf of those sponsors. Reaching out to the brand's to showcase your app or your plan if you haven't launched yet could be a great starting point for you to find the right sponsors. The next one is subscriptions. Subscription is one of the best ways to get a predictable recurring revenue The only requirement is that your app should have some value to share to its users so that they can keep coming back and paying you month on month.
A popular technique is to start with a free trial let's say 14 day or 30 day trial and then charge a subscription fee to those users who wish to stay back and continue with a paid plan Next up is freemium. Freemium apps are made available free of charge but include paid or premium features As the term state it's a mix of free + premium hence freemium. The users download a free version of the app and if the content is worth paying for then they upgrade to a premium version. It's a great way to get your foot in the door and upsell your users with quality and premium content.
You can also have two different types of apps which is one free version and a paid version In fact, 15% of the free apps have a sister version which is a paid app to unlock all the premium features. The next one number six is affiliate marketing. Affiliate marketing is a huge industry. It allows you to promote and sell someone else's services and products and make money as commissions. You can use various techniques within your app in order to promote the affiliate products and services based on the number of clicks or installs.
There are a number of websites that are available to help you find the right affiliate based on your apps vertical And there are several techniques to use this app monetization strategy like CPM cost per impression, CPI cost per install or CPC cost per click. Alright let's summarize the top six app monetization strategies that we just discussed. Number one is ads Number two is in-app purchases Number three is sponsorships Number four is subscription Number five is freemium And number six is affiliate marketing. Now you can make a lot of money with the mobile app development if you go about it correctly. in fact top 15% of the iOS and Android app developers make roughly around $5,000 per month with their free apps but that also means that only about 10% or 15% of the apps on the App Store and Play Store combined are good quality apps.
Now if you apply these app monetization strategies on top of a quality coded app then you will certainly be able to increase your revenue.