You might have heard people telling you how they’re building the next big app. For some reason, the ‘app’ is talked of as a proxy to success.

Is that true?

Well, here we are to give you concrete guidelines on how you can earn money through your application.

2020 is a year of distress, but it is also a year to become self-dependent. And the best way to do that currently is to develop a mobile application. According to, the second quarter of 2020 saw a massive rise in the usage of Google Play Store applications. More than 96% of these applications were free to use.

We can deduce that users are engaged in applications, but only 5% are ready to pay for them. So, exactly how do free apps make money?

Let’s begin from square one.

How to Create A Successful Application?

Here’s the fact that you must keep in mind before reading ahead. Free apps hold the maximum of the world application economy as opposed to paid apps. Note here that the app market is worth billions worldwide. Revenue from free apps is expected to increase shortly.

So, how to create a successful application. Here are the steps that you’ll need to follow:

  • Study your competition well. Don’t barge into the development process before you know what you are competing against.
  • Begin with an idea. Be aware of the problem you are targeting. Identify the service/product that your app can offer to solve this problem. And finally, make a list of the features you’ll have in your app.
  • The next step is to choose the platform: iOS or Android. Compare them and analyze them.
  • Check the app development languages, tools, and SDKs. Some examples of this are Objective-C, Swift (both for iOS), Kotlin, Java (both for Android), etc.
  • Select the types of app you will be launching: Native app, Flutter, or Hybrid app.
  • Estimate the cost of development based on the complexity of the application. If it’s a messaging application, the cost would largely depend upon design complexity, software development stages, etc.
  • No matter how tight your budget is, you have to invest a big chunk of it in the graphic design of your app. The graphics attract users like anything.
  • Find the right software outsourcing company. It’s often observed that outsourcing is more budget-friendly than hiring a full-fledged tech partner.
  • The last step is to calculate the development cost, using a “cost calculator tool”. Or, you can calculate it yourself by using this formula:

App Development Time x Hourly Price = Total App Development Cost

Tip: Once you know the estimated cost, try reducing it by studying different payment models for app development and each step included in them.

How to Make Money with Android Apps or iOS Apps?

Professional app developers would always recommend you to go for a suitable monetization model that can work for your audience. For either Android or iOS, you’ll need to keep yourself updated with the following ways of monetizing your app:

  • Paid Apps
  • In-App Purchases
  • Freemium model
  • Subscription model
  • In-App Advertisement
  • Partnership monetization or Sponsorship

Let’s first study the difference between Paid and Free Apps:


  • Free apps require nominal app development costs, while paid apps require high app development costs.
  • There are always fewer downloads of paid apps, while free apps often attract more user attention and frequent downloads.
  • User expectation is relatively high when they pay for a paid app. So, it would be best if you had flawless mobile app development. With a free app, users usually expect a decent interface. With some good reviews, you can survive with your free app.
  • With free apps, you have plenty of monetization possibilities in the future. Contrarily, with paid apps, you have limited prospects of monetization, and you have to pay a monthly/annual fee for it.

In-App Purchases

Simply put, this is the first and smartest answer to your question, “how to earn money from developing android apps that are free?”

Your application is great; it has impressive features, perfect graphics, and an excellent interface. Now check how this app makes money.

You can add additional features, extra redeemable points, or in-app currencies. There are two main types of in-app purchases:

  • Consumable: These are the products that, when purchased, the user can consume within the application. Some examples of consumable items are virtual money, redeemable points, health points, virtual currencies, etc.
  • Non-consumable: These are those products that, once purchased, are permanent. Some examples of non-consumable items are maps, games, etc. That’s also how free apps make money without ads.


It’s also one of the types of in-app purchases.

It’s meant for applications that have high user engagement. In fact, a subscription is a considerably better type of in-app purchase. Some examples of apps monetized via subscription plans include Netflix and Spotify.

Freemium Model

In this model, the users get basic features in the free application. To get some extra functions, the users have to pay extra. Even if only 5% of your audience buys the premium version, it would still reach a wider audience.

The Freemium Model (Free + Premium) works best with cloud services, educational applications, photo-editing apps, etc.

It also works well with games, which offer only a few features to the players, and for the full experience, they have to pay a bit extra.

In-App Advertising

That’s by far the best way how the app makes money. Three types of in-app ads that you can get for your application are:

CPV (Cost per view) model is based on how many times your app users watch the video ads.

CPC (Cost per click) model is based on the number of clicks the ads get on your app.

CPI (Cost per install) model is based on the number of installations.

However, before getting any of these models, you must keep a check on the type of ads that will be displayed on your app. Do keep in mind, the ads should load swiftly, and be relevant to your audience. Users tend to lose patience with clunky and irrelevant ads, and this deteriorates the user experience.

Now, the question arises: how much money do apps make per ad?

That depends on the type of ad unit and the application. You can have four different types of ad formats: Interstitial ads, Banner ads, Video ads, and Native ads.

No matter what type of ad is put up there, a difference is always there between the amount you get on an Android app and the amount you get on an Apple app. Apple, of course, pays better. Like, in the U.S., the revenue per download on an Android app is $.01875 while on an Apple app, it is $.1, and on Microsoft, it’s $.1538.

Partnership Monetization or Sponsorship

Sponsorship is another effective way to earn money through your app. It’s also known as influencer marketing or partnership monetization. It is quite prevalent on social media platforms like Instagram these days.

So, if you have already established your brand/videos/app in the market, you can become an influencer for another brand. That way, brands will contact you to use your mobile app for their brands’ marketing. And the best part of this type of monetization technique is that it will be a win-win for both of you.

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