Free Apps Vs. Paid Apps: The Best App Monetization Strategy for App Developers
Mobile apps have emerged as an indispensable piece of technology for businesses of all sizes. While mobile app monetization is a critical concept, there are different ways to implement it. Some businesses opt to make paid apps, while others offer their apps for free.
Appy Pie AppMakr is known for the flexibility and control it offers to the users. The platform lets you choose whether you want to make free apps or paid apps.
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Businesses use mobile apps for multiple purposes, from eCommerce to appointment bookings, from lead capturing to internal communication, and more. However, there has been a considerable debate on free apps vs. paid apps when choosing the most suitable mobile app monetization strategy.
The modern customer is more comfortable using a mobile app due to the sheer convenience it offers as compared to a website.
Hence, most businesses either convert their website into a mobile app or create a mobile app from scratch. Ahead in the blog, we will discuss the importance of mobile app monetization and the pros and cons of free and paid apps.
The infographic below will give you a cursory overview of the debate between free vs. paid apps
Mobile app monetization
The ultimate goal of a business creating an app is to make some money from it. As you invest money and time in creating your mobile app, it is natural that you would also invest some time planning the monetization aspect of it.
You will have to consider the number of app installs, revenue per app, conversion rate, and many other factors while determining the success of your mobile app.
These numbers depend heavily on the app monetization strategy you choose to implement. There are many mobile app monetization strategies that businesses may employ, for example:
- In-app ads
- Email marketing
- In-app purchases
- Freemium upsell
- Paid apps
- Premium versions
You can read about it all in the beginner’s guide to mobile app monetization.
For the purpose of this post, we will discuss the pros and cons of free and paid apps and how effective both are as a chosen mobile app monetization technique.
Free mobile apps: why are they popular?
Free apps are the most popular mobile app category and the most populated one as well. Whether you are looking at Android apps or iOS, there are many mobile apps that follow this method.
However, there are no free lunches in the world. The mobile apps that are free to install usually work on the freemium model, where additional or premium content is available behind a paywall or a subscription.
You can also offer in-app purchases to your clients to add to your revenue.
Pros of using Free Apps strategy
- Low to no usage barrier
- Low expectations
- High visibility
- High downloads
- Multiple revenue channels
Since the mobile apps are downloadable for free, there is no risk for the customer. They are more likely to download your app without having to worry about the app’s worth. They always have the option to uninstall, in case they do not like what’s inside. The more the number of downloads, the higher are the chances of conversion!
The expectations from a free app are quite frankly much lower than those from a premium or paid app. As the expectations are fairly low, the chances of them getting annoyed with little frictions within the app are lesser too. The free app users are less likely to give a bad rating or review.
Freemium or free apps are the most popular category on both the leading app stores, which means your free app will enjoy great visibility on the app stores. Hence, more customers are likely to download the app, and more sponsors, marketers, and advertisers are likely to take note of it.
This advantage follows the advantages mentioned above. As the free apps have a low usage barrier and enjoy high visibility on the app stores, it is natural that they would enjoy a higher number of downloads. And, who doesn’t want downloads? It is, after all, one of the most important metrics of measuring your app’s success.
Most of the paid apps limit themselves in terms of revenue channels. However, a free app can have multiple channels to earn through the app. In-app advertising, subscriptions, in-app purchases, premium content, affiliate partnerships are just a few of the popular revenue streams you can build within your free app.
Cons of using Free Apps strategy
- High competition
- Third-party reliance
- No guarantee of a revenue
- Lack of loyalty
There are literally millions of other free apps vying for the attention of your customers, and you are only one of them.
A free app has to rely heavily on third-party resources to maintain revenue and profit stats. Not only would you have to rely on customers’ willingness to upgrade or subscribe, but also on other people for ad revenue and marketing.
The revenue you receive from a free app depends on whether or not your app users subscribe to the premium version of your app. There is no fixed revenue that you get for every app download.
Your app users got your app for free. Chances are they just downloaded it on a whim and may not really come back to use it, even uninstall it at the first opportunity. It is tough to have a loyal user base when your app is available for free.
Paid apps: why some choose this model?
Set up the right app pricing, and make sure that your paid app gets you the right kind of audience. Though this is not as popular a choice, it does have its own market and quite a profitable one.
In fact, in some niches like gaming, education, etc., paid apps enjoy a good reputation and great popularity because of what they offer.
For the right benefits, features, and experience, app users will be happy to pay for the app they want to download.
Pros of using Paid App strategy
- Defined user base
- Promised revenue
- Measurable metrics
- Better engagement
- Lesser competition
Since people have to pay to download your app, people won’t just download it on a whim and delete it later. All your app users will have a genuine interest in your offerings. It means your churn rate and the number of uninstalls will be lower, and you will have a more loyal customer base.
Since all your app users will have to pay a certain sum of money to download your paid app, there is lesser ambiguity regarding the revenue you will make for every install. You get paid at the first interaction with the app user, and you do not have to rely heavily on third-party resources like advertisers and marketers to make your app profitable.
As the app traffic is unified and more organized, the metrics are easier to track in the case of a paid app. You can measure metrics like impressions, traffic, revenue, purchases, CLV (Customer Lifetime Value), and more with greater efficiency and accuracy.
It costs your app users some money to download your app. Hence their underlying intent is to get their money’s worth. It means the paid app users will be more engaged with your app and use it more often, instead of simply downloading it and forgetting about it, until the next time they do some spring cleaning on their device.
The number of paid apps in the app stores is much lesser, and they have the ability to attract the right audience niche. It means you have lesser competition that you would have to beat to gain your audience’s attention. Automatically, your app will have a better ranking in the ‘paid’ category, helping you get more eyeballs.
Cons of using Paid App strategy
- Higher expectations
- Lesser downloads
- Limited revenue potential
There is a good chance that someone is offering a similar app for free. Hence, when you put a tag on your app, the app users have elevated expectations. Ensure that you provide quality content, advanced features, and excellent customer service if you don’t want negative reviews on the app stores.
No matter how low you price your app, there would be lesser takers for a paid app than a free one. So while you may get good quality downloads, there may not be a big number to boast about.
Though there is a promise of a fixed revenue right off the bat, there are limitations when it comes to maximizing the earning potential of a paid app. For example, you can’t show ads in a paid app. Also, the moment you increase the subscription charges, your app users will expect some advanced features or added scalability in return.
Now that you know the exact advantages and disadvantages of both paid and free apps, it is time to sit down and analyze which pros and cons matter the most to the success of your app. Are you looking for a large number of downloads, or are you planning to acquire only a few but loyal subscribers?
Once you have all this information, you can make an informed decision before creating an app and starting monetizing it. Appy Pie’s no-code app builder lets you make your own app in minutes while affording you the flexibility to add as many features as you want and deciding your own app pricing without any interference. So, what’s stopping you now!