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Ever heard of Nick D’Aloisio? The 24-year-old multimillionaire made Summly, a popular and innovative iOS app based on artificial intelligence. One of the youngest self-made millionaires in the world, he made his fortunes with an idea and through coding.

Nick first made an application called Trimmit, which could summarize text content into 1000, 500, or 140-characters. The concept got immense attention from Apple, and they featured it as a noteworthy application on the App Store.

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As the word grew, a billionaire investor provided him $300,000 in venture capital, and from there, Nick revamped and relaunched Trimmit into a better Summly. He later sold Summly to Yahoo for $30 million.

Nick is just an example; many have changed their lives with an app. Names like Brian Wong, Robert Nay, and Chad Mureta stand as inspirations in the world of mobile application developers.

To make money from an app, you need to have a proper plan in place. You also need to know the source of the money. In this article, we discuss the latter.

How Much Money Can I Make from an App?

A lot. Facebook, Google, and even popular mobile games like Temple Run and Flappy Bird are applications that have made millions (or even billions) for the developing parties.

According to reports, the top 200 apps on Android and IOS generate, on average, $82,500 daily.  We are not telling you to get your hopes extremely high – only about 25% of iOS App developers and 16% Android app developers make more than $5,000 from their apps.

The figures above were on average, but that is not how you calculate the potential revenue. After all, it is about the idea. If you want to build an app that does what other apps already do, you can’t expect as much revenue as a fresh new problem solver.

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How Do You Make Money from a Free App?

Paid apps make money from their price, that is a given, but many ask about free apps. These are the ways that you can monetize your free (as well as paid) apps.

In-App Ads

Showing ads is the most effective and popular way to make money from apps. According to Sweetpricing, 32.5% of top mobile apps use advertising as their only source of in app-revenue.

You have two ways of bringing advertisements in your app:

Joining an Ad Network

You could join ad networks like AdMob, Media.net, StartApp, and Epom.net, which can show commercials to your app users. These networks are basically like intermediaries; they act as an interface between app developers willing to give some ad space and businesses that need mobile applications.

The revenue that you make from ad networks depend on your niche, and the ad network themselves. You should research on your own about the ad availability, payout, and the trust factor before choosing one.

Depending on the advertisements, the publisher can pay you per click, impressions, or action.

PPC: You get paid a certain amount every time someone clicks on the ad.
PPM: You get money for a specific number of impressions (when your app shows the ad for a certain amount of times).
Pay Per Action: The publisher pays you when people take action from the ad. For example, install an app.

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Direct-Sold Advertising (Sponsorship)

Direct-sold advertising pays a lot more than ad networks, but you need to be an established giant. The idea here is to let businesses directly approach you to show their advertisements on your application. On the other hand, you could also pitch to publishers about your app and how placing their ads in it will be beneficial to them.

In the case of direct-sold ads, your revenue depends on the project. As ad networks are not involved, you will have to deal with the advertisers on your own.

In-App Purchases

In-App purchases already accounted for 48.2% of mobile app earnings before some years, and even if only 5% app users spend money on them, the global in-app purchases were already more $37 billion in 2017.

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These days with more app users willing to pay for a better service, app developers are also enjoying the idea and availing from freemium developments. The idea here is to distribute a free-app, but make some features available only for those who pay. On the other hand, some paid apps might also make in-app purchases available.

It is not only about the features; but also the credits. For instance, mobile games trade coins, in-game currencies and other items for real money. All you need to make sure is that the thing you are offering holds a value such that users want to purchase it.

There are three types of In-App Purchases:

Consumable: Things that your users can buy and consume. For example, the in-game currency.
Non-Consumable: Purchases that will remain with the app. For example, a pro-feature or a new game map.
Subscriptions: A feature or the material of an app will be available to the user for a specified period.

Subscription Model (Membership Application)

The subscription model is mainly for magazine and newspaper apps and blogs. Your users need to ‘subscribe’ to your service to access the content in your application. Well, they are for apps with any kind of content, for example, Netflix.

The users need to pay a recurring fee to access some or the entire part of the application.

In some cases, apps use the subscription model with the freemium model we discussed above. For example, YouTube. It is free, but the user needs to pay a recurring fee for accessing Youtube Premium services.

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Accept Donations

Donations work for apps with engaging web communities, or those offering free services. Also, apps that don’t show ads can ask for donations as a way of keeping it running.

There are various platforms for donations, including Fundly, Qqiy, and Fundme, and these days, even Paypal and Stripe let you open accounts very quickly from where you can accept donations.

For you to make money from this app monetization method, your application should offer something valuable. You can’t go around asking for money from strangers. Your users should believe that it is worth donating to your app. 

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Transaction Apps

Transaction apps are not only limited to e-commerce apps (we talk about them below) but every kind of application where the money is involved. You can become an interface between the user and the service seller and then charge a commission for helping each of them. In such cases, mostly, the seller will be liable for your service charge.

An example of a successful transaction app would be Oyo. It charges around 22% of commissions from hotel owners every month for the money they made from the leads it brought it. Other examples include Paypal, real estate trading apps, e-commerce applications like eBay, etc.

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E-commerce Applications

E-commerce is a way to make money from an application. To make this point more relevant to the premise, we talk about dropshipping.

We are discussing ways to make money from an app and an app itself. Dropshipping lets us do that.

Dropshipping means opening an online store such that every time someone makes a purchase, the supplier itself ships the product to the buyer. You can open an online store and keep things for sale without actually buying them from the suppliers (a wholesale dealer). When one of your users buys something, you notify the supplier, and they will deliver the object in the address. It doesn’t matter to the buyer where the product comes as long as they get it.

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App Merchandising and Events

These methods work after you build your app as an established brand. You can sell merchandise. For example, t-shirts with app prints.

You can also organize events, including conferences and seminars, and make money from tickets and sponsorship. Once you reach the point of selling merchandise and events, you will be able to sponsor others.

The future is delightful – make a spending mobile app, and you will have an incredible journey in front of you.

Selling an App

To sell an app, you should build its value. On the other hand, you can pitch it to a firm.

Sometimes, a company can buy your app looking at the revenue it is bringing in, while sometimes someone established can purchase your application for its potential.

Applications’ values have gone up to millions or even billions of dollars. In 2012, Facebook bought Instagram for $1 billion. If that sounds a lot, here this is- Facebook paid $21.8 billion to acquire Whatsapp!

Conclusion: The mobile app market will grow to $189 billion in 2020. The industry has been providing a lot of opportunities to the developers, be it in innovation, or financially. You have a lot of ways to make money from an app, including paid advertising, in-app purchases, donations, subscriptions, etc.

The one thing that matters the most is if your app is excellent. Some applications make billions, while some apps only receive a few downloads. It all depends on your research, vision, problem-solving, and coding skills regarding how much money you can generate.

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