According to Statista research in 2021https://www.statista.com/statistics/1119916/app-monetization-methods-united-states-app-publishers/, the majority of apps make money from advertising. 38% of digital products worldwide work the same way. But while advertising is the most popular business model, it is by no means the only one. It is not even the best solution. Let’s consider other monetization options.
This model is based on paying to use the app. A person is asked to subscribe after installing the app. Often the app offers a trial period — several days of free access to the app so that customers understand what value the app brings to them. The experience of mobile app development in various industries shows that the model is effective.
👍 Paid subscriptions are especially suitable for startups in education and entertainment:
- online education and training courses;
- tools for self-education: one can study foreign languages or improve their knowledge in a particular subject;
- services for listening to music or watching movies, TV shows, and lectures;
- electronic journals: for professionals or hobby-based, like fishing;
- community platforms for people sharing the same interests and dating apps;
One of the largest streaming services, the Netflixhttps://play.google.com/store/apps/details?id=com.netflix.mediaclient&hl=en&gl=US mobile app, works on a paid subscription. With the subscription, a customer gets access to all content on the platform. The price depends on the subscription period: if the user pays for a longer period, they receive a discount.
Another example of how a mobile app makes money with a subscription is the EWAhttps://play.google.com/store/apps/details?id=com.ewa.ewaapp&hl=en&gl=US service for learning foreign languages, which has a free three-day trial. The subscription allows choosing only one language to learn: English or Spanish. Having subscribed, the user gets access to movies, books, and tools to expand their vocabulary. Like Netflix, the subscription price varies depending on the number of months. This motivates people to use the product longer. Businesses, in their turn, get money upfront, can engage in long-term planning, and don’t spend additional resources on subscriber retention.
In general, the subscription is one of the easiest ways of monetization. However, people pay their money only when they understand the value of the product. Massive advertising or a collaboration with a major brand might help.
Here’s our experience. The Purrweb team was developing a service for selling video content called Contentplace. It is a hybrid of Vimeo and Shutterstock: registered users pay for a subscription and download a limited number of videos for personal and commercial purposes. Initially, the client wanted to offer about 30 different plans, but we proposed to stop with three to make the choice easier. When the service launched, it turned out that we made the right decision: three subscription plans were exactly what we needed. If you want to read the case and know more about how we made a marketplace with private pages indexing, you can click on the link below. ⬇️
Purchase of the digital products in the app
Often apps make money by having a paid and a free version. Users have free access to some features but have to pay if they want all of them. Usually, basic features are free, and more advanced tools are open after payment. It can be a one-time payment like buying a particular movie or lecture in the app. Sometimes, features are available after paying for the subscription. For example, the photo editor may charge an additional fee for individual filters.
👍 One can make money on mobile applications by selling individual digital products in these cases:
- applications for work optimization: project management systems, messengers, professional platforms in various fields;
- projects with useful or entertaining content: users can get some for free, and pay for others.
- dating services;
- sports and healthy lifestyle apps;
- travel guides and navigators;
- cloud storages.
One example of making money this way is the corporate messenger Slackhttps://play.google.com/store/apps/details?id=com.Slack&hl=ru&gl=US, which is actively used around the world. There is a completely free version, which is enough for small projects. You can store 10,000 messages in your correspondence history and 5GB of attachments, as well as make one-on-one voice and video calls for free. If you need to store more information, make video conferences, and integrate other applications, there are several paid plans with advanced features.
Many corporate services work in a similar way: Trello, Asana,and Jira.
Workout Trainerhttps://play.google.com/store/apps/details?id=com.skimble.workouts&hl=ru&gl=US fitness app works in a similar way. The free version has photos, voice instructions, and a workout timer. For an additional fee, you can do video workouts and get a comprehensive program for several weeks.
The biggest risk for mobile app development using this business model is that the free version will be enough for users. Then the paid products will not be in demand. To avoid that, it is important to carefully engage in analytics: find out what exactly the target audience is ready to pay for. If you offer relevant paid services, the app will make money without ads.
Sponsorship and Crowdfunding
Socially-active nonprofit projects also have their own digital products. In many cases, these apps make money without ads. In order to make the project profitable, they often have sponsors or engage in crowdfunding.
👍 Here are some company examples that can work with this mobile app monetization:
- environment protection movements;
- public associations;
- nonprofit educational institutions;
- charity organizations.
Crowdfunding supports the work of the «Life Gift»https://play.google.com/store/apps/details?id=ru.givealife&hl=ru&gl=US fund app. The service helps to coordinate people willing to cooperate with the foundation. You can become a volunteer, a blood donor, or donate any amount of money. The earned money goes to help those in need, as well as to support the resources of the foundation itself, in particular, the app.
One more example is World Wildlife Fund. It is one of the largest independent environmental organizations. It has many mobile applications. One of the most popular is an educational one called WWF Amazing Planethttps://play.google.com/store/apps/details?id=com.wwf.amazingplanet&hl=ru&gl=US. Informative and entertaining news from the world of wildlife is available in the form of articles, videos, and photos. WWF projects have many major sponsors, both individuals and corporations. The Foundation accepts donations of any size from anyone as well.
The nonprofit segment is quite limited, so this monetization option is quite rare. But if you have a socially important initiative that needs the development of a mobile app, you can try to raise money from the community or find a big sponsor.️
Using service fees is another answer to the question of how do apps make money without ads. This is relevant to digital products that mediate between people or organizations.
👍 Service fees will be suitable for:
- delivery apps;
- platforms to find customers or freelancers;
- second-hand marketplaces;
- banking applications with transfer and investment services;
- dating, communication, and networking services.
The professional marketplace Upworkhttps://play.google.com/store/apps/details?id=com.upwork.android.apps.main&hl=ru&gl=US works with service fees. The platform charges a 3% commission on customer payments. Freelancers are charged 5%, 10%, or 20% depending on the project budget.
This business model works very well in such applications. Marketplaces make finding clients and freelancers more convenient, and people are ready to pay a commission fee for it.
Often banking apps make money on service fees. Revoluthttps://play.google.com/store/apps/details?id=com.revolut.revolut&hl=ru&gl=US is a good example. The app charges a transaction fee. For example, for international transfers or cryptocurrency purchases and sales. Since the commission is small and the app is simple and user-friendly, users don’t mind the service fee. The app has been successful for several years.
Want to learn more about mobile banking trends? Follow the link below ⬇️
Mobile app monetization with service fees is becoming increasingly popular. This year, delivery service Delivery Clubhttps://play.google.com/store/apps/details?id=com.deliveryclub&hl=ru&gl=US began charging customers a commission despite the fact that the company charges restaurants too. Having introduced the fee, the company faced discontent of the users. Representatives of the company commentedhttps://vc.ru/claim/246099-delivery-club-vvel-cervisnyy-sbor-s-polzovateley-poka-v-testovom-rezhime?comment=2792939 on the situation: according to their words, the fees charged on restaurants go to the marketing needs, and the charges from customers are for product improvements.
A service charge is a good idea if it’s not too big and the app is really user-friendly. People are willing to pay for a digital product to save their time and effort. This means that such apps make money without ads quite easily.
At Purrweb we also once developed an app that makes money on service fees. It was a freelance photographer marketplace. You can read about the development process and how we dealt with the “ready-made” design in our business case.
Making money from user data
According to 2021 statshttps://www.pcloud.com/ru/invasive-apps, 52% of apps share user data with third parties. This is a legitimate practice: the data is encrypted. It is impersonal, and one can only extract general statistics from it. Basically, this information helps marketers choose the audience for their products and show more relevant ads. A lot of apps make money by being completely free to people and not using extensive advertising. If they don’t have sponsors, they’re probably monetizing user data.
👍 Such a model will suit you if you have:
- a messenger or social network;
- an entertainment application with video, audio, or text content;
- an online store, marketplace, or aggregator;
- games for children or adults.
For example, there’s a completely free messenger without advertising WhatsApphttps://play.google.com/store/apps/details?id=com.whatsapp&hl=ru&gl=US. The company can provide unlimited communication services for free because it collects and transmits user data to Facebook. Information about the country of residence, type of device, and time of access to the network can then be used on other platforms.
Many apps make money from user data by combining it with some other business model. The dating service Tinderhttps://play.google.com/store/apps/details?id=com.tinder&hl=ru&gl=US also makes money from users’ data, but this is not the only monetization model they use. At the same time, the app offers paid premium accounts.
In case an app makes money from users’ data, the product can be made completely free. This is good for app development for the widest possible audience. That said, it’s important to carefully monitor security systems to avoid leaks. You should also write a clear and transparent user agreement to inform people in advance about the use of their data.
What’s easier for a startup to make money from
How do apps make money without ads? This article hopefully gives you plenty of options to choose from. Make your choice based on your startup field, marketing strategy, and target audience. There are no universal solutions, but here are our recommendations:
- If you are confident that people are willing to give money for your product right away, implement a paid subscription.
- If you are not sure exactly what functionality your audience needs, work on an in-app digital purchasing model. Test it and collect feedback to see what services can be free and what can be paid for.
- If you planned app development for a socially important project, look for sponsors or crowdfunding;
- If you help users find contractors or provide digital services that save people time, introduce a service charge;
- If you want to make the app free for everyone and not force people to see ads, monetize the users’ data. Just warn people about it in the user agreement.
If you’ve already identified the model with which your app makes money, it’s time to move to development. If you haven’t decided on the option model yet, we will advise you and help you find the best one. Don’t worry, there’s always an answer to ‘How do apps make money without ads?’
Purrweb team has been helping startups to develop MVPs and bring them to market for 7 years already. We will be glad to advise you on mobile app development services! Fill in the form below and we’ll get back to you within 24 hours.
- Anton Kiryukhin
- Olga Fleryanovich