How Do Free Apps Make Money: The Most Popular Revenue Models

The article was updated on July 10, 2025.

Almost every app wants to monetize itself — after all, that’s what the products are made for. The trap? Most users want to have an app for free. Fortunately, the market is ready to follow this trend wherever it leads.

As of January 2025, free apps made up approximately 97% of all apps on Google Play and 95.37% on the App Store. So, the majority of the existing programs are free to download; however, this doesn’t mean they don’t make a profit. In 2024, the research found that the three most often monetization strategies were paid apps (3% of all app monetization strategies), in-app ads (31%), and in-app billing (5%). And that’s just the tip of the iceberg. 

Can you make money from a free app? Undeniably. And so, how to make money from a free app, thus retaining the majority of your target audience, and still grow? Let’s explore how to get this done — painlessly and without sacrificing your app quality. 

Ready to explore how to make money off free apps? Start with the checklist below.

Why offer an app for free?

It might feel counterintuitive to offer your app for free, especially if you want to earn money from it. But it’s a pretty wise decision that has its advantages; there are many more ways to make money with apps than you might think. And most of these will accumulate as you continue to expand and improve your app. 

• Maximizing user acquisition. The information above has already highlighted how the mobile app market is segmented based on pricing. The key question you should ask isn’t “How to make money from free apps?” but “How to attract more users?” Many people aren’t willing to buy an app right away and want to explore its proposition before making a final choice. This significantly increases the number of users for your app, attracting a wider audience with time.
• Achieving greater visibility and ranking. More downloads often lead to better rankings in app stores and, eventually, making money with free apps. Since users are more likely to download free apps, your app’s visibility can improve organically without needing to spend heavily on marketing. Such a shift motivates them to explore the features of your app more through word of mouth: users are far more likely to recommend a free app than a paid one.
• Gathering user data and feedback. When your app attracts more people, you get access to valuable data that you can use for further improvement. Many businesses use the free features of their program to gather information that they can invest in developing paid features and more. Even more so, some companies make money with free apps by monetizing this data.
• Laying the foundation for ecosystem growth. Here’s a smart answer to a question: “How do you make money from free apps?” Easy: your free application can become an entry point for users into a larger system of apps and services. For example, introducing a free app for calorie tracking can guide users to another app or program for fitness, nutrition, or health monitoring. 

As you see, a free app attracts users and becomes a strong focal point for generating ideas and directing business strategies.

How do apps make money?

1. In-app purchases

Being one of the most popular methods to make money on free apps, in-app purchases is the strategy when you give an app away and then ask for some money for extra purchases made within an app. This may be vividly exemplified by game apps, where a user might want to buy additional coins or power-ups. How much money can you make from an app in this case? Unfortunately, it is not easy to predict the amount of possible revenues. The best way to get a better understanding is to try it out.

If you’re lucky enough, you will repeat the success of Candy Crush Saga. This classic mobile game made $945 million in 2018 via in-app purchases while being absolutely free to download.

Note that you won’t get all money that your users pay. Currently, AppStore works on a 30/70 split, meaning that Apple gets 30% of total users purchases (and you get 70%).

2. In-app advertising

As a rule, apps employ several app monetization strategies when it comes to mobile ads. 

• Banner ads. This is one of the most common types of advertisements in mobile apps. While the numbers for banner apps in mobile aren’t readily available, the market for digital banner advertising is estimated to reach $185.44 billion in 2025. Plus, despite some dislike for this ad type today, Liftoff’s report suggests that banner ads on mobile are more effective than native ones: 38.1% of ITA compared to 35.8%, all while being less expensive. This makes it one of the best free app monetization strategies.
• Interstitial ads. These ads show on full screen after the natural pauses in the app (for example, between game levels). They generate higher revenue but must be used carefully to avoid annoying users. 
• Video ads. Video ads are the most effective type of advertisement and free app monetization approach that generates the highest install rate. At the same time, it’s the most expensive way, too: it costs nearly twice as much ($12.16) as native and banner ads ($7.65 and $6.18, respectively) while providing a relatively mid ITA rate. So, using this advertisement type should be combined with a more affordable option. 
• Native ads. Native ads are usually the least disruptive to the app’s performance because they look and feel like part of the program. They can help you address one of the main problems in advertising: too much marketing that causes them to delete the app. 
• Playable ads. One of the most popular marketing approaches today, interactive ads keep users’ attention for longer and allow them to try out the app before downloading it. 

Making money with an app through advertising requires a connection to an ad network that makes it possible. Ad networks are platforms that connect advertisers with publishers. Below are the most common ad networks in 2025:

• Google AdMob. The most popular ad network, AdMob, has been a market leader for years already. It supports major ad formats and works well with both iOS and Android mobile apps. 
• AppLovin. Known for high eCPMs and strong performance in gaming apps, AppLovin offers a variety of tools that boost mobile marketing.
• PropellerAds. This platform has a high volume of ads and publishers to choose from, plus it’s praised for its ease of use. 
• InMobi. This is a global ad network with a wide range of ads to choose from. Currently, it’s gaining an increasing presence in emerging markets, making it an even more appealing alternative.

These ad networks allow you to make money from an app more easily. 

3. Sponsorship

Landing a sponsor is a good way of making money with apps. If your app responds to the needs of a niche group of users, there is a chance that you will find partners who would like to sponsor it to present their message to your audience. In this case, you will need to prepare specific sponsored content for the application and mark it as advertising content.

Fitness apps, for instance, may collaborate with the producers of wearable health-tracking devices, place their content, and showcase their advertisements.

4. CPI (Cost Per Install) networks—pay per install

You might have seen those pop-up messages in games and applications, which prompt you to look at another app or game. These applications are dynamically served depending on the type of application you use, your interests, age, etc. This mechanism of making money with apps is supported by CPI (Cost Per Install) companies, which are equivalents to CPA (cost per acquisition) in the web marketing world.

Top 4 mobile CPI app networks

1. YeahMobi
2. ClicksMob
3. Matomy
4. Chartboost

5. Subscription model

One of the most popular means of mobile app monetization is the subscription model. Instead of relying on a one-time purchase, companies often opt for a subscription, which offers more long-term revenue as users pay for continuous access. Here are the key alternatives you can choose:

• “Freemium” apps. Do free apps make money? You bet! You can make your application free to download but provide additional features at an extra charge. Thus, your users may get a sense of what your app can offer them at no cost. If your application is captivating enough, people will be ready to pay for the extended version.
• Premium content access. Lock some features, levels, or content behind a paywall that only premium subscribers can access. This can be a helpful feature for learning apps or streaming services. For example, LinkedIn, the career-building social network, is free to use. Yet, it has a number of features available only on a paid basis. If you need to know who viewed your profile, want to access on-demand learning, and want applicant insights, you must buy a premium version.
• Tiered pricing. Offer varying subscriptions for different features and access. For example, a basic tier may provide ad-free usage, while higher tiers unlock exclusive tools or more storage. This will appeal to different audiences and give each of them value for the distinct cost. 
• Free trial. Let users access premium features for a limited time (e.g., 7 or 14 days) before requiring payment. This way, your users can learn about how the app works and decide whether they want to commit to it. 

6. Selling fees

This payment model enables app publishers to receive a commission from every sale that takes place using their app. This model applies to platforms and marketplaces connecting customers with providers of services on a regular basis. For example, travel marketplaces like Booking.com charge hotels 10-30% from each of their hotel visits. Apps can also use a flat fee for each sale.

This is a vivid example of how to earn money from apps. On the downside, one party usually isn’t happy with having to pay a percentage of their transactions to the application’s owners, and this model is believed to be tricky to set up.

7. Transaction fees

If you’re wondering how app owners make money out of nowhere, you may be overlooking transactions. If your app is a marketplace enabling parties to send and receive payments, you may charge fees for processing payments. Such fees are usually small, so the more payments you process, the better.

Building a business platform with ongoing transactions is an excellent way of leveraging this model. Freelancing marketplaces like Behance, Fiverr, and Freelancer use transaction fees as one of the means to generating a steady stream of revenue.

8. Crowdfunding

Crowdfunding will apply if you plan on continuously offering your audience truly unique and valuable content, given that the audience will be willing to continue paying for it. By posting your app on crowdfunding platforms, you can evaluate how users respond to it.

Non-gaming applications are an excellent match if you plan on using this strategy. If you look at the most funded app section on Kickstarter, you will see apps like an ad-free social network, educational applications for kids and adults, and an app enabling horse owners to remotely monitor their horse’s well-being. 

This app monetization strategy will enable you to build a customer community while the work on an application is still in progress. On the downside, crowdfunding is time-consuming, and chances are, you won’t eventually raise enough money.

9. Monetizing data

Collecting and selling users’ data may help you capitalize on free apps. Third parties will then use this data for advertising or analytics. Companies may use behavioral, browsing, or demographic user data to better target their marketing efforts or advertising campaigns.

Some of the market giants, such as Facebook and Google, are reaping benefits from users’ data that they collect and use for various purposes. You can also use this data to better target your own advertising efforts or to offer new services based on customers’ needs.

However, this approach comes with responsibility: you must maintain strong data security standards. In the event of data leaks or misuse, you will be directly accountable.

10. Referral marketing

Promoting partner companies in your app might also help you make a quick buck. Within this model, you generate income for user interactions with your product referrals or services. All in all, referral marketing models differ depending on how they pay for their referrals. The most widespread models are

• Cost per action: your income comes from promoting products, displaying ads, or offering in-app purchases of third party offerings.
• Cost per click: receive payment every time a user clicks on an app.
• Cost per view: get a user to play a referral video and get paid.
• Cost per install: you make money each time a user installs a referral app in your app.

There are numerous referral platforms, like Flurry or AdMob, that help find affiliates for your app. Perhaps the most illustrative example of earning money for referrals is Amazon.

11. Selling merchandise

Another means of free mobile app monetization presupposes selling physical products and merchandise through your app. For example, Rovio, owner of the mobile game Angry Birds, is successfully generating revenue through selling the game’s merchandise: t-shirts, toys, backpacks, etc.

Surely, this model is only applicable to apps with attractive and distinct brand personalities. Its advantage is its ease of integration with other app monetization models.

How much money can you make from an app?

It largely depends on the time and effort you invest. Making money with apps is not easy when you don’t spend much time on research. You need to study your users, your market, and your competitors to make sure that your monetization methods don’t drive users away.

• Know your users: research their demographics and preferences so that you can offer relevant advertising based on their needs and wishes.
• Know your market and your competitors: although it is hard to estimate how much money apps make in your market, you can easily find out which monetization techniques your competitors use. Observe how their users react, then refine your approach.

Keep in mind that usually only a small percentage of users will generate most of your revenue. That’s why you need to build up a large and active user base. For this purpose, it’s also beneficial to be armed with analytical tools that will help you indicate lifetime customer value and free-to-paid conversion rates, which can help guide and improve your strategy.

Choosing how your app will raise money

As said above, how you make money from an app should be the first thing on your mind before you start the development. To set you on the right track, here are some important things you should think about in advance.

Your app type

Are you building a gaming app? A marketplace? A streaming multimedia service? Or maybe an education app helping users reach their learning objectives? Knowing your app category and what problems it will help users solve is essential to choosing the right free app monetization model.

How your competitors yield profit

Do your homework and research how your competitors are drawing revenue. Chances are, you will quickly come up with monetization ideas for your app. They may be missing some important opportunities or using the ones you could easily tap into.

Your users’ needs and demographics

Envision a portrait of your user: their age, gender, average income, needs, and preferences. Will they see real value in your app? How often will they be using it, and for how long?

These considerations will help you pick an optimal app monetization type and write your specifications to include features that will help you benefit commercially, even if you give users free access to your app.

User engagement frequency

The ways to make money from apps greatly depend on how often the audience uses them. The frequency with which your users engage with your app can affect how you monetize it. Programs with high daily engagement, such as games or habit trackers, will benefit from in-app ads or in-app subscriptions.

In contrast, applications with lower usage (such as travel or seasonal ones) can yield more profit through one-time purchases or pay-per-use features.

Final thoughts

The statistics for application downloads indicate that the hype for free app development isn’t going to subside in the near future. The app monetization strategies also tend to evolve as the number of applications grows. Another trend impacting the growing diversification of app monetization methods is the technological advancements that help enrich smartphone functionality with new features.

Until recently, app owners primarily relied on in-app advertising to generate profits; however, subscription and freemium models are now confidently taking the lead.

The good news is you can build an app that integrates several monetization strategies to maximize your revenue potential.

Thinking about building an app? At Eastern Peak we can guide you through the intricacies of the product ideation stage and help you choose a viable monetization plan. Contact us now for a free consultation!

Frequently Asked Questions

Read also:

• How Long Does It Take to Create an App
• How Much Does It Cost to Make an App
• Building a Successful Mobile App: Key Features Customers Look For
• Top 12 Mobile App Development Trends Expected in 2024