You might think that giving away a mobile app for free is a sure way to make zero money. You’d be wrong.

According to a report from App Annie, so-called “freemium” apps are leading revenue growth worldwide compared to premium, or paid, apps. Freemium apps are free to download and offer some functionality, but rely on in-app purchases for revenue.Mobile app revenue

App Annie’s report says that revenues for freemium apps on iOS have increased more than four times in the last 24 months. On the Android side, freemium revenues have grown 3.5 times just in 2012. At the same time, revenues from paid apps stayed “relatively flat.”

Although there was steady growth in the US, Japan and China had some of the highest revenue growth among freemium apps. Android’s app store, Google Play, recorded 24 times higher revenue in September 2012 as in January 2012 in Japan. In China, iOS freemium revenues increased nearly 25 times between January 2011 and September 2012. Japan’s iOS freemium revenues saw a 15 times increase in the same period.

GigaOm read the report and concluded that freemium apps account for 69 percent of global iOS revenue and 75 percent of Android revenue. That means that between two-thirds and three-quarters of all app revenue for iOS and Android comes from free apps that offer some kind of in-app purchasing capability.

There are a few common ways to implement freemium features and still make money:

  • Display ads. Revenue is revenue, and money coming in from advertisers is just as good as money coming directly from customers. If users want an ad-free experience, they can pay to upgrade.

  • Make it a demo. The free version of an app doesn’t have to be full-featured. In fact, it could be just a demonstration of a paid app’s capabilities. Many freemium apps disable saving your progress, for example, letting users try out the functionality before committing to a purchase.

  • Offer extra content. A free app might be complete in itself, but paying for extra content improves the experience. This strategy is often used in games to purchase special weapons or power-ups.

If you have an app idea, Zco Corporation provides the mobile app development services to build it – either as a free app with in-app purchases or as a paid app. Request a call to speak with an Account Executive!

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