How Do Free Apps Make Money? 12 Tips for Building Your Own

Suppose you’re planning to build or have already built a fully functional website. It’s easy to use, and it has a strong identity. What could you, as a business owner, do to scale further? Make sure you’re always just a few taps away from your users.

Easily accessible products support higher engagement, therefore leading to bigger conversions. People usually don’t carry laptops around, and even if the platform has a responsive design for all devices, a tab in a browser may not be as convenient as an application.

Mobile development helps businesses to engage with their audiences anytime. But if most apps are free, how do they generate profit? If you’re planning to develop your own free mobile app, we’ll guide you through different monetization options and show which ones are most effective for different cases.

3 Common ways to make money from free apps

Society has gradually transitioned to a mobile-first approach since phones have transformed from a means of communication into pocket-sized personal computers. On average, people spend more than four hours a day on their phones. And by usage, we primarily mean apps.

There are different types of applications: educational, entertainment, social, etc. They could be unique, standalone products or web platform extensions. Currently, we have millions of applications for all kinds of purposes, but paid apps make up less than ten percent of that number.

It’s logical to assume that apps that require upfront payment would generate more revenue. That’s not usually the case. Dozens of free alternatives can do just as well as their paid competitors, if not better.

Although thousands of dollars are spent on app development, it doesn’t seem like developers are going broke anytime soon. You’d be surprised how much we’re used to marketing strategies in our everyday lives.

What may appear as costless on the surface is actually a foundation for monetization. Below, we will describe the three most common methods of how free apps make money.

Advertising

Many free apps generate revenue through advertising integration, but we are interested in how exactly this happens. To place an ad, developers turn to mobile advertising platforms. They act as intermediaries between advertisers and the platform, helping both achieve their goals in exchange for a percentage of the profit. Usually, their share ranges from 20% to 30%.

Platforms such as Google AdMob, Meta Audience Network, AppLovin, and Unity Ads are considered leaders in this field. Whichever platform you choose, you need to consider which of the three traffic formats you will use to earn.

1. Cost per mille (CPM).
   Higher ad frequency means greater reach. You are paid for every thousand views. This includes both unique and repeat views.
   
2. Cost per click (CPC).
   The pay-per-click system assumes that the user will not only view the ad but also click the link to the advertised page, whether by accident or not.
   
3. Cost per Action (CPA).
   A result-oriented model that requires users to perform a specific action. The advertiser will pay only if the user clicks the link and registers, installs, or purchases the product.

Neither developers nor business owners are responsible for which ads are shown to their users. This is managed by our so-called intermediaries, who select ads in real-time bidding.

However, based on the abovementioned traffic types, you choose placement formats and display frequencies, and you can sometimes filter out unwanted ad categories.

Types of in-app advertising

Banner ads

Banners can be static or dynamic. Their placement depends on the application’s type. For example, tools and educational platforms place ads either in strips at the top or bottom of the screen, or in small banners embedded in the layout.

If you are building a social media app, it’s more practical to place ads between content sections as users scroll through the feed. However, banner ads have one major disadvantage — people get used to them and develop banner blindness.

Interstitial ads

Like TV commercial breaks, interstitial ads show up during natural pauses, such as between game levels or series episodes (though TVs don’t let you skip ads after 5 seconds). Unlike banner ads, interstitial ads take up the entire screen and require users to take action to turn them off.

Rewarded video ads

This is quite an interesting ad integration model because it’s entirely optional. Who would willingly spend half a minute of their time watching an advertisement? This is possible if you offer users something in return. For example, restoring life in the game or opening temporary early access to content.

In addition to the usual static and video ads, advertisers have also invented interactive ads with very simplified versions of their products.

The advertising integration strategy for apps you can make money on must be considered during the design stage. Put yourself in the user’s shoes. The same annoying mini-game ad, the tenth time in an hour, will eventually frustrate even the most loyal user base (bonus points if it has a ridiculously tiny exit button).

Sometimes ads drive people crazy to the point where they are willing to pay to get rid of them, which brings us to the next monetization model.

Subscription

You could say that it is possible to make money from free apps without advertising, and you would be right. There is a way. For example, you could include premium features in your mobile app development.

Apps that offer free versions with optional paid subscriptions are called “freemium” apps. As the name suggests, the product is fully accessible at no initial cost, with upgrades available via recurring payments.

At first glance, the idea may seem contradictory and can raise reasonable concerns about the effectiveness of this strategy. How can you encourage a user to buy a subscription when there is an option not to pay?

A good subscription plan is a matter of achieving a competent balance between price and quality. Yes, the app itself is free and great, but you can offer something even better. Generally, there are ways to improve user experience with subscriptions:

• Improve existing features: Enhanced quality, advanced filters, or faster processing.
• Remove restrictions: Lift daily caps, increase storage limits, remove watermarks, or disable ads.
• Offer exclusive content: Premium lessons, unique templates, personal assistance, or members-only libraries.

Recurring purchases generate predictable income, and they help businesses forecast revenue. Most often, subscriptions are divided into monthly or annual. Developers usually motivate people to opt for a yearly subscription, backing it up with savings compared to paying for 12 months in a row. Who said cheaper in bulk doesn’t work for online products?

Additionally, you can offer different subscription types. The first method involves using a tiered pricing, where a higher price tag opens up more opportunities. The second option is to divide prices by user categories. These could be students, family groups, corporate profiles, and so on.

In-app purchases

Another freemium app type relies on in-app purchases (IAP). Unlike subscriptions, IAPs do not necessarily have to be recurring. Every subscription is an in-app purchase, but not every in-app purchase is a subscription.

Apps in the gaming category generate the most revenue from IAPs. According to the freemium application’s rules, the game can be downloaded and played for free, but certain features require payment to unlock a better experience.

Below, we describe 4 types of in-app purchases with examples across niches:

How do apps make money if they are free?

Huge download numbers can boost the product’s credibility, but an installation does not translate into revenue for a free app. Profits have a cumulative effect, with retention being the key factor in achieving sustainable revenue.

As people try to reduce their screen time, companies are scrambling to squeeze in this framework. The math is simple: frequent app usage generates more impressions, more opportunities for in-app purchases and advertisements, and more premium feature promotions.

Engagement that supports monetization

Do free apps make money if users open them once in a blue moon? The developer is interested in ensuring users spend as much time as possible in their apps; otherwise, they have very limited potential to earn.

For example:

• A meditation app earns more impressions when users complete daily sessions.
• A shopping app records more affiliate conversions when users browse regularly.
• A game maximizes in-app purchases when players return to complete missions or unlock bonuses.

There’s no such thing as free lunch

Data fuels all monetization models, especially advertising. You may have heard the saying, “If you’re not paying for the product, then you are the product.” We will briefly go over how this can be done ethically and how dubious entities resort to it.

Legitimate data monetization

Many apps that make money rely on user data to optimize their products or share aggregate information with advertisers. To avoid legal issues, conscientious developers comply with regulations such as GDPR and the CCPA.

Before installation, users are usually warned in the terms of use what and who receives data about them. We have listed several situations for which user data is used:

• Improve the app experience.
• Tailor content recommendations.
• Improve advertisement targeting.
• Conduct market research.
• Train AI models.

For example, a fitness app might learn that users in the 30–40 age range consistently engage most with cardio plans on weekends. That insight can help brands target promotions without ever touching personal data.

Questionable data monetization

Some free apps go further, collecting device identifiers, location specifics, contacts, browsing habits, or purchase history that can be used for hyper-targeted advertising or sold to brokers. They abuse device access and are not allowed on legal platforms.

Examples of risky behaviors include:

• Using dark patterns to extract more personal information.
• Selling precise location data without transparent disclosure.
• Sharing personal identifiers with third parties.
• Tracking cross-app activity without consent.

Real examples of apps that make money

Spotify

Spotify is a classic example of a free app that built a massive business around a freemium + subscription hybrid. People use this app to listen to music or podcasts, but the free version has limited features.

For example, you can only listen to stuff online and in shuffle mode. Plus, there are ad breaks, and you can only skip a certain number of times. The moment people want offline listening, unlimited skips, or higher audio quality, the upgrade to Premium becomes a natural next step.

Webtoon

Webtoon established a monetization model built around microtransactions. You can read comics on the platform for free on both your PC and phone, but the developers encourage users to download the app, where you can view more chapters. Users are then offered various options depending on whether the comic is complete or still being released.

In both cases, some chapters can be read ahead of schedule by viewing ads, but not all. For some, a so-called daily pass is set, which determines how many chapters you can view per day in exchange for ads. However, if the user does not want to wait, more chapters can be opened using the inner currency.

But even this currency can be obtained for free in some cases. For example, thanks to promo codes or seasonal offers. This is more likely to encourage readers to make a purchase.

Mobile gacha games

Gacha games are among the highest-grossing free apps in the world thanks to probability-based microtransactions. Users can play for free indefinitely, but revenue comes from “pulls” — randomized chances to acquire rare characters, skins, or items.

Games like Genshin Impact, Honkai: Star Rail, and Fate/Grand Order rely on a mix of in-app purchases, seasonal events, limited-time banners, and battle passes to create repeat revenue. This model works because it blends entertainment, collection habits, and social pressure while remaining technically optional for players.udacity, VLC Media Player

How do you make money from a free app you build?

Revenue isn’t something you “add on” at the end. It stems from what the app is, who it serves, and why anyone should keep using it in the first place. The monetization strategy for a free mobile application is built around its structure. If these foundations are unclear, no monetization model will perform well, no matter how many banners or paywalls you install.

The most reliable way to approach this is to build a revenue strategy the same way you create the product itself: step by step. Below is a roadmap that helps you align your business model with user expectations.

Step 1: Define your value proposition

Your monetization approach should feel natural within your product’s ecosystem. Every free app has its backbone, also known as a killer feature. This is what should satisfy the user’s needs in the first place. Once you have defined the backbone of your free app, you can start building additional elements on it.

For each niche, you can come up with at least two ideas for premium features:

• Entertainment apps benefit from ads, microtransactions, or premium add-ons.
• Education apps convert through subscriptions or locked lesson packs.
• Business or productivity apps often perform best with freemium models, paid features, or monthly plans.

Step 2: Estimate your user base

If your monetization system feels intrusive and greatly hinders usage, your users will delete your app without hesitation and seek better alternatives from your competitors. It would be strange if a meditation app were suddenly interrupted by loud video ads in the middle of the process.

To avoid this scenario, ask yourself:

• What core problem does the app solve?
• What will motivate users to return?
• Which features will remain free?
• Which can be placed behind a paywall?

These dynamics determine how tolerant your audience will be of ads, how often they’ll encounter premium features, and whether subscription logic fits their usage patterns. For example, younger users may tolerate more ad impressions but spend less on subscriptions. Business customers might expect paywalls but want transparent upgrade paths.

Step 3: Evaluate how monetization affects user experience

Another puzzle piece to the question of how apps make money is to check if your monetization strategy aligns with usability. We offer two ways to verify this: test your product from the user’s perspective and analyze your competitors.

Let’s say you are developing a weather app. Will users come to you if the free version only shows the weather for the next 3 days, without detailed factors such as humidity levels? Most likely not, because it makes no sense to users, since other apps and websites show detailed forecasts for a month for free.

Always design the free experience intentionally, not as an afterthought. Ask yourself whether the app can deliver value without the paid feature. If your free app can’t satisfy the users without forcing them to spend money, then you are not building a free app.

Best practices for making money with free apps

Building a successful monetization strategy for a mobile app requires more than simply choosing one strategy. It should be a comprehensive approach, one that feels natural, beneficial, and fosters loyalty.

Let’s see how free apps make money with a slight improvement in quality of life.

Combine monetization models

High-performing free apps rarely rely on a single revenue stream. Depending on the product’s features, developers offer several monetization options.

A common combination is advertising with a paid subscription. The free version runs ads, while the premium tier removes them and often adds quality-of-life features such as offline access or faster performance. This model is popular among productivity tools, weather apps, mobile games, and media players.

Another effective blend is mixing in-app purchase types. Many mobile games follow this structure: users can play for free, with the option to obtain in-game consumables and permanent cosmetics.

Use time-limited offers

People are used to expecting good deals at certain times. They want to buy a subscription, but have decided to hold off until a better time. Follow market trends to avoid missing opportunities to offer your users exclusive deals.

Limited-time offers, such as Christmas sales, Black Friday discounts, or anniversary promotions, create a sense of urgency to stimulate faster decision-making. Advertise the offer using visual banners, countdown timers, or push notifications.

Encourage subscriptions with a trial period

Not every user will be ready to commit to a subscription. Some are satisfied with basic functionality, while many hesitate to spend money. Free trials can help users to break the ice and familiarize themselves with premium features without risk before making a final decision.

A 7-day trial works well with apps that deliver value quickly, such as meditation tools, photo editors, habit trackers, or VPNs. Users can fully explore core premium features within a short window and see how the upgrade improves their experience.

For apps like fitness programs, educational apps, or productivity platforms, one week may not be enough. A 14-day trial increases the emotional investment by allowing users to complete small milestones. This could involve creating a design using more advanced tools or completing a two-week training program.

A 30-day trial is most effective for long-cycle or content-heavy products, such as streaming platforms, design suites, or advanced learning tools. These apps often have large content libraries or complex features that users need time to explore. A month-long trial establishes a regular usage pattern, which makes the perceived loss much greater when the trial ends.

Localize prices on the global market

Not all countries will find a single conversion rate advantageous. If you are launching your product globally, keep track of sales analytics across regions.

Price adjustments also help eliminate app piracy. People look for ways to avoid purchasing, not because they don’t want to spend money, but because prices are not commensurate with the local economy.

Lowering prices in one or more countries can help you generate more revenue from increased user traffic. At the same time, multilingual support contributes to user comfort and loyalty.

How free apps will make money in 2026 and beyond

Modern consumer culture is shaped around subscriptions and microtransactions. This has been facilitated by the rapid growth of Software as a Service (SaaS) and the transition from television to streaming platforms such as Netflix and YouTube.

Users are now accustomed to paying for ongoing access to digital products rather than physical goods. This is convenient for business development, as it relies on a steady income from recurring purchases, which is more profitable in the long run than a one-time acquisition. This business model is here to stay because it supports ongoing product development and improvement.

Let’s look at the top-grossing free apps in 2025 in different categories:

As their revenue shows, these free apps are alive and thriving. Their users are willing to engage deeply with products that offer clear value — even when the initial price is zero. The key lies in sustainable exchange. Subscriptions will remain a cornerstone of revenue, with additional support from in-app purchases, contextual advertising, and flexible trial systems.

At the same time, people are gradually becoming tired of the subscription-heavy landscape. An example of this is the large number of cancelled streaming platform subscriptions due to content fragmentation and changes in pricing policies.

While each service offers exclusive content, some users are unwilling to pay for each one separately. Some ultimately give up on all of these products and seek ways to access all content for free, while others keep only one subscription among several.

To counter subscription fatigue, developers should consider that users are increasingly intentional about where they spend their money. Winning in this environment requires exploring monetization strategies that let users engage on their own terms.

Conclusion

If free mobile apps didn’t make money, they wouldn’t dominate the market. Now you see how you make money off a free app. The general rule for application monetization is that everything should be used in moderation.

If you’re planning to adopt a freemium approach, don’t force your users to buy. Instead, create conditions that encourage them to improve their experience. When the core product is genuinely helpful, upgrades eventually start to feel like a fair deal.

At Intobi, we’ve helped numerous partners develop platforms and applications that grow sustainably while supporting their users’ needs. Book a free consultation to explore how we can help you build a free app that users love.

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