Free Apps - How Can They Remain Free?

This post is an extension of the Guide to the Free Apps Phenomenon post. The free apps phenomenon is the situation where many apps that were created with the intention of making money are turned free. This post on the other hand will cover the various ways apps can remain free (no upfront cost).

In-App Advertising

In-app advertising means that that there is some sort of advertisement displayed when you use the app. Some of these advertisements can be downright annoying to quietly discrete. There are 2 kinds of in-app advertising:

1) Mobile Advertising Networks Ads

Mobile advertising networks are networks developers join in order to gain revenue from displaying other developers' banner ads on their own apps. Each mobile advertising network has their own business model but the most common model is going by a cost-per-click basis. Examples of such networks include iAd and AdMob.

2) Cross-game Ads

Often times developers will want to display other games or apps it has developed in order to increase user visibility. This is a good strategy if one game is very popular while the rest are not. By developing cross-game ads, developers hope that popularity of one game can be transferred to another. For example, Paper Toss 2.0 has banners of the same developer's other games displayed on the very bottom of the app. 

Free But You Can Upgrade

There are a lot of apps out there that are free but give you the option to upgrade the app if you like what you are using. The 2 most common paid upgrades are from the Lite Version to the Full Version of the app, and from a free app with advertisements to one which is ad-free.

Freemium Apps

The word 'freemium' is a mash-up between the words 'free' and 'premium'. The Freemium business model represents a huge percentage of apps located in the top app categories, and for good reason. Because once people get hooked to a great game, they may go lengths just to improve their stats or buy custom accessories. There is some slight controversy over these apps because they are marketed to the public as free but allow for purchase of premium items such as virtual currency. 

Free Apps - Guide to the Free Apps Phenomenon

This guide will present you with information on the free apps phenomenon. The free apps phenomenon is the situation where many apps that were created with the intention of making money are turned free. 

What Are Free Apps? 

Shout it out loud! "We all want free apps!!" They say nothing in this world is free, but guess what? We do have free apps. Of course when I say free, I mean that you don't pay an upfront fee to own them, but they may be swarmed with advertisements or if you want extra features like more virtual coins then you have to pay real cash for them (people in the app industry call them "Freemium Apps"). 

Why Are Some Apps Free?

It is common belief that app developers tend to make a lot of money. The logic is that even if an app costs only $0.99 to download, if 1000 people download it a day then they'd be making $990 a day and $361,350 a year. Not bad for a single product that probably only cost a tiny fraction of that to make but has such a huge potential market. But if app developers make a lot of money, then why do free apps even exist? Even if the app is swarmed with advertisements that can make them money, I seriously doubt that the revenue that advertisements can bring in will be as much as having a lot of people download your $0.99 app every day. The answer is simple: people love free apps. 

People want to try your app, they really do. But only if it is:

A) Free

B) Super popular and everybody they know is playing it too

C) Sounds like something they would need 

Out of all 3 options, option A aka option Free, is the easiest way to entice people to try your app. You can worry about getting your app super popular later - in the beginning all developers want is for people to try them out and give feedback. 

This strategy works for both newly released and older apps. For example, an existing older app may not be selling very well in the market. The developers or marketers may opt to turn their app free for a specific period of time to get their apps noticed, in hopes of growing a loyal fan base that will generate revenue later on. There are many websites and applications out there that track paid apps turned free, such as http://www.freeappaday.com/ or the AppsFire Deals iPhone app. Even developers like ourselves are guilty of using these websites/applications to scout for free apps from time to time. 

Conclusion to the Free Apps Phenomenon

Free apps are awesome for users. Developers oftentimes have a love-hate relationship with free apps because making apps free makes them more popular, but does not necessarily translate into more revenue. But the most important thing to keep in mind, is that the app industry is fairly young. Just how Facebook has not quite figured out a way to utilize all their data to generate income, the app industry is also still experimenting and evolving. The recent development? Freemium apps.

To read more on a developer's take on creating apps for a living, click here.

Idea Organizer - Top #18 Free Productivity App

We decided to release Idea Organizer for free for a limited time just to thank the users for the support.  It took roughly a day for the download count to shoot up to above 15000 copies.  In the US, Idea Organizer ranks #18 in the Productivity category (as of this writing) and #494 overall.  That's with around 3800 downloads.  Interestingly, Idea Organizer ranks #2 in China in the Productivity category and #134 overall with over 8000 downloads.

A few interesting observations:

• People are watching for price drops in apps.
• If 2500 downloads results in #494 Overall in the US App Store, imagine being in the Top 100 consistently (and being a paid app).
• Making your app free and letting people decide if they would pay for it via in-app purchase can be a good tool if you are finding your app being drowned in the sea of noise.
• Either a lot of people have a need for a place to store their ideas or they just like to try out free apps. We think the latter more so than the former.
• If everyone likes free apps, Chinese likes it more so than others. Apple should perhaps consider implement a country-specific pricing scheme for apps.
• US and China account for close to 75% of the download. If this number is conclusive or indicative of something, it means if you are making a paid app, focus on the US market. If you are making a free app, focus on the US or China market.

It will be interesting to see what the download stat looks like tomorrow.

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Top Free iPhone Productivity App (US)


Top Free iPhone Productivity App (China)