How Apps Generate Passive Income

Passive income is tossed around by personal finance gurus in every corner of the internet. But how does one go about setting up avenues for passive income? One way to begin amassing your wealth is to commission an app for mobile devices. No matter what app you choose, with the right company, you’ll be bringing in a steady stream of passive income for years to come. Let’s explore the ways in which an app can generate that passive income.

Freemium vs. Paid Apps

According to Statista, the largest global business data platform, the highest grossing apps are free. Only about 5%-10% of all users are willing to pay for an app before it’s proven its worth. The majority of downloads and profits come from the free app sections of store platforms like App Store and Play Store.

Advertising

Free and paid apps alike utilize advertising to generate income for the app developer. By adding features to games, like earning 3 free lives or 10 extra coins for watching an ad video (incentivized ad), each advertisement viewed is more money in your pocket. Other ads include banners, pop-up ads, videos and interstitial ads. Incentivized video ads are the most effective method of monetizing an app.

In-app Purchases

In app purchases offer the user the chance to purchase in-game loot, coins, gems, etc. that will make game-play easier and faster. That same loot is generally amassed at a much slower pace during the course of the game. These in-app purchases are considered consumable purchases. Another form of in-app purchase is the non-consumable purchase. This would include removal of ads or extension of in-app functionality.

Subscriptions

Features like weekly or monthly subscriptions allow for higher retention rates of passive income. A subscription package can include a set amount of loot or a loot package each month, removes ads, or offers new characters and collectables, as well as bonus content or upgrades. The same models hold true for other types of apps, from blogs to trackers.

App Merchandise

Cult classics like Angry Bird utilize merchandising to expand their revenue greatly. From clothing to toys and stuffies, Angry Birds aren’t hard to find on store shelves.

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