On the internet, “free” usually comes with strings attached. It’s like a house party where you’re welcome to stay overnight… but suddenly the host disappears into their bedroom, and you end up having to sleep on the floor with cardboard for a duvet. In the online world, eventually, the “free” storage runs out, or the “free” software locks its best features, and you’re forced to pay. Mobile apps, however, are playing a totally different game. They are one of a few parties in town where people can crash on the couch for five years, never spend a dime, and the host is actually happy they’re there. However, is freemium still a way to go? Are there really better alternatives for mobile app publishers? Let’s find out!
A definition of freemium and premium
Premium apps function like a traditional store purchase: you pay an upfront price and, in exchange, you typically get the full experience with no ads or limitations.
Freemium (a blend of “free” and “premium”) flips this model by offering the download for free to lower the barrier to entry. Instead of charging everyone at the door, freemium apps usually split the experience: the basic version is free for everyone (usually supported by ads), while advanced features or ad-free usage are locked behind an optional “premium” upgrade.
Advantages of freemium
- A conversion rate tells you what share of your app users take a key action after installing or using your app. For example, if 100 people install your app and 10 of them start a free trial or subscription, your conversion rate is 10%. In freemium apps, only about 2-5 out of every 100 free users typically upgrade to a paid plan, which is why monetizing the remaining users through ads is so important;
- Freemium models take the pressure off by letting you monetize the massive crowd of users who simply aren’t ready to subscribe yet. By leveraging ads across this volume, you build a steady, predictable income stream that keeps the cash flow smooth. This creates a solid financial safety net;
- Ads aren’t just about “banner spam” anymore – when done right, they actually encourage daily engagement. It’s without a doubt that by keeping the app accessible, you keep users scrolling, tapping, and returning every day;
- Instead of forcing users into a subscription with restrictive paywalls, an ad-based monetization encourages long-term retention. It maintains accessibility, allowing individuals to engage with the app freely until they choose to upgrade on their own terms. This approach empowers the user.
Freemium app vs premium app
Many top-tier platforms know that choosing between “freemium” and “premium” is actually a false choice, as they can really complement each other. That’s why the debate between “ad-supported” and “subscription-only” is becoming obsolete. The most robust app businesses today are hybrid ecosystems: they use subscriptions to capture the deep value of their most dedicated fans, while simultaneously using ads to monetize the vast majority of users who are happy to engage for free. This approach ensures you aren’t leaving money on the table from the 95% or more of users who might never upgrade, but still love your product.
To execute this strategy effectively, you need an ad partner who prioritizes user experience as much as revenue. At optAd360, we specialize in helping mobile publishers unlock the full potential of their ad inventory with AI and personalized support. Let us optimize your ad monetization so you can focus on building a great app for every user, paid or free!
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