How To Make Money From A Free App

Developer Brian Robbins from Riptide Games gave a fascinating talk today about the apparent paradox of trying to make money off of a free app on Apple's App Store. Originally the App Store had only the two choices of a free apps or paid release. More recently, developers have a bevy of options for bringing in revenue even on free apps, including in-app ads, in-app purchases and premium models, or even using "lite" versions of games to promote the paid versions. Robbins walked through a general overview of the models available and filled in the blanks with a lot of actual, clear numbers from his own company and its release.
However, robbins also said that when Apple does sell ads, they are profitable. Last holiday season, Apple's ads were paying as much as $40 per CPM, and Robbins's set of ad-supported "ilook" apps take their biggest chunk of revenue from Apple's own service. The ilook apps have made over $53,000 for Robbins and his company so far, of which $26,000 came from iAds. Most of that came from a big Christmas boost last year. Robbins said the other networks paid less for games and a little more for non-game apps. iAds for Dove, for example, never showed up in his games, but he saw them all the time in his non-game photo apps.
Finally, Robbins talked about the freemium model, which he and his company have since moved to using in a big way. The first game Riptide released under this model was Gravity Slide (a game actually prototyped at a previous 360iDev game jam). since its release the app has pulled in 450,000 downloads, making up $14,000 in revenue from in-app purchases of level and content packs. The app has seen a 1 percent conversion rate (so 1 percent of people using the app have purchased something), but Robbins noted that among OpenFeint users specifically, that conversion rate more than doubled to 2.5 percent.

Read more about how to make money from free apps at : http://www.tuaw.com/2011/09/12/360idev-how-to-make-money-from-a-free-app/