The Tool Desk
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Who pays when an app is free?
The answer depends on the business model. An advertiser may pay to reach app users, the user may pay for an upgrade or ongoing access, or a customer may buy a physical product or service through the app. For reader apps, payment may happen elsewhere: someone buys a magazine, book, music, or video subscription outside the app and then accesses it there.
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These models differ in who pays, what triggers payment, whether it repeats, and whether the transaction happens inside or outside the app. There is no universal most-profitable model; results depend on the particular app and its audience, market, costs, and period.
How the main app revenue models work
| Model | Who pays | What triggers payment | Can it repeat? | Where payment happens |
|---|---|---|---|---|
| Advertising | Advertiser | Ads are placed in the app and delivered to users | Potentially, as ads continue to run | Through the advertising arrangement |
| Optional digital purchases | App user | A one-time purchase of a feature, content, or digital item | May repeat for consumables or additional purchases | In the app |
| Subscription | Subscriber | Access to a service or regularly updated content | Yes, while the subscription remains active or is renewed | In-app or, for some content, outside the app |
| Physical goods or services | Customer | A purchase such as food, clothing, or a ride | May repeat with further transactions | Through the sale or service transaction |
| Outside-app content purchase | Reader or viewer | Purchase or subscription for content used in the app | Depends on the purchase or subscription | Outside the app |
Advertising
The developer earns revenue by placing ads in the app. Apple describes apps primarily funded by in-app advertising as generally free to download and use, and notes that advertising can complement in-app purchases or other models. Apple cites Instagram, Twitter, YouTube, and Pinterest as examples of prominent apps that use advertising; that does not mean they rely on advertising exclusively. Apple’s App Store business-model guidance and its June 2025 App Store report explain these examples.
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For scale, Omdia estimated that developers placed $150 billion in ads within iOS apps globally in 2024, with around $25 billion tied to games, as reported in Apple’s June 2025 ecosystem report. This estimate covers developer-placed advertising within iOS apps; it excludes mobile web advertising, search advertising, and Apple Ads. It is not total mobile advertising, total App Store revenue, or an estimate of what a typical app earns. Apple’s report provides the figure and scope.
Optional purchases and freemium upgrades
A freemium app costs nothing to download but offers optional paid features, extra content, subscriptions, or digital goods. Apple describes the model this way: “With freemium models, users pay nothing to download your app and are offered optional in-app purchases for premium features, additional content, subscriptions, or digital goods.”
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Purchases can be consumable or non-consumable. A game might sell lives or gems that are used up; a photo app might charge once for additional filters that remain available. The free version is the entry point, while users who want more can choose to pay.
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Subscriptions charge for continuing access to a service or periodically updated content, such as cloud storage or a magazine. An auto-renewing subscription bills again on a recurring schedule until canceled. A limited-duration subscription may instead expire and require the user to renew.
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Google Play requires subscription terms to clearly disclose the cost, billing frequency, renewal terms, and other material information. It also says subscriptions must provide sustained or recurring value. Google Play’s Developer Program Policy sets out these requirements.
Physical goods and services
Some free apps facilitate sales rather than charging for app access. A customer might order food, buy clothing, or arrange a ride. The app can be free to use while revenue comes from the goods or service transaction.
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Content bought outside the app
Reader apps may let people access magazines, newspapers, books, audio, music, or video purchased or subscribed to elsewhere. In that case, the app provides access, but the purchase that generates revenue takes place outside it, as Apple explains in its business-model guidance.
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Yes. Apple explicitly describes free apps with no ads, in-app purchases, or purchases of physical goods or services as generating no revenue from the app. A free download is not proof that the developer earns money directly from that app. Apple’s guidance distinguishes free apps with monetization from those without it.
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What the revenue figures can—and cannot—tell you
The $150 billion estimate is useful for understanding the scale of developer-placed advertising within iOS apps in 2024, but it says nothing about the earnings of a particular app. The available sources do not establish a representative income for a typical free app, a universal profitability ranking among models, or comparable per-app ad rates, purchase conversion rates, and subscriber revenue. Those figures vary with the app, audience, market, time period, and costs, and should not be inferred from an industry-wide total.
Quick Recap
Platform rules shape monetization
App monetization is subject to platform policies, not just a developer’s choice of payment model. Google Play’s policy covers payments, subscription disclosures, advertising identifiers, and ad fraud; it prohibits ad fraud. Developers need to follow the rules that apply to the platform and the type of transaction they use. See the Google Play Developer Program Policy for its current requirements. Google also lists tools including AdMob and Google Play Billing in its app monetization resources.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
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