There is a lot of money to be made by giving mobile apps away for free.

Freemium, a business models for mobile devices, was a topic of discussion at DC Week’s Digital Garage.

“A lot of people are realizing the power of free because there is no barrier to entry,” said Natalia Luckyanova of Imangi Studios. The point is to get people to “99 cents is a barrier.”

The way to make money with free is to start by opening a door to potential customers.

“People will at least try out a free app. The 99 cent barrier could be the difference between a success and failure,” said Vincent Buscemi, Vice President of Mind Grub. Sometimes free apps can be used to drive brand so users might make a decision to invest in your product that you sell.

There are already several successful iPhone and iPad applications that have been able to  drive customers to make that investment. App makers have found that success by giving away the first few game levels away for free, then charging for additional levels. They also make money by giving away the game for free then charging users for game enhancements. The key is to get the user hooked.

“Free apps are more likely to be downloaded than ones that charge.” Luckyanova said. There are other ways to monazite a free apps. We monazite our free apps through ads.

Ads have been able to drive success in the mobile market, and companies like Apple are trying to change the way ads work by creating a product called iAds that adds more rich media integration.

The panelists warned that the business strategy that you plan take use should be decided on before you start your application.

“You have to think about how you are going to monazite your app. It will make a difference on how you will design it,” Luckyanova said. Adding premium layers for additional levels or better game experience later will make things very difficult for you change once the app is released.

“The freemium model is really hot right now. If you change your model then [change] it all in at the end, it will not be as successful,” Luckyanova said.

Deciding on a plan to make free profitable is important.

“You cant give away things forever,” said Grant Allen, Vice President of Core Capital Partners. “At some point you have to flash things in front of them to get them to buy something. Otherwise you will not have a business.”


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