How do free apps make money? Mostly by selling real things (UK, 2026)

The short version

• Selling real things. The app is free because it’s the shop counter: you order the groceries, book the table or call the taxi through it, and the business makes its money on the thing itself. In the UK in 2025 that was about 76% of the money going through iPhone and iPad apps.
• Advertising. Advertisers pay to show you ads inside the app. About 13%.
• Digital sales. Paid apps, in-app purchases and subscriptions, where the store takes a share. About 11%.
• Real-world sales go round the stores. Apple’s and Google’s rules keep those payments out of their in-app payment systems, so they go through the business’s own payment provider. Apple takes no commission on them.
• Your data. Both stores make every app declare what data it collects and whether it tracks you. Check that label before you install.
• For a business: an app rarely needs to make money itself. Ask what people will buy through it.

How do free apps make money? Where the UK money went in 2025

Apple publishes a study of how much money goes through apps on iPhones and iPads. The latest, by economists at Analysis Group, covers 2025 and was published on 4 June 2026. Its first line reads: "Support for this study was provided by Apple." It has a table for the UK, in billions of US dollars. The percentages are ours, worked out from that table.

Two things stand out. Shopping alone was worth almost four times all the digital sales. And food delivery and pickup came to the same $6.7 billion as every paid app, in-app purchase and subscription combined. The UK was the biggest of the five European countries in the study, "driven in part by the UK’s higher iOS market share", and physical goods and services "accounted for the majority of billings and sales in all five".

Worldwide the pattern is the same. Apple’s announcement says: "In 2025, sales of physical goods and services accounted for $1.1 trillion". Digital goods and services "totaled $149 billion", and "In-app advertising revenue from ads placed by developers in their apps was $151 billion."

How do free apps make money without ads or in-app purchases?

By being the way you buy something the business sells anyway. A restaurant’s app costs nothing to download and takes your order; the restaurant makes its money on the food. The same goes for a salon’s booking app, a shop’s app or a taxi firm’s.

The stores’ own rules make this work in a particular way:

• Apple. Section 3.1.3(e) of its App Review Guidelines says: "If your app enables people to purchase physical goods or services that will be consumed outside of the app, you must use purchase methods other than in-app purchase to collect those payments, such as Apple Pay or traditional credit card entry." Apple’s membership page puts its commission on "the sale of digital goods and services through the App Store".
• Google. Its Payments policy lists, among "Purchases that are not supported by Google Play's billing system", "Purchases or rentals of physical goods (such as groceries, clothing, home appliances, or electronics)" and "Purchases of physical services (such as transportation services, airfare, gym memberships, or food delivery)".

So the money goes through whatever payment provider the business already uses, at that provider’s usual charges. This is largely why Apple can say that "For more than 90 percent of the billings and sales facilitated by the App Store ecosystem, developers did not pay any commission to Apple." Google’s fee pages don’t spell out a fee for real-world sales in so many words, so if your app sells anything physical, read its two pages for your own case.

Two smaller cases are worth knowing. Apple lets one-to-one services in real time, such as "tutoring students, medical consultations, real estate tours, or fitness training", be paid for outside in-app purchase. And Google says of loyalty schemes: "Earned or awarded points can be issued in-app without using Google Play’s billing system."

How do apps make money from ads?

The app shows ads, and the advertiser pays for them, often through an advertising network that fills the space. In Apple’s study that came to $8.0 billion in the UK in 2025. The study counts only "ads placed by developers in their apps", and says its figure "does not include ad-network or other ad-tech revenue, advertising on mobile web, or search ads".

Ads are also where the data question comes in. An app paid for by advertising may collect information about you to show you ads, and both stores make it say so. More on that below.

How do apps make money from in-app purchases and subscriptions?

This is the model most guides lead with: the app is free, and you pay inside it for extra features, game currency or a subscription. Apple’s guideline 3.1.1 says: "If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase." That is the part the stores take a share of:

• Apple: "The commission on the sale of digital goods and services through the App Store is 30% (15% if you’re enrolled in the App Store Small Business Program, Video Partner Program, Mini Apps Partner Program, or News Partner Program) and 15% for qualifying subscriptions." The Small Business Program is open to "Existing developers who made up to 1 million USD in proceeds in the prior calendar year for all their apps, as well as developers new to the App Store".
• Google, for UK users since 30 June 2026: its service fees page gives "10% + 5% billing fee" on the "First $1M (USD) of annual earnings". The billing fee applies only when the payment goes through Google Play’s own billing. Google says "97% of developers distribute their apps and take advantage of all Google Play has to offer at no charge".

In the UK, all of this came to $6.7 billion in 2025, the smallest of the three. Our post on what an Apple developer account costs in the UK sets out what each store charges, including the sign-up fees, in a table.

Are free apps really free?

You don’t pay to download them. Whether you pay in other ways depends on the app, and both stores make the developer tell you before you install:

• On the App Store, Apple says: "On each app’s product page, users can learn about some of the data types the app may collect, and whether that data is linked to them or used to track them." The developer has to include "the practices of third-party partners whose code you integrate into your app", which covers ad networks. Look for App Privacy on the app’s page. (Apple’s page for developers)
• On Google Play, "Before you install an app from Google Play, you can check the app's Data safety section. Developers use the Data safety section to share information about how their app handles your data." It includes whether the app shares your data with third parties. (Google’s help page)

Both are filled in by the app’s developer, not tested by the store. Apple tells developers: "You’re responsible for keeping your responses accurate and up to date." So they’re the developer’s own declaration, not a guarantee, but they take a few seconds to read.

If you’re thinking about an app for your business

The study’s biggest UK rows are shopping, travel and food, the same things small businesses sell. A business’s app rarely needs to make money itself. It earns its keep the way the shop or the service already does, and the question to start with is what people will buy through it, and how they pay you today.

• If it’s something real, a table, an appointment, a delivery, a call-out, the stores’ rules send the payment through your own payment provider, and the app itself is free.
• If it’s digital, a course, a members’ area, extra features, the in-app purchase rules apply and the stores take a share.
• If it’s neither, because the app is there to make repeat orders or bookings easier, it doesn’t have to take payments at all.

We build mobile apps for businesses. You don’t have to know exactly what you want before you start: you have the real app on your phone from the first version and shape it by reacting to it. When it goes live, it’s published in your business’s name, on your own App Store and Google Play accounts. More on how our mobile apps work.

What the guides on page one get wrong

The guides that rank for this question are almost all written by app agencies and companies selling tools to app makers, in US dollars. They lead with ads, in-app purchases and subscriptions. One of them, updated in June 2026, sums up the stores’ share as "The app store takes 30%", or 15% in some cases. None of the four we read mentions that real-world sales don’t go through the stores’ in-app payments at all, which in the UK is most of the money.

That matters if you’re weighing up an app for a business that sells real things. A guide built around in-app purchases will tell you to plan for a store taking 15% to 30% of your sales. For a takeaway, a salon or a shop, those payments don’t go through the store at all.

What argues the other way

• Apple paid for the study. The authors say the conclusions are theirs, but it’s Apple’s study, published by Apple, and it suits Apple to show that most money in apps pays it no commission.
• It covers iPhones and iPads only. There’s no Android figure in it, and we haven’t looked for one elsewhere.
• The figures are estimates, in US dollars. The study says regional estimates "may not be directly comparable to previous reports due to periodic updates made by third-party sources".
• "Billings and sales" isn’t income. The $46.4 billion is what people spent on real things ordered through apps, not what the businesses kept, and certainly not what the apps earned.
• The percentages are ours, worked out from the UK table, and rounded.
• We have an interest. Lola Squared builds mobile apps for businesses, and a post saying a business app doesn’t need to make money itself suits a company that builds them. We don’t earn anything from Apple, Google or any app named here.

Sources, and what we checked

• Apple: App Store ecosystem reaches $1.4 trillion (Newsroom, 4 June 2026) and the study it announces, Apple’s Global App Store Ecosystem and Its Growth, 2025 (Analysis Group, June 2026; the UK figures are in its Table 4); the App Review Guidelines (3.1.1, 3.1.3(d) and 3.1.3(e)); the App Store Small Business Program; Apple Developer Program membership; and App privacy details on the App Store.
• Google: the Play Console Help pages Understanding Google Play’s Payments policy and Service fees, and the Google Play Help page on the Data safety section. We quote the English (default) versions; the British English version of the Payments policy words one example differently ("houseware" for "home appliances").
• Page one: four of the guides that rank for "how do free apps make money", read in full.
• Every page above was read on 17 October 2026, and again on 19 October 2026, the morning we published; the wording we quote and the figures we use were the same both times. Apple’s study was downloaded as a PDF and read in full, and the copy downloaded on the 19th was byte-for-byte the same file.
• Our own arithmetic: the percentages in the UK table.
• Every quotation above was tested automatically against the text of its source before publication.