You must have observed that some applications on your smartphone don’t charge anything but are still profitable. Most companies that are free for a user make money with the data of the users. So, if you want to know how companies make money with your data, this article is for you. In this article, I will take you through some business models companies use to make money with your data.
Here’s How Companies Make Money with Data
Below are some business models companies use to make money with your data while keeping their applications free for users.
Advertising Services
Many applications have a huge user base today, specifically social media applications. No social media app charges you anything to access the features for which they are known for. But still, all the major social media applications stay profitable most of the time.
It happens because these applications have users of every interest. So they offer advertising services on their platforms where they invite businesses to run ads on their applications and provide them tools to target users based on their interests. So using your data, companies understand your interests and then ads are shown based on your interests. It helps businesses reach their potential customers and help social media applications use your data for their business.
Subscription Based Model
Now let’s take another example of a business model where you don’t see any ads, but the app is still free for the users. In such applications, there is one platform for users and one platform for businesses. The users can access all the services for free, and the businesses are charged using a subscription-based service.
For example, Paytm! It is one of the most used payment and UPI apps in India. It’s free for users, but on the merchant side of Paytm, businesses who use the Payment processing services of Paytm are charged using a subscription model through which businesses can access the data of the customers who made payments for their services using Paytm.
Data Exchange Platforms
Data exchange platforms are the platforms that let businesses share data for monetary and mutual benefits.
Companies make money by selling data about their users on these platforms. This data can include features like what websites you visit, what you search for, and what products you buy. The businesses that buy your data then use it to show ads that are more likely to interest you or improve their products and services.
Summary
So below are some ways how companies make money with your data:
- Advertising Services: Where ads are shown by understanding your interests;
- Subscription-based model: Where your data is shared among businesses using a subscription-based model;
- Data Exchange Platforms: Where companies make money by selling data about their users on data exchange platforms;
I hope you liked this article on how applications make money with your data. Feel free to ask valuable questions in the comments section below.
