The VPN market is growing yearly, and new players seek ways to dominate this field. Creating a VPN app is a complicated process. Picking the right servers, app interfaces, and security, developers invest a lot of money in crafting these apps. However, how do these companies generate their revenue? Well, this article is all about that!
In this article, We’ll explore how VPN companies make money and what they do to generate revenue in a fast-growing market. Without further ado, let’s start!
Subscription-Driven Income
Most VPN businesses make their revenue from subscription fees like Express and Nord VPN. They offer various pricing levels that suit multiple customer needs and budgets. You can pay by the month, the year, or even for several years, and getting a more extended plan often means scoring a sweet discount.
Monthly Subscriptions
If you go with a monthly subscription, you can let people try out the app temporarily and change things whenever you want. It’s perfect for giving the VPN a whirl or using it occasionally. Sure, the user is investing more money into it each month, but it’s ideal for people who aren’t sure about locking themselves into an extended deal.
Yearly and More-than-One-Year Plans
Now comes the annual and more than yearly plans. These plans are relatively cheaper than getting a monthly plan. These companies calculate an overall cost for the whole year and bill it for every month. It’s also a big win for the company because they get steady cash flowing in.
When people pick these plans, they end up unlocking premium features like premium customer support and better protection. This allows them to stick around for more time.
VPN companies get smart with how they set up their prices. They set it in a way so that money-conscious people can get in on it, but they also get a decent payoff from the die-hard users who stick with it for ages.
Ads Driven Revenue by Free Apps
There’s one hand where VPN companies make money with subscriptions, and the other side wants to keep their app for free. But how do they make money? By running ads. They turn user actions into money by popping up ads in their apps or sites.
Targeted Advertising
These free VPNs snatch up anonymous details in the form of cookies and give you personalized ads. Another way they run ads is to access a certain feature. You need to watch ads to unlock a feature. This way of making money is standard for the no-cost VPN crowd.
Sponsorships
Some free VPNs also partner up with different brands, advertisers, and sponsors. These partners invest some funds to push their services or products to those using the VPN. This setup keeps the VPN costless for people and helps to generate revenue.
Freemium Approach
Many VPN companies offer the best of both worlds, which is the freemium approach. They hook people up with some basic service at no cost, and if you want a better upgrade, you have to purchase a plan.
Free VPN plans often have restrictions, such as limited server access, slower speeds, or data caps. These limitations encourage users to upgrade to premium plans for a better experience. The free plan acts as a tester, influencing people to buy the full plan.
There are benefits such as faster servers, advanced encryption, and better upgrading protection. By advertising the advantages of premium services, VPN companies convert free users into paying customers, making the freemium model a cheeky way to generate revenue.
In-App Purchases
This also falls in the freemium model but is worth mentioning, too. VPN companies often make more cash by adding in-app purchases. These details bump up the value for people using the service while increasing the company’s revenue. One example of this is getting your IP address. This is gold if you’re a businessman or someone who’s always online managing accounts.
Some VPN businesses let you pick up top-notch tools like malware protections or ad blockers. They add these, which makes you spend more, making them generate more revenue.
White-Label Reselling
VPN companies also generate revenue by giving resellers white-label setups. This means that other businesses can create their own brand on a VPN service prototype and sell it independently. This is a clever move for smaller companies to make their way in the industry without going through the hassle of creating their app for it.
These VPN companies charge the resellers to use their interface and platform. They might ask for a fixed price or a split-profit deal, grabbing a slice of the reseller’s sales.
Handing out white-label options is smart for VPN companies because it expands their reach and boosts their customer count without spending extra cash on marketing. Everyone benefits, and revenue flows steadily.
Affiliate Marketing
For VPN businesses, affiliate marketing is another key source of income. Individuals or companies act as affiliates, pushing VPN services and getting a percentage for each sale via their recommendation links. This tactic lets VPN companies widen their marketing reach without spending tons on traditional ads.
To make affiliate income bigger, VPN companies also work with content creators, blog writers, and YouTubers who can advertise the service through ads, tutorials, and reviews.
Creators like Pewdiepie have been lifelong affiliate partners of NordVPN. These partnerships help VPN companies tap into targeted audiences, which boosts brand visibility and sales.
Business-to-Business Services
As remote working is becoming more and more popular, Some VPN companies cater to businesses to protect their information and prevent confidential things from leaking. Catering to businesses is a smart move regarding revenue as they have bigger investments and wouldn’t mind splurging on top-notch expandable services. Most popularly, these VPNs are known as “Corporate VPNs” or “Business VPNs”.
Supplementing Networks
Having many servers requires a lot of money to create and run. So, to lower their investment, they can often use your device as an exit node for its VPN network. It’s not as common, but some cases reveal that VPN companies will use their free users’ devices as exit nodes for their premium ones.
It means low server channels need to be opened, which ends up generating more revenue for the company. When a VPN company uses your device for this purpose, your IP address will be revealed, which may put you in danger of legal crimes.
Selling VPN Routers
Some VPN companies make money by making routers with VPN services. These routers help make every gadget on your home or office network safe, and appealing to families and the office.
These routers are often sold with a VPN membership. Users must keep resubscribing to keep all the features, generating steady revenue. Some examples of companies that have implemented these are ExpressVPN and NordVPN.
The company diversifies its revenue channels through these VPN routers by targeting niche markets with these services.
Selling User Data
Another way they make money is by selling user data. It could be for a business or another app in the making. It is an illegal way to generate revenue, and people are now more conscious about their data usage. So, we highly recommend not going that route if you’re willing to start.
It is carried out in the form of cookies. Those cookies the app asks to allow are a way to track data without violating legal laws. In some cases, they are automatic, too.
Another way of doing this is through web beacons. They are similar to cookies, but they involve images to track movement. It is used to see if someone visited a particular website or content. These VPN companies can develop their beacon to track these activities.
Last but not least, they can also track your pixels. Social media apps do this where you share your interests with the app by mapping the pixel movement. The VPN company can implement it, or they can access it if they partner with one of the apps.
As this model is unethical, we recommend not utilize this method if you are planning to start your VPN business.
Conclusion
And there you have it, all the ways VPN companies make money. VPNs are an amazing asset for the internet and paying for it is definitely worth it. Also, creating a VPN is a complicated process so the makers deserve their share of profit too. Remember to always read through the terms and condition before giving your VPN app full access.
However, gaining customers’ confidence through transparent and honest practices is key. Create a good app, have excellent working practices, and promote the app well. However, you don’t have to do this alone. Nagorik is always there to help you with your VPN needs.
Contact us today to unlock the potential of your business. From creating the app to establishing it as a brand, we’ll help you through it all. Let’s make something big together. Feel free to reach out to us. Our team of experts can’t wait to serve you.