The benefits of in-app purchases for developers
Have you ever looked at the “Top 10” lists inside the Apple App Store and noticed that more than half of the apps that earn the most money are free to download? How can this be possible?
Several years ago, the App Store introduced a new feature that allows developers to charge customers directly from their apps, with the customer’s connection of course. This feature took a while to catch on, but it is now one of the top earning strategies for many developers, and here are two strategies that have proven to be very effective for developers:
free trials
The App Store does not directly allow the download of free trials of games/applications. But with in-app purchases, developers can effectively offer users a demo and trial of their apps at no cost. During 2011, the App Store saw a huge increase in this strategy. A game developer may offer a free download of the full version of their game with 1/10 of the levels unlocked. If the user enjoys the game, they can purchase all other levels, directly from the app, for the original price of the game.
This has numerous benefits for the developer. In particular, it allows them to put their game in the hands of many more users than would otherwise be possible. Since users can download apps for free, they are more inclined to try them out and hopefully update later.
The “Freemium” model
Another popular strategy for in-app purchases is the “fermium” model in which the app is free for everyone, but those who use it regularly can upgrade to get more features. This is widely used by utility developers like photo editors where most effects are free but additional filters are available for $0.99. Again, this allows many users to benefit from the app, while earning revenue from those who use the app enough to be willing to pay.
The “currency” model
Finally, we will look at what is perhaps the most effective in-app purchase strategy of all. This is mainly used by developers of social and strategy games. Like the previous strategies, the game is free to download and play by any user, but the games offer something like Smurf Berries (Smurf’s Village) or Magic Beans (Trade Nations) which are essentially “currency” within the game. Most games offer users ways to earn money for free, but for users who want to progress faster or achieve more, in-app purchases of these items will enhance the gaming experience.
For developers, the increase in in-app purchases has created more opportunities to generate substantial revenue from their work, creating more depth and quality within the app store.