Does your app have a good following with multiple people installing and using it regularly? Do you offer it free or for an exceptionally low price? If so, it may be time to consider in-app purchases as a way to improve the profitability of the app, while also extending the user experience.
What is an in-app purchase?
In-app purchases allow the user to buy additional items or credits to use inside the app, simply by providing their password for their iTunes or Google Marketplace accounts. The money is deducted from the credit card associated with that account and the credits or items instantly show up on the app. For example, the popular Zombie Café game allows the user to purchase toxin through iTunes, rather than having to wait until it becomes available through play. Other non-gaming apps may offer in-app purchases as a way to upgrade to premium content. Users don’t have to locate a computer or leave the app to visit the iTunes or Google Marketplace stores. The purchase process is streamlined into gameplay, keeping the user interested and improving the likelihood that s/he will make a purchase.
Profitability potential is high
The potential for profits with in-app purchases is quite high and continues to improve as consumers become more used to the function. In June 2011, Verizon released statistics for its in-app purchases on iOS. According to the report, 72 percent of the revenue from iPhone apps came from in-app purchases, with a full 48 percent coming from free apps with in-app purchasing. This percentage increased tremendously from 2010, when only 28 percent of revenue came from in-app purchases. What does this increase mean for the future of in-app purchases? Clearly, consumers are becoming more accustomed to and more willing to take advantage of the online marketplace. Financially successful apps for 2012 and beyond will most likely be those that have in-app purchasing.
Mobile platforms embracing in-app purchases
Verizon’s excellent results have prompted other mobile platforms to add in-app purchases. For instance, Brew recently added in-app purchases to its mobile platform, allowing developers to monetize apps beyond download cost and subscriptions. Other platforms are following suit, which means most developers have an option now to create the purchase structure within their apps.
Why it works
Today’s consumers want value for their money. They are hesitant to spend money on something like an app, especially since so many free options exist. For this reason, they gravitate towards free apps, particularly when they need something for entertainment. After they’ve had the chance to try the app and see for themselves how much they like it, they are far more willing to spend money on it. Enter the in-app purchase option. Users are far more willing to spend a few dollars to extend an app’s usability or improve their experience after they’ve played a game or used the feature. The app has proven to be valuable and thus becomes something worth spending money on.
If you are in the process of developing an app or want to improve an app you’ve already created, in-app purchasing is a feature to keep in mind. Enhancing the user experience can benefit your customers and improve your bottom line at the same time.
About Author: Cameron uses a variety of platforms including http://www.brewmp.com/ to diversify his app portfolio and increase revenue from in-app purchases.