In-App Purchases: ABC of Freemium App Monetization

Aprofita
Aprofita
Apr 12, 2018 · 8 min read

When incorporated smartly, in-app purchases become an immensely effective way to monetize your mobile application. Predictably, unlike paid apps, freemium (a.k.a. free+premium) apps have better perceptibility, as they don’t ‘squeeze’ money out of mobile users for simply downloading the app.

According to Statista, in-app purchases are rapidly taking over other monetization models — in 2017 over 50% of mobile apps revenues were generated by in-app purchases.

Image source — statista.com

What’s an In-App Purchase?

An In-App Purchase (IAP) is an additional digital item, content or subscription sold within a free-to-install app.

Image source — support.apple.com

IAPs vary greatly in their forms and prices. One may think that the most popular IAP prices are $0.99, $1.99 and $2.99. But in reality, the most common ones are $4.99 and $9.99. Just FYI, you know :)

Image source — growthbug.com

Is In-App Purchase Monetization a Universal Solution?

Obvious as it may sound, every mobile app on the App Store and Google Play is unique, to a certain extent ;) , and requires a particular monetization model. No universal solutions. Deal with it.

For instance, in-app purchases fit in well with mobile games or any other mobile apps where users may need some additional items to head over to the next level or complete a task faster.

Just remember - Google and Apple are big corporations. They will enthusiastically cut off their 30% revenue share from your every in-app purchase or any other paid element. So think well how exactly you want to monetize your app.

Apple App Store vs. Google Play

But before you do that — think of where your apps will be distributed.

When choosing between the App Store or Google Play to publish your freemium app (or in case you’re planning to stage on both) — the first thing you need to be aware of is the fact that both stores have certain peculiarities that require thorough analysis on your side.

Remember that on average, iOS shoppers spend 2.5 times more than Android users on in-app purchases.

In February 2018, Apple has introduced a new feature on the App Store: now developers can promote their in-app purchases directly on the Store itself. These promoted posts can be advertised in search results or on the product page, which makes freemium apps marketing a little more aggressive (read — effective). Same thing we do on Aprofita, by the way. But that’s a different story :)

Google Play hasn’t implemented the promoted in-apps yet, but who knows what will happen tomorrow, right?

Types of In-App Purchases

As mobile apps differ in their form and purpose, so do in-app purchases. Usually, they are divided into specific elements that you might need in the app and a subscription option for a stated period of time.

Image source — uplabs.com

To be more precise, Apple defines the types of in-app purchases that exist in their app store as follows:

1) Consumable. It refers to game currency, game hints, extra health or some extra points. These items can be downloaded any time the user needs/wants them, and once used up — they can’t be re-downloaded free of charge.

2) Non-consumable. Here we usually mean pro versions of mobile apps, ads removal, full game unlock, unlimited hints or extra characters. These in-apps are purchased once, can be re-downloaded for free or be transferred to other associated devices.

3) Non-renewing subscriptions. Sports season pass or subscriptions for a set period of time fall under this category. You can use this content for a fixed period of time and purchase new items again after your subscription has expired.

4) Auto-renewable subscriptions. These are usually newspaper and magazine subscriptions, ongoing services, such as Netflix, and games. You can purchase such subscriptions for a certain period of time, and it will automatically renew at the end of that period. You can cancel automatic renewal at any time.

Why Should You Incorporate In-App Purchases?

Going freemium nowadays is not just a trend, but a smart marketing strategy. In case you didn’t know, Pokemon Go users spend $1.5 million per day on in-app purchases!

In-app purchases grab a major share in global mobile app earnings — about 48%, with sales estimated at around $37 billion.

How to Implement In-App Purchases in Your App?

The process of implementing in-apps to your app differs depending on the platform you are using — the Apple App Store or Google Play Store.

Apple App Store

In order to implement in-apps in iOS apps, you need the Store Kit Framework. It connects you to the App Store and processes user payments.

Google Play Store

At Google Play, developers use In-app Billing to facilitate in-app purchasing. Below you can see the basic purchase flow.

Image source — developer.android.com

Ready.. Set.. Market!

Ok, let’s assume that you’ve made your choice regarding the “Where to Publish” part and implemented in-apps correctly into your app. Time to think about marketing the entire affair! Here’s what you can start with:

1. If You Want Users to Do Something, Tell Them About It

The main issue with the in-apps is that it’s pretty challenging to make them public and ensure that users who’ve downloaded your app (or even those who haven’t) find them and understand the value your app is offering with its’ paid features or content.

Of course, when people use the app on a daily basis, they are very likely to know about the in-apps you offer. However, if they don’t spend enough time inside the app, they might as well miss something important.

What can you do about it? Well, remind them of the benefits your app offers. Various messaging tools and social media are there at your disposal. It’s proven that push notifications, for instance, drive 9.6x more users to purchase and increase in-app spend by 16 %.

2. Know Your Audience

Tracking customers’ behavior is not a super-power. We are all aware of the fact that huge corporations, such as Facebook and Google, might know about our habits even better than our parents and friends do. So, if everyone is collecting and analyzing information about users, why don’t you do it for your own personal sordid motives?

To make your in-app purchases work you’d better know what your target audience is in need of. You may follow their behavior, get to know what their action sequence is. It will definitely help you to make better in-app offers.

3. Free Samples Always Work

To motivate users to make a purchase within your app tease them with some quality free content. A free app should contain plenty of awesome features that will satisfy users and make them engaged with your app on a regular basis. When the do — BAM! offer them advanced features they can’t live without. Play on users’ weaknesses, make an offer when they’re most likely to accept it :)

HootSuite and Crowdfire are awesome examples illustrating this concept. They offer a wide variety of opportunities and features. But once you get used to them and become more professional in social media management and wish to manage several accounts, for instance, you need to make an in-app purchase.

Image source — crowdfireapp.com

4. Right Time, Right Place

Timing is really important. The main idea is to catch users when they’re the happiest. Don’t send notifications or pop-ups when people are distracted or angry. It’s better to offer an in-app purchase when the user actually need it — for instance, if he has troubles and needs a bit of “luck” to win an impassable game level.

Also, the end of a trial period is a great moment for offering upgraded features and to attract more users to your paid content. Usually, when people come to the very end of the trial, it’s very likely they will continue using the app and purchasing extra features or content.

Image source — marsflag.com

Moreover, the day and time do matter when prompting users for in-app purchasing . Leanplum has discovered that if you send push notifications on a Saturday, it might result in 2.2x more purchases. And push notifications sent between 3 and 6 p.m. lead to 2.7x more purchases.

Image source — leanplum.com

5. Promote? Absolutely!

iOS 11 offers you a perfect opportunity to promote up to 20 in-apps right on the product page on the App Store, not just inside the app itself. However, not that many developers have started optimizing for promoted In-App Purchases.

Only 3 (3%) of the top 10 keyword results for 10 keywords were promoted In-App Purchases.

Image source — incipia.co

Conclusion

This is just the tip of the iceberg and merely general guidelines that will help you to promote your in-apps. Do some marketing research, go for A/B testing to find out what works best for your app, and don’t ignore third-party tools and services that can help you promote your freemium app.

At Aprofita we will always be happy to help you promote your in-app purchases among exclusively our paying user base. Just DM or email us to learn more.