React Native In-App Purchases — Part 1

Introduction to in-app purchases

What is an In-App Purchase?

In-app purchases offer a convenient revenue generation method in mobile app development. These purchases encompass subscriptions or one-time payments, granting users access to additional features or content on their mobile devices. Subscription periods can vary from weekly to annually.

For instance, a user may download a music app and enjoy a 14-day free trial period. After this trial, the app becomes locked, requiring users to purchase a subscription to continue using its features. Apps like Netflix, Spotify, PUBG Mobile, and Amazon Prime are examples of applications that utilize in-app services.

History of In-App Purchases

The concept of in-app purchases (IAP) has expanded dramatically since its inception in the early days of mobile apps. Initially, users paid a one-time price to download software from platforms like Apple’s App Store or Google Play Store. However, the introduction of in-app purchases transformed the scene, providing developers with new methods to monetize their apps and users with more flexible and personalized experiences.

With iOS 3.0 in 2009, Apple enabled in-app purchasing, allowing developers to offer extra content, subscriptions, and digital products within their apps. This was a watershed moment in the app economy, allowing developers to make ongoing money rather than relying primarily on one-time sales. Google Play Store also embraced in-app purchases, making them essential to the success of various apps across multiple categories.

In-app purchases have emerged as a dominant revenue model in today’s smartphone landscape. They support freemium models, in which users can download the app for free and purchase premium services or virtual objects. In the extremely crowded app industry, this method balances offering value to users and generating cash for developers.

Developers relied on a one-time purchase model before the widespread adoption of in-app purchases. Users paid a single upfront fee to download and install an app, gaining access to all its features without additional charges. For instance, a photo editing app might have been priced at $2.99, and users who found it appealing would pay this fee upfront for indefinite access. However, this model had limitations in generating continuous revenue from existing users.

Types of In-App Purchases

There are four primary types of in-app purchases:

1. Auto-renewable subscriptions: In this model, customers are charged regularly for using content, services, or additional features within an app. For instance, a monthly membership to a music streaming platform is automatically charged every pay period until the user cancels it.

2. Non-renewing subscriptions: Unlike auto-renewable subscriptions, these subscriptions are not renewed automatically. Users must purchase a new subscription once the current one ends to maintain access. For instance, a one-time 6-month subscription to an online magazine.

3. Consumable: Consumable purchases become depleted as users utilize them. Once depleted, users must purchase another consumable IAP to enjoy the same benefits, such as extra lives in a gaming app.

4. Non-consumable: Non-consumable purchases remain permanently available to users with no expiration date or usage restrictions. Examples include adding filters to a photo app or removing advertisements.

Prerequisites for In-App Purchases

Enabling in-app purchases for your app requires:

1. An Apple Store Connect account for iOS and a Google Play Store Console account for Android.
2. Completion of the Paid Applications contract for Apple.
3. Creation of a developer account on Google Play Console and Apple Developer.
4. Setting up a sandbox tester. (Apple Store, Play Store)
5. Using a real device for testing.

Making it work

With in-app purchases, customers can make payments with just a single click because mobile phone owners have already linked their credit cards to their Google or Apple accounts.

This ease of ordering and payment explains why IAP is so successful. After just a few taps to confirm, users are ready to enjoy the product or service fully. In a matter of seconds, users can access a vast collection of episodes and movies via Disney+, HBO, or music via Spotify or Apple Music.

Subscription Flow

Subscription fees

Apple and Google charge a 30% service fee on purchases, which is reduced to 15% for long-term users. This fee structure is an essential consideration when developing retention strategies.

Price change

Adjusting the price of an in-app purchases subscription can immediately affect all users, potentially impacting revenue.

If you decide to raise the price, you can force the current base to upgrade to the new pricing or keep them at their current rate. The user will then receive a notification from Apple and Google about the price adjustment, which they must accept. This may cause a large number of cancellations, so take extreme caution.

Kids and In-App Purchases

When developing games or apps for education, you will run into a problem with children: parental authority.

Ensuring clear communication with parents about app purchases, including providing notifications and explanations of purchases, can help increase conversion rates and reassure parents about the value of subscriptions.

App Categories with High In-App Purchases

According to Statista, mobile gaming apps generate over USD 200 billion in revenue, making them the top category for worldwide app revenue.

Around 79% of gaming and 50% of non-game apps use in-app purchases to generate revenue. Entertainment, social networking, photo and video, lifestyle, and music apps also see significant revenue from in-app purchases, reflecting user spending habits favoring entertainment and gaming apps.

Rejections of in-app purchases on the Apple App Store and Google Play Store can occur for various reasons, and the specific reasons can sometimes be platform-specific. Here are some common reasons for in-app purchase rejections on both platforms:

• Functionality: The IAP doesn’t work as intended, or there are bugs in the purchase process.
• Validation: The app fails to validate receipts or handle purchase restoration properly.
• Environment: You’re using a sandbox receipt in a production environment or vice versa.
• Testing: You haven’t provided enough information about your IAP testing procedures.

Below are the platform-wise rejection reasons:

Apple App Store

1. Non-compliance with App Store review guidelines
Your app may be rejected if it violates Apple’s App Store review guidelines. Ensure your app follows these guidelines regarding content, functionality, and design.

2. Incomplete or misleading information
Provide clear and accurate information about your in-app purchases. Misleading or incomplete details about the pricing or functionality can lead to rejection.

3. Bugs or crashes
If your in-app purchases implementation is buggy, crashes frequently or doesn’t work as intended, it may be rejected. Thoroughly test your app before submitting it.

4. Use of unauthorized APIs
Avoid using unauthorized APIs or private frameworks. Stick to the public APIs provided by Apple.

5. Inappropriate content
Ensure that your in-app purchases content complies with Apple’s content policies. Inappropriate or offensive content can result in rejection.

Google Play Store

1. Policy violations
Google has strict policies regarding in-app purchases. Violations of these policies, such as offering real-world goods or services outside the app, can lead to rejection.

2. Misleading descriptions or imagery
Ensure that the descriptions and imagery associated with your in-app purchases accurately represent the offered content or services. Misleading information can result in rejection.

3. Incomplete payment information
Make sure that your app’s payment system is complete and functional. If users encounter issues when making purchases, it could lead to rejection.

4. Security concerns
If your app lacks proper security measures for in-app purchases, it may be rejected. Ensure that user payment information is handled securely.

5. Violation of design guidelines
Similar to Apple, Google has design guidelines that apps must adhere to. Violating these guidelines regarding design and user experience may lead to rejection.

It’s crucial to carefully review the guidelines provided by both Apple and Google before submitting your app or in-app purchases for review. Regularly check for guideline updates, as they may change over time. If your submission is rejected, the feedback provided by the app store can often pinpoint the specific issues that need to be addressed.

Here are some resources that you might find helpful:

• Apple App Store Review Guidelines
• Google Play Store Billing Overview
• Top reasons for App Store rejections

Benefits of In-App Purchases

1. Continuous Revenue Stream: In-app purchases provide developers with a sustainable and continuous revenue stream. Developers can generate income over an extended period instead of relying solely on one-time app purchases.
2. Freemium Model: In-app purchases enable the freemium model, allowing users to download apps for free and decide later whether to make purchases for additional features or content. This lowers the barrier to entry and encourages more users to try out the app.
3. User Engagement: In-app purchases can enhance user engagement by offering additional content, levels, or virtual goods. This keeps users interested and invested in the app, fostering a longer-lasting relationship between it and its users.
4. Customization and Personalization: Users can tailor their experience by choosing which in-app purchases to make based on their preferences and needs. This customization can lead to a more personalized and enjoyable user experience.
5. Monetization of Free Apps: For developers offering free apps, in-app purchases provide a viable way to monetize their creations. This is particularly beneficial for app categories where users expect free downloads, such as games and productivity tools.

Disadvantages of In-App Purchases

1. Potential for Exploitative Practices: Some developers may implement aggressive or exploitative in-app purchase strategies, potentially leading to a poor user experience. This could include excessive pop-ups, misleading pricing, or manipulative tactics to encourage purchases.
2. User Resistance: Some users may resist in-app purchases and prefer apps with a one-time purchase model. This can result in a smaller initial user base, especially if users are skeptical about ongoing costs associated with the app.
3. Complexity in Development: Implementing and managing in-app purchases can complicate development. Developers need to integrate payment systems securely, handle purchase verification, and ensure a smooth user experience, which can be challenging.
4. Risk of Negative Reviews: If users feel pressured to make in-app purchases or are dissatisfied with the value they receive, it may lead to negative reviews. Negative reviews can impact an app’s reputation and user acquisition.
5. Dependency on Platform Policies: Developers must adhere to the policies and guidelines set by app store platforms (such as Apple and Google) regarding in-app purchases. Changes in these policies can impact app functionality and revenue streams.

Conclusion

In-app purchases (IAPs) are now essential in the digital era, providing businesses with convenience and substantial revenue potential.

So, in Part 2, we’ll cover how to integrate in-app purchases for iOS and information about subscriptions and grace periods.

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