The dominance of the freemium model for Android and iOS is astounding. According to Distimo’s 2013: Year in Review at the start of 2013, 77% of all the apps in Google’s Play Store and Apple’s App Store were free apps with in-app purchases. Heading into December that figure had reached 92%. Freemium apps completely dominate the charts and pull in the lion’s share of the profits and if you want a slice of the action then you’ve got to get your IAP strategy right.
Employing IAPs carefully enables developers to earn a decent return, but it’s easy to turn off your core audience by being too heavy-handed.
What not to do
Pay per progress is probably the most pernicious IAP crime and it’s rife in games. Typically things will start out easily enough, but the difficulty is soon ramped up to epic proportions, and it becomes impossible to proceed without splashing the cash on some special item or power-up. This approach betrays a lack of understanding of the business model.
IDC and App Annie did some interesting research on this and found that around 70% of in-app purchases are made by 5% of users. A large percentage of users will never spend cash on IAPs and if you try to force them to do so, then they’ll stop using your app.
It’s also a mistake to bombard the user with “opportunities” for IAPs. Forcing them to click on interface options that pop up during and after levels or throwing up a splash screen to suggest an IAP every time they open or close the app is creating a bad user experience.
Another surprisingly common technique, which is hugely frustrating for users and thoroughly unpleasant when employed in kid’s games or apps, is to make no mention of IAPs being included, or trying to trick the user into spending real money without making the costs involved clear. This has led to law suits and serious investigations in some countries, most recently by Italy’s Antitrust and Competition Authority.
It’s much better to take a patient approach and ensure that the user experience you are offering is positive. For subscription-based apps always make the costs clear at the outset. Advertising something as free when it’s actually a free trial is only going to alienate people.
Using in-app advertising and offering an IAP to unlock an ad-free version of the app or game is a common approach and one that rarely elicits any criticism.
If you plan to generate income in the long term from IAPs then you must understand the importance of engaging the user. Give them access to as much of the app or game as possible. As user engagement goes up, so does the likelihood that some of those users will spend money on IAPs. You should always make it clear what the IAP will get them, give them limited access to try it before they buy.
Offering shortcuts is very effective. A lot of apps or games place a time or life limit per day, but you can pay for unlimited access. This gives people who want to play the game the full experience and a proportion of them will get hooked if it’s good enough and potentially pull the trigger on an IAP.
You can also use optional IAPs as a way to speed up things that can only be earned for free by grinding for a longer period, time is money after all. The timing of when you offer IAPs is also vital, but it might take some experimentation to find the sweet spot.
There’s no need to employ shady tactics or trickery. The most successful games and apps generating serious profits from IAPs have something in common — they all offer a great gaming experience for free and it’s possible to get hours of entertainment out of them without paying anything. The longer people play, the more likely that some of them will spend, and they won’t feel angry or duped about doing it.