In-app purchases and their types

5 min read

The phrase "in-app purchases" or the English abbreviation IAP is often found in reviews, on thematic sites and in descriptions of applications in Google Play and App Store. In-app purchase is a charge for additional content or features in a mobile game or app that can be purchased after installing the program on your smartphone or tablet.

Built-in purchases cause a lot of controversy among gamers, as some believe that in the case of excessive obsession, they negate all the fun of the game.

Apple had to deal with lawsuits filed against the company by parents whose children spent thousands of dollars on in-game purchases. Naturally, without permission. After litigation, the App Store now warns users about in-app purchases without entering a password, which can still be made within 15 minutes afther authorization. Also, with the iOS 7.1.1 update, "in-app purchases" is now listed under the "buy" or "install" button.

Google also pays attention to the built-in purchases of users of Android devices. With the March update of Google Play 4.6.16, the app has the option "Require password". If you have enabled it, you cannot make an in-app purchase without entering a password. If you decide not to use this protection, then after the first purchase for half an hour, you can make in-app purchases without entering a password.

If we are talking about in-app purchases, we can’t avoid mentioning the so-called freemium-games that simply make no sense without in-app purchases. You can download these games and play them for free. Most freemium games use a variety of timers and limits. Usually the scheme looks like this: for a while you play quietly, then the timer turns on, and you either wait until some "energy" is restored, or you buy an "additional charge" through the built-in purchases. The choice is yours. Freemium games and apps generate the lion's share of revenue in Google Play and the App Store.

Why in-app purchases became so popular?

In-app purchases will perfectly stick to startups that are focused on constant use and addiction (games, social networks, Dating services). From the point of view of users, such applications (also called freemium) are a good deal because:

  • You can download them for free and check if they are as good as the description in the market promises.

  • They have no advertising per se.

  • You can do without in-app purchases and use only basic features

The last point is a risk for your startup — if the basic functions fully meet the needs of users, this model will not work — so you need to take a responsible approach to the issue of separation of functions or consider other ways to make money on mobile applications, for example, immediately and boldly offer users a paid product.

The owners of fremium applications usually operate as follows:

  • They develop an application that looks and works so well that it is difficult to believe that it can be downloaded for free.

  • They seriously invest in the promotion of mobile applications and attract as many users as possible from the target audience.

  • They offer premium features of different price categories: very cheap, a little more expensive and conditionally expensive. In the case of a subscription, it looks like this: for 24 hours of premium, the user will have to pay $0.99, for 7 days - $5.99, and for a month — $25.99. Seeing a clear benefit, it is difficult for the user not to buy a slightly more expensive subscription.

If in 2012, in-app purchases accounted for only 11 percent of profits, then, according to the statistics, in 2017 their share was almost half — 48.2%. This model is used by:

  • Slack, corporate messenger

  • Vessel, a video viewer application

  • Tinder, a mobile Dating service

  • Headspace, a meditation app

  • Envoy, service for visitor registration office

Types of in-app purchases

I will call as well as Apple does:

Compensated

Example: health, extra money, double the speed of construction for three days, etc.

You have to buy it again and again each time you need it. Compensated purchases can not be transferred between devices, when reinstalling the application you can’t download them for free again.

Uncompensated

Example: additional maps, unlock the full version of the game, maps for GPS, additional levels of the game, etc.

They are bought just once. If you transfer to another device, you can download it again for free inside the app. If you reinstall the application, you can install it again for free.

Subscriptions

Example: a subscription for three months online games, subscription to daily news

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