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Seven In-App Purchase Trends for Higher Revenue

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In-app purchases (IAPs) are the most powerful moneymaking mechanism in the app market today.  Did you know? Now you do.

According to recent research from Distimo, in-app purchase revenue accounts for seventy-six percent of U.S. iPhone app revenue, and ninety percent in Asian markets.

These numbers represent a twenty-three-point climb in IAP revenue from January 2012 to February 2013.  Profits are rising quickly for app developers taking advantage of this dynamic strategy, and it’s a sign of powerful things to come for the “freemium” model.

In today’s rapid-fire digital landscape, it pays to know the latest trends in app development and mobile device technology. Staying current ensures your web projects benefit from the inside scoop: the technologies and applications users love, and the solutions that increase profits and sales.

Here are 6 more trends in the in-app purchase landscape you need to know:

1.     Tablets beat smart phones for Android IAP revenue

Small Biz Trends reports Ibrahim Elbouchikhi, Product Manager of Google Play Commerce recently shared that the purchase rate on Android tablet apps is 1.7 times higher than for smart phone devices.

Main take-away: if you plan to integrate an IAP into your next app project, ensure the IAP and the app itself is optimized for tablets.

2.     Android users crave “free app” model more than iOS users

Wired reports “the average price for an app as of April this year was $0.06 on Android, $0.19 for iPhone apps, and $050 for iPad apps.”

Main take-away: Attract the Android market to your app with a “freemium” model - offer your app for free, with additional content and service available with IAPs.

3.     Tablet gamers predicted to spend $3 billion on in-app purchases in 2016

A recent study from Juniper Projects forecasts tablet gamers are poised to spend a record- breaking amount of money on in-app purchases by 2016.

The in-app purchase boom is predicted to be lead by virtual currencies, which enhance gaming experiences and increase user engagement.

Main take-away: The future looks bright for app game developers who integrate virtual currencies and extension packs into their “freemium” model solutions.

4.     Highly-rated apps bring in more sales

Another insight reported by Small Biz Trends from Google Play Commerce Product Manager Ibrahim Elbouchikhi reveals how an app with a 4-star rating reaps almost triple the revenue of a 3-star rating.

Main take-away: Android app developers can increase their chances of higher in-app purchases by boosting the app’s Google Play rating.  Elbouchikhi suggests best practices such as “replying to reviews, fixing bugs, [and] providing good customer support.”

For more ways to boost Google Play ratings and reviews for your app, check out this article from the Android Developer team.

5.     In-app purchasing could put Google Play ahead of App Store

Distimo’s report also shows that users who pay for upgrades and other conveniences inside “freemium” apps could put help Google Play outpace the App Store in sales.  In the last four months of 2012, Google Play ramped up forty-three percent aggregate growth in daily revenue compared to the App Store’s twenty-one percent.

Main take-away: Android users are quick to adopt “freemium” models, and quicker still to pick up extras once the apps are on their devices.  To take advantage of market growth in this arena, prioritize solutions for Android devices.

6.     Microtransactions account for 51 percent of total portable game revenue

According to the latest App Annie-IDC report, in-app purchasing reigned over total portable game revenue with 51 percent, a spike upwards from 40 percent last year.

For gamers, IAPs are worth it. A new report from video game researcher EEDAR discovered that of 3000 respondents, 75 percent of those who spent US$50 on IAPs and 67 percent who spent US$100 believed the prices were fair and that they benefited from the purchases.

Main take-away: App gamers are a viable and growing audience for IAPs.

What’s next for in-app purchase trends?

As Google Play outpaces the App Store and app gamers lead the way for microtransactions, there’s some strong data to suggest the future for mobile marketing revenue rests in IAPs.  As trends come and go, how will you harness these opportunities for app profitability?

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