Freemium and Apple’s App Store: The in-app purchasing model really works

“One of the best decisions Apple made for the iOS App Store was to open up in-app purchasing to free apps. (It was initially for paid apps only.) This has allowed app developers — especially game developers — to really take advantage of the ‘freemium’ model,” Dan Frommer reports for SplatF.

“The best evidence: Today, 14 of the top 25 highest-grossing iPhone apps are totally free to download, generating revenue from in-app purchases,” Frommer reports. “(I don’t know if Apple includes iAd revenue in those tallies, but it can’t include ad revenue from other ad networks. And it doesn’t take revenue into account from other marketplaces, such as Amazon’s Kindle store.)”

Frommer reports, “Why does this work? Because free apps are downloaded many times more than paid apps — perhaps 5X to 10X more. That can dramatically boost any other natural network effects an app has, which is especially relevant for social games. And all of this means a much larger user base to eventually do in-app purchases, which, in turn, could generate more revenue than if the app costs money in the first place.”

Read more in the full article here.

12 Comments

  1. I wonder about this “Free apps are downloaded 5-10x more”.

    I have two apps. One paid, one free. Both are equal quality. The free one targets a much larger market. But it is downloaded only about %50 more than the paid app.

    1. And that’s why statistics require a large sample size and not a sample size of two. Really? Two apps. Two? Two. Wow. “Brilliant!”. Grab another Guiness. “Brilliant!”

        1. Come on…Engineer deserved that sarcasm! Anyone who dares to go by the name “Engineer” should have enough savvy in mathematics to avoid extrapolating from a sample size of two. Two!

  2. I really like the try before you buy option. In fact, I am more likely to buy an app I can try out first than something I have to buy from the start. Hint hint, developers.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.