What Does In-App Purchases Mean?

Introduction

Whether it's Google Play or the iOS App Store, you can see multiple apps which users can download for free. But that does not mean it will not cost you anything. These so-called free apps have hidden charges, and that is exactly known as in-app purchases.

Let’s understand What are In-App Purchases (IAP) in detail.

In-app purchase means, the app users can purchase different sorts of digital items, goods, or services inside an app. This Is how developers can profit through their apps rather than giving complete free access to the users.

Here are some use cases for a better understanding of the meaning.

Develop a Freemium model of the app where the app is free to download, but it can cost on leveraging advanced content within a Premium account.
App users need to purchase things like extra lives, unlocking bonus levels, virtual currency, skipping a particular complex gaming level, and additional moves to take the gaming experience to a next level.
Purchasing a key that unlocks advanced features within an app.

What is Consumable and Non-Consumable In-App Purchase?

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Consumable In-App Purchase

This in-app purchase must be purchased each time when users download it. It is not allowed to download again for free. If users remove/uninstall an app, or install it on other smart devices, users can lose the purchases.

Examples- Extra currency and additional health points in gaming apps, export packages to a new file format.

Non-Consumable In-App Purchase

This in-app purchase needs to purchase only once when users download it. It is transferable to any other device associated with the same user ID. In case users lose it, it can be downloaded for free again.

Examples- Unlocking of a full game, Bonus level, upgrading to premium edition, ads removal.

In-app purchase statistics 2020

According to Statista , In-app advertising revenues are anticipated to reach 117.2m in 2020, raised from 40.5b in 2015. (U.S. dollars)

App revenues amounted to 69.7b in 2015 worldwide. In 2020, apps are anticipated to make 188.9b in revenues via app stores and in-app advertising. (U.S. dollars)

According to ZDNet , Users are contributing $380 billion to in-app purchases globally.

The prediction for the comprehensive mobile app development services is for a consistent rise, achieving an astonishing $935 billion in revenue in 2023- As per Statista’s analysis.

You can take a look at more numbers and statistics here .

In-app purchase is a source of Advantages

In-app purchases - a system of app financing have become the buzzword when it comes to mobile applications. However, it is emerging as the best income source for the apps that provide extra digital content at a moderate cost.

Take a look at some of the benefits

Freemium models assure developers that their app will get maximum downloads and ultimately boost the potential of high revenue generation from in-app purchases.
You can showcase different ads in a free app and offer an option to remove them by In-App Purchase.
As more users will download the app and get reviewed by various users, the app stores will place your app among the top lists. Greater exposure can be generated that will definitely increase traffic.
According to the response of the first release of an app, new paid content can be included rather than developing a brand new app to make a source of income.
Users will stay engaged and loyal as the app is providing promos, rewards, and offers on in-app purchases according to their preferences.
There is no need to fill out lengthy forms with personal details to pay as users can easily make payments with just a few clicks with in-app purchases.
Marketing can be customized to attract users at the right time. On-time offers to purchase for upgrades can make a positive impact among free and paid users.

What is a Subscription?

Subscription means a user needs to pay for a specific time duration (yearly, monthly, weekly) to access the app content. Spotify, Apple Music, and Pandora are the best examples.

Free Subscription

Once a user signed up, the content is available for free across all devices associated with the same User ID. These subscriptions are non-expirable.

Auto-Renewable Subscription

With this subscription, money will be deducted from the user’s credit/debit card automatically once a cycle gets completed.

Non-Renewing

These are the subscriptions mostly utilized for in-app purchases to provide time-based accessibility to static content. Users need to renew this subscription manually.

The Difference between In-App Purchase and Subscription

In-app purchases are the expenses an app may ask to purchase digital items once users download the app.

But when users subscribe, they need to pay a fixed amount to use all the app features on a monthly, weekly, or yearly basis. There are many apps in the stores that offer discounts/incentivizing features on the subscription of longer duration.

In-app Purchase Guidelines and Actions Needed for Developers

If you are a developer, you need to learn IAPs to provide additional content integrated into the application. All you need to get familiar with basic Swift and iOS coding concepts and need some guidelines to get the ball rolling.

Conclusion

Offering in-app purchases through an application is not rocket science, but definitely, it is a lengthy procedure as it involves many steps. Always, assure to be aligned with the app store suggestions and best practices concerning in-app purchases.