The Pitfalls of In-App Purchases

It’s a fairly well-known fact that Android users are less willing to pay for their mobile apps than are those who prefer iPhones and iPads, and thus Android developers have had to rely on more creative methods of monetization for apps they develop specifically for Android devices.  What is perhaps less well-known, however, is that free apps beat paid apps hands-down in every app store in every country in the world, including Apple’s.  And when we say “hands-down,” we mean by at least a factor of ten to one, according to the most recent report released by Distimo.  That number is slightly higher in the U.S., at eleven to one, but can go as high as fifty to one in emerging mobile app markets like China.

These numbers make a strong case for a freemium monetization model over a paid model, but not all freemiums are as lucrative as others.  Freemium apps that draw their revenue by selling ad space are harmless enough, but when it comes to in-app purchases, there are pitfalls in store for developers who fail to appreciate the end-user’s experience.  According to the Distimo report, for example, “it is important to remember that, if the user needs to use an in-app purchase to unlock essential parts of your application, the usage will be lower and there is a risk that users might rate or review your app badly.”

If we look at some of the worst offenders, it appears Distimo has a gift for understatement.  One app that tried to sneak the in-app purchase past the goalie ended up with 461 scathing one-star reviews which, in an industry as competitive as mobile app development, could be the death-knell for the company that put it on the market.  It gets worse; poorly incorporated in-app purchase schemes even led to a class-action lawsuit against Apple.

So if you’re considering the in-app purchase model for your mobile app, remember this:  make sure it’s transparent (particularly to parents), and make sure it’s truly optional.  If your “free” app requires a purchase to unlock its best features after being downloaded, that’s bait-and-switch, not good business.

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