App Monetization through the In-App Purchases

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Mobile Development
Artem Velykyy
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Introduction

Mobile app downloads have had a significant increase with $218 billion downloads in 2020 alone. The data suggests that this number will continue to increase with each passing year.

In 2021, there are quite a few revenue generation models but in-app purchases stand out the most. An in-app monetization strategy needs some experimentation to get the revenue source sustainable. In this blog post, we will analyze the primary points of the in-app purchases you might know when applying this monetization model to your apps. 

What is In-app Purchase?

An in-app purchase refers to integrated offerings customers buy in the form of features and content such as premium content and subscriptions. Customers can make direct in-app purchases through Google Play or AppStore.

The monetization of an app comes into focus when you buy virtual or physical goods within an application. It involves users usually purchasing visual augmentations, exclusive content, special features, and merchandise on the app. In-app purchases are arguably the most practical and popular app monetization model.

App monetization, on the other hand, refers to converting the users of an app into a stable revenue stream. Monetization of a mobile app can be through in-app purchases, data monetization, or advertising.

Types of In-app Purchases

Consumable Purchases

Consumable purchases refer to the offerings that can be used up and repurchased multiple times. Users can purchase consumable digital items from dating apps or gaming apps to increase the visibility of their profiles, get access to the limited features, content, and so on.  

Non-Consumable Purchases

These in-app purchases hint at on-time purchases that have no expiration. In-app purchases of non-consumable items allow users to access the premium features of the application.

Non-renewable Subscriptions

These in-app purchases allow you to use or access an app service for a limited time. This subscription is not subject to automated renewal and users have to purchase another subscription after the time to gain access before the service expires.

Auto-renewable Subscriptions

These in-app purchases apply to current accessible digital content, premium features, or services of an app. It means users pay a recurring fee until the cancellation of the service. The most common examples of auto-renewable subscriptions would be media content or libraries. It can also be educational or SaaS services such as cloud storage, graphic design, or productivity. 

In-app Purchases in AppStore

On the surface, iOS in-app purchases are not so different from Android. But in iOS, in-app purchases are embedded with a store kit framework. In layman’s terms, a store kit is integrated with AppStore in order to secure payment processes. It also notifies the app when users make a transaction or purchase items. 

It is vital to understand that in-app purchase on AppStore has more than one type. Whether it’s consumables, non-consumables, auto-renewal subscription, non-renewing subscription, or free subscription, you have to follow (more or less) the same process.

Conversely, developers can make it easier for users to renew their subscriptions by requesting another store kit. Developers can also review the official guidelines set forth by Apple to figure out whether or not their objectives are in alignment with Apple’s in-app purchases policy.

Apple provides testing sandboxes that allow developers to test without incurring additional charges. It might sound straightforward but before you opt for an in-app purchase in the iOS user environment, make sure to test it first. 

For the sake of convenience, users can also perform the test through iTunes Connect. You can also roll out potential restorative purchases in the event of a repeated download or installation on a different device. Collectively, your in-purchases in iOS are interconnected with Apple’s user ID.


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In-app Purchases in Google Play

The billing service of Google Play manages in-app purchases in Android through its API framework. You can implement an in-app billing service in applications you want to publish via Google Play. Google Play takes care of the connection between the Google Play server and the Android application. 

Remember that Google Play is not responsible for content delivery. It means you have to showcase the digital content you want to sell on multiple Android applications. For instance, if you want to make digital content available on more than one application with in-app purchases, you cannot publish the same product for another Android-based app.

Google Play on the other hand manages the financial transactions in the app. In Google play, you can see the sale of products as the Developer Console. Users can configure their products but need a Google Wallet account to use Google Play’s in-app billing service and buy digital products on Android apps.

With in-app billing, Google Play allows you to manage in-app subscriptions and products on your Android phone. It comes with asynchronous and adaptive purchase flow along with a wide range of features. You might not be aware of it, but the billing system of Google Play is robust and allows users to sell digital content and products directly into the Android application effortlessly.

Google also allows users to utilize its billing system of Google Play to sell one-time products, consumable products, non-consumable products, and subscriptions. When it comes to subscription-based products, Google Play Console offers incredible flexibility. For starters, you can set your own introductory price, billing period, free trial offer, grace period, pause subscriptions, and much more.

In-app Purchases in AppStore VS Google Play

Are There Any Alternative In-app Purchase Methods?

Freemium Model

Fremium is a famous mobile app monetization model that makes the availability of the app free for users. This model can accumulate a massive user base and eventually allows influencers to take on  premium status. 

Pay-Per-Download

As the title suggests, users are charged with a one-time fee in the pay-per-download model for using a specific application. This model has become redundant and often discourages users from checking out the app on iOS or Android devices.

Subscription Model

This monetization model is also famous among developers with the premise of making applications free for specific features. This means users have to buy a subscription to use every feature of an app for more than a month.

In-App Advertisement

This type of monetization combines other models in order to increase the revenue of the mobile app. The success of this model depends on the success of ads that should be relevant and non-disruptive. In-app ad formats can include interstitial ads, banner ads, and native ads.

Conclusion

In the mobile eCommerce landscape, there is wide adoption of internet users and that means more in-app purchases. The forecast suggests that in-app purchases will generate billions of dollars of revenue in the coming years. But your mobile app has to have the right platform and content to achieve these long-term revenue generation goals.

It is hard to beat the App Store when it comes to the quality and security of mobile apps. But Google Play is not lagging behind in any way, in terms of mainframe protections. In fact, Google Play has become more user-friendly with much lower development prices.

In Google Play, developers also have also had more freedom to make social and personal choices. It ultimately all boils down to the target market and user demographics. You have to take into account your preferred business model and then proactively move forward with a suitable monetization strategy.

Axon Development Group
October 5, 2021
Mobile Development

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