Tap Swipe Pinch

In last week’s blog post, I examined The App Store Top 100 Grossing rankings over the course of one year, and found that the average purchase price of a Top 100 Grossing app had decreased.  This decrease was facilitated in part by the 11 Free apps that made it onto the Top 100 Grossing charts.  Today I’m looking at what In App purchase business models these apps are using to produce enough revenue to gain a highly sought-after spot on the charts.

Apple announced In App Purchase (IAP) for free apps in October of 2009.  Right away, there was a lot of talk about how IAP would be used.  Plenty of developers and media outlets discussed the elimination of Lite/Pro app versions which would be replaced by a single free ‘Plus’ app with a single IAP upgrade option.  Well, there is only one out of eleven Top 100 Grossing Free apps that is using this IAP upgrade model.  I don’t have any data to find out if this business model just doesn’t produce revenue, or if there aren’t many apps using the model…but it’s not showing up on the charts.

So what model are the rest of the Top Grossing Free apps using?  With the exception of the previously mentioned app using the upgrade model and one app using a subscription model, the remaining nine apps use the Freemium Pay-To-Play(-More)/Pay-To-Not-Wait model.  This is the FarmVille/WeRule model where you have to either wait for things to happen in the game or speed it up by purchasing their virtual currency.  Here they are listed along with their top three IAPs:



The biggest benefit to using this IAP model in an app is that there is no limit to the amount of revenue you can obtain from each user.  In This Week In Startups Episode #60, ngmoco CEO Neil Young claims that some users have spent over $10K on IAPs playing the company’s We Rule app.  No, that’s not a typo…$10K…on We Rule Mojo.

Additionally, it seems likely that users are more open to advertising in free apps even if they are the Pay-To-Play(-More) model.  This allows devs to open up another revenue stream with ads in these types of apps.

The biggest downside is that this model couldn’t work for every type of game or app.  Imagine a Twitter client that only let you tweet once a day unless you bought more Twit-bucks.  Probably wouldn’t be very popular.  However, I do think this model could be extended beyond the FarmVille-esque build a farm/kingdom/city games.

Are you considering this model for your next app?

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As a quick side-note, I’m heading out to iPhoneDevCon tomorrow.  See you there!