In-app purchasing options: monetization vs. user ratings

Photo app developers can monetize their apps in a variety of ways, such as by charging for the app, placing ads, selling photo print products, or offering extra features through in-app purchasing (IAP) options.

For our recently published we took a deep-dive into the IAP patterns of the top-ranking apps from the US Google Play and Apple iTunes stores in the free Android, paid Android, grossing Android, free iOS, paid iOS, and grossing iOS apps categories.

First of all, we found that IAP is on the rise: currently, 49% of the top-ranking photo/video apps offer IAP, compared to only 37% two years ago.

 

As we’ve done for all app variables, we also analyzed cross-tabs between IAP and nine other variables to see if the occurrence of IAP is more prevalent for certain segments:

Main use case (such as camera apps, photo editing apps, or photo organizing apps):

• App age
• App user ratings
• App price
• Top ranking on one or both platforms (i.e. iOS and/or Android)
• Geo of where the developer is based
• Size of the developer
• OS (iOS vs. Android)
• Payment (paid vs. free)

For this article, we’d like to highlight two, somewhat related, cross-tab findings:

First, apps with IAP are over-represented among apps with the highest user ratings. On first glance, this seems counterintuitive: you’d expect apps with IAP to be over-represented among lower rated apps, as users might be disappointed that not all features are included without paying (extra). We suspect that in reality higher rated apps can afford to monetize their apps through IAP without the “pay extra” features threatening their popularity.

Second, a similar phenomenon might be the case when analyzing the apps by how long they’ve been on the market: the majority of apps 2 years or older offer IAP; for the younger ones this is a minority. Here also our suspicion is that older but still high-ranked apps can afford to absorb whatever negative impact IAP might have; developers of younger apps might be more concerned about building long term market share and don’t want to jeopardize their success by adding “pay extra” features.

In the end, no matter the longevity of the app or its ratings, fine-tuning IAP options to maximize monetization while minimizing any negative impact on user ratings and download number is not an easy feat: it requires creative experimentation and ongoing rigorous testing, as user expectations and competitive offerings continue to evolve.

Click for more information about the Photo/Video App Market Study.

Photo by barsen