What is the Largest Source of App Revenue?

Even if you are an Android or iOS app builder or developer, you would probably answer that the majority of app revenue comes from selling apps. You would be wrong. A study from app analytics firm Distimo showed that 76% of all revenue from the apps comes from in-app purchases.

While we are always happy to see someone develop a really great paid app, we are proponents of distributing free apps and monetising them. It takes a lot more luck for a paid app to generate thousands of downloads than it does for a free app to generate thousands of downloads. Once a user has downloaded a free app they see that app every time they turn on their device.

One of the best ways to monetise in-app from within is to sell virtual currency within a game app. The Simpsons game is a great example of this. Users can buy quantities of 132, 300, 900, or 2400 doughnuts, which help the users play the game more easily. There are many very successful apps that use this strategy, including Marvel War of Heroes, Clash of Cans, and Candy Crush Saga.

The currency allows players to buy more of whatever they need, better equipment, or reach hidden levels of the game. The reason this works so well is that it takes advantage of the desire of many users to win giving them the option to spend money to make the game easier to win, or to reach higher competency levels.

The one caveat here is that this is technique is dangerous to use on apps that are attractive to children; many children run up huge tabs for their parents with in-app purchases. On the other hand, there’s a little bit of child in all of us, and those who are the most competitive at playing games are the most likely to spend more money to attain higher levels of competence.

The model is easy; make an attractive game app, give it away to as many people as possible, and wait for the revenue to roll in. It isn’t always quite this simple, but it can certainly seem that way if executed correctly.

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