In-app Payments Exceed Up-front Payments for Mobile Apps

In-app purchases have become an increasingly common way for mobile application developers to improve their mobile apps and generate revenue. It is often seen as an alternative to up-front payments or in-app advertisements.

A new report from an American research and advisory firm Gartner reveals that mobile app development companies make more money on apps with in-app payments than they ever did on the up-front payment model or the advertising model. The survey showed that mobile users tend to spend around 24% more on in-app purchases than up-front app payments.

Mobile app developers make more money on apps with in-app payments than they ever did on the up-front payment model or the advertising model.The results show that users enjoy a more flexible experience when purchasing features inside an app than paying for an application that may not have all the features they are looking for. Consumers can test the app for free before they decide to pay for extra features. This can be anything from the ability to remove annoying in-app ads to better push notifications. A user will also be thrilled if he or she can download a game for free and use in-app payments to unlock levels.

In general, the survey results revealed that users spent an average of $9.20 on in-app purchases, according to Gartner research director Stephanie Baghdassarian.

Despite the fact that not everyone will be convinced enough to utilize in-app transactions, app users see the value and are likely to spend more.

Age was a factor too. Younger users (ages 18 to 34) spent more money on in-app purchases while those over 45 years were more likely to just purchase an app outright. Also, the study confirmed that younger users are unlikely to change their preference any time soon. That presents some good opportunities for mobile app developers to cater to their products accordingly.

Baghdassarian added that a great customer experience increase customer advocacy and referrals. It also gives mobile app developers a better chance of building rapport and increasing customer loyalty.

While developers can monetize their mobile apps by integrating ads to maximize revenue, in-app advertisements may not be the way to go. Only 20% of users confirmed they often clicked on ads within a mobile app. This means than the remaining 80% ignore ads contained within mobile apps.

Regardless of the type of the app – be it for an entertainment, communication, fitness or gaming – there are many opportunities to provide additional value through in-app payments. Proving additional value will not only increase user engagement but also satisfaction.

Concluding Thoughts

These days no one wants to risk his or her money. The information a potential app user has prior to a purchase will help them make an informed purchase. When a user can download and install an app for free, use it and decide that it is a quality product for their needs before buying it will help increase you revenue created by your app.

Pic: Tech Stage (Flikr)

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Kimber Johnson

Kimber Johnson is the co-founder of Aspen App Design, which is a sister company of Vanity Mobile Apps and Pacific App Design. Kimber has worked within the web development, graphics design, mobile application development, marketing and advertising fields for over 17 years.

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