Glossary
Mobile App Terminology simply explained

What Are In-App Purchases?

In-app purchases (IAP) are additional purchases that can be made within an app. Depending on the app, users can purchase various virtual goods to extend the app‘s features.
Key Takeaways
  • IAP, or in-app purchase, is additional content or perks that you buy within an app
  • There are 3 main categories of in-app purchases: consumables, non-consumable, and subscriptions
  • It is essential that the game economy is balanced to ensure users are engaged and are willing to make purchases

In-App Purchases Categories: What Is There?

You can divide in-app purchases into the following six categories:

  • Bonuses to progress in a game
  • More energy, extra lives, new or special weapons
  • Extra levels or episodes
  • Unlocking premium features
  • Outfits and other items to customize style
  • Subscriptions, through which certain functions can be used on a user’s phone

What Types of In-App Purchases Are There?

Anyone who has ever downloaded a free game app may be familiar with in-app purchases. In-app purchases allow you to pay money to remove ads or unlock premium features, for example. Let’s start with the three main categories of in-app purchases.

Consumables

As the name suggests, consumables can be purchased once and will disappear after a single use. You can redeem them when you want to. For example, gaming apps are usually completely free to install and play to a certain level. As the game progresses, levels might become more challenging, and you therefore may need to purchase extra lives in order to attempt a level a second time.

This is popular with match-3 games, like Homescapes, where users are given a certain number of moves in order to clear a puzzle. In order to receive extra attempts, users must then purchase more lives. 

Nonconsumables

Nonconsumable purchases remain as long as you use the app. Once unlocked, you can use those purchased features, services, or features at any time, and their benefits are available to you for as long as you have an account. Nonconsumables are linked to your account, regardless of the device you use.

An online metaverse app like IMVU is an example – once you have purchased new clothing, you can see it on your smartphone each time you use the app. However, to unlock more, you may need to purchase them. 

Subscriptions

Subscriptions provide access to a range of premium content or features for a limited period of time. They can be divided into auto-renewable subscriptions, where a one-time paid subscription automatically renews on a weekly, monthly, or annual basis. You can also have nonrenewing subscriptions, where a user is subscribed for a determined period of time but will receive a new request to renew the subscription after it has expired.

Think, for example, of a Tinder subscription, through which certain functions can be used on your phone – like Super Likes. With this premium feature, you can show a potential match that you are super interested in them.

How In-App Purchases Contribute to Your App’s Success

Launching an app that users like is only one part of developing a successful app. Another important factor is to think about the right app monetization strategy. App monetization is finding a solution to leverage a user base so that publishers and developers can make money from the app.

In-app purchases are an essential part of app monetization strategies because they allow users to enjoy apps with more and more features while keeping control over their spending. Moreover, many apps rely on IAPs to increase their return on ad spend (ROAS) and return on investment (ROI).

What Are the Benefits of Implementing In-App Purchases?

  • The game remains free to install and flexible: Marking an app as “free” encourages many users to give the game a chance first. Moreover, developers have full control over which features in the game will be payable and how much they will cost. So, there is a lot of flexibility within the app.
  • Creating an ad-free experience: Some users prefer a completely ad-free experience and are willing to pay for it. You can offer this option with an in-app purchase option.
  • Economy of effort: The game app is the platform on which users put all their efforts to succeed and are rewarded by reaching the next level. All they need is some premium features that will help them overcome the first challenge and quickly move on to the second. IAPs have a positive impact on two very important metrics of user behavior: engagement and retention rate.
  • Learn about user behavior: Analyzing users’ spending habits, usage patterns, or demographic characteristics provides valuable insights needed to improve the mobile game and increase your ROI.

Conclusion

Especially for freemium apps, IAP are essential for app developers. Purchases can fall into one of six categories. Which one you choose depends on the type of content or service you offer. Most importantly, there is a strong correlation between engagement and purchases.

When users are engaged with your app, they are more committed and therefore more likely to make a purchase if the right offer is made to them at the right time. Creating a personalized and smooth in-app experience will help boost your IAP revenue. Learn how adjoe can help you do that.


FAQs

What Is IAP?

IAP means “in-app purchases” – purchases that allow you to get more from an app or mobile game.

How Do You Increase IAP Revenue?

Some efficient ways to increase in-app purchases are using push notifications, creating hype and added value, using location-based features, offering a loyalty program, and optimizing the checkout process.

Why Do Apps Have In-App Purchases?

In-app purchases allow developers to offer their applications for free. The developer then advertises upgrades to the paid version, unlocking paid features, or selling special items.

Do All Apps Have In-App Purchases?

Not all apps offer in-app purchases. To check if an app offers in-app purchases, go to the app’s setting. Also, every app in the Google Play Store that offers in-app purchases is marked with an “offers in-app-purchases” disclaimer.


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