The Changing App Store

by @Stuart 548 days ago

There are signs of change in the App Store. Traditionally there were free apps and then there were paid apps. A lot of companies decided to make free or lite versions of their apps to promote their paid versions. Other companies decided to release free applications with advertising.

But now one third of the top grossing iPhone applications are free. These apps use in app purchasing to unlock features of the apps.

We recently tried this with iBoost with interesting results. We decided to add some new ‘pro’ gauges which can be purchased for 99c within the app.

The pro gauges now account for approximately 20-25% of iBoost revenue. Below is a chart of sales (dark blue) vs in app purchases (aqua).

We have also done quite a bit of experimenting with making applications free for short and long periods of time. We have found this “see-saw” rankings by swapping from paid to free and back a few times effective. Here are a few examples from different apps of ours:

We have found, even after a large initial spike, the applications when free attract 10-30x more downloads than when they are 99c.

So what does this mean? If you can convert 20% of downloads into in app purchases, and can get 10-30x more downloads as free, potentially you have a lot more revenue.

Does the theory hold true? Are users who download free apps as likely to make in app purchases?

We’ll let you know.

1 Comment • #Business
  • http://lukedurrant.com Luke

    Wow thanks for sharing this.
    As a user and a developer I’d say the in app model makes more sense just up sell the in app purchases….of course you need to have a good app in the first place.

The Bonobo Blog

About our Blog

Our blog is a collection of thoughts on business, startups, development, design and our ventures written by people from Bonobo and our colleagues from around the world.