In-App Payments Generate Only One-Third as Much Revenue as Paid Apps, Says Yankee Group

Friday Jan 31st 2014 by Developer.com Staff
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A new report says it's too early to count paid apps out.

Conventional wisdom in the mobile development industry holds that the best way to make money is to offer apps for free while accepting in-app payment for add-ons and extras. After all, a number of reports from Distimo and others have indicated that the in-app model is the most lucrative.

However, Raúl Castañón-Martínez, an analyst from Yankee Group, says that his company's more comprehensive research points in a different direction. They found that in-app purchases generate only a third as much revenue as paid app purchases. Other key takeaways from the report include the following:

  • "Two out of three smartphone owners in the U.S. never spend money on app stores."
  • "Only 12.5 percent of users who download only free apps will spend money on in-app purchases."
  • "Eighty-three percent of users that download paid apps will also spend money on in-app purchases."

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