
One third of top-grossing iPhone apps are free - aaw
http://www.nytimes.com/external/gigaom/2010/11/10/10gigaom-one-third-of-top-grossing-iphone-apps-are-free-86181.html?ref=technology
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davidcann
The headline is misleading. The base apps are free, but you pay for the full
app via In-App Purchases. This isn't a whole lot different than the standard
lite and full versions model.

How about the less-sensational: "One Third of Top-Grossing iPhone Apps Profit
With In-App Purchases"

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codypo
I think this is quite a bit different than the standard lite and full version
model. The reason why is because, through in-app purchases, a developer has
the potential to realize a lot more revenue per user.

If all you're trying to do is to get someone to upgrade from lite to full,
that can only happen once. In-app purchases can happen several times. In
Restaurant Story (one of the games mentioned in the article), you buy gems to
speed up the process with which you make food. I'd bet that most people who
purchase those gems do it more than once, because they're directly tied in to
your success at that game. In short, there's the potential here for recurring
revenue.

Not only that, but the prices on in-app purchases can be startling! Going back
to Restaurant Story, I think the smallest batch of gems you can buy is $5 and
it goes all the way to $99. That's a lot more revenue per user, potentially,
than on an upgrade from lite to full.

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haribilalic
My favourite example is Billings ([http://itunes.apple.com/us/app/billings-
touch/id343938310?mt...](http://itunes.apple.com/us/app/billings-
touch/id343938310?mt=8)). It doesn't sell content like music or in-game
credits, but features. The app is free, but if you want to send invoices via
email or sync it with your Mac, it'll cost you $14.99.

~~~
phlux
I personally don't like such "drug-dealer" models.

Do you get to try the features out before paying for them? It would be
disappointing if you liked the app, wanted a feature - then found that it
didn't meet your expectations/requirements after purchase.

~~~
haribilalic
The other features are there from the start and the description in the App
Store states that these two features cost extra. I don't see the big problem.
Hell, you have to fork out $39.95 for the Mac app for one of these to even be
useful. What's another $15?

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tav
Makes one wish that the Web had a decent micropayment system instead of the
pain that is PayPal.

~~~
zach
The Facebook Credits team has the same dream you do.

<http://www.nytimes.com/2010/09/23/technology/23facebook.html>

~~~
phlux
yeah - but I will never want all my payments requiring that I have/be logged
into facebook.

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olalonde
In other words, you are more likely to be in the top-grossing list if your app
is not free. (sorry for bringing freemium fans back to reality)

~~~
chc
That's not reality. It's actually more deceptive than the original phrasing,
because it assumes that there are a roughly equal number of freemium and
purely paid apps and that entry into the top-grossing list is a matter of
probability based on the initial purchase price. These assumptions seem very
likely to be false in a way that favors paid apps.

If you want to argue that the freemium business model offers worse odds, you
need to measure the percentage of freemium apps that make it onto the list
versus the percentage of paid apps (and if you want your argument to be really
credible, there are other factors you'd need to take into account as well).

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sidwyn
Will the freemium model work for non-gaming apps?

~~~
uptown
Sure. It's highly effective for web-based business apps. No reason to think it
wouldn't work on the mobile platform as well if the free version is compelling
enough to encourage the initial install and the upsell provides additional
value. This is particularly true if your app is a consumer of information
entered by your users, as then they may have some level of reliance to your
solution.

