I'm in the exact same boat - about 75-80% of my income comes from the paid version of the app. The free version mostly serves as a staging ground to increase adoption and encourage users to upgrade to get rid of the ads.
Yeah. I've noticed that most people don't seem to care about having ads. An IAP to remove ads is of so little value it's amazing. I've had much better success adding a bit of friction and limiting the free versions. Here is this tracking app, it does everything the full version does, but you can't save more than X tracks. Stuff like that has worked nicely for me. Ads are just a bit of gravy and a slight annoyance to make someone ever so slightly more likely to upgrade.
definitely. it is always nice to have multiple streams of income, just in case something bizarre happens to one of them. Another reason I'd like to start a SaaS app to diversify a bit from mobile apps. Last year I got hammered by Apple for a few months after the search changes and app store redesign. Thankfully things have gotten better since then.
I'm hoping to start a SaaS app in the near future, as B2B is far more interesting to me than $1 mobile apps. Having an ARPU above 70 cents and recurring revenue sounds glorious.
That being said, products are the way to go. Last month was actually my best month ever, and I haven't done any work on my apps since January. (some freelance work, some big projects on my property, some traveling)