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

  • January 31, 2014
  • By Developer.com Staff

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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