Rating: 58% of Top 300 US grossing apps are freemium says Canalys
Although the pay-to-download model is currently the primary mode of monetisation for many app developers, the freemium mode is increasingly become the widely used alternative, according to Canalys Freemium involves an initial free app download with upgradeable features available as in-app purchases. Removing the need to pay to initially download an app takes away a considerable barrier. From the developers’ standpoint, the freemium model also allows developers to attract recurring revenue from their (hopefully loyal) customer base.
For high-quality apps, with good content or features and a robust upgrade and enhancement roadmap, the freemium model brings numerous benefits and few risks.
Some apps, though, will fall victim to the freemium trap, where downloads are not converted into transactions.
This can happen where an app is of poor quality; where too little is given away to give customers a real sense of the value proposition – where too much is given away.
This erodes the imperative to make in-app purchases at all or where the in-app purchases on offer, are insufficiently attractive or over-priced.
Nonetheless, the ability to make money from an existing customer base is – for most developers – the Holy Grail.
A study of the top apps in Apple’s App Store in the USA in January 2013 reveals the extent to which the freemium model has now become an established feature of app market dynamics.
Over the 31 days of January, the top 300 free iPhone apps included, on average, 38 per cent that were monetized solely or in part through in-app purchases.
Of the Top 300 grossing iPhone apps, 58 per cent on average were freemium apps, while a further 13 per cent were paid-for apps offering additional in-app purchases.
A similar picture can be seen with iPad apps. 41 per cent of the top 300 free apps, on average, make use of the freemium model, along with 59 per cent of the top 300 grossing iPad apps.
Notably, these proportions tend to grow in the upper echelons of the top grossing lists, while remaining fairly static in the top free app list.
64 per cent of the Top 100 grossing iPhone apps, and 85 per cent of the top 10, are monetised via the freemium model.
Among iPad apps, on average, 68 per cent of the top 100 and 85 per cent of the top 10 grossing titles were freemium.