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In-app billing - new revenue stream for developers

In-app billing seems to be the hottest thing since then developers are looking at other revenue stream other than ads. In-app billing is billing from within the application you are using on your mobile device. In- app purchase gets triggered when an application enables you to play or listen or view something (such as a game download) on your mobile for a period of time or until you reach a certain threshold when you have to buy the full version. It is a kind of a 'try before you buy' scheme.  Some examples of In-app purchases are buying virtual goods, currencies, additional game levels , subscriptions to digital magazines or newsletters.

As consumers, most of us try and then buy clothes. This is the very similar concept in in-app billing. Heard about Farmville? There are millions of consumers who were farming their virtual farms for long days and nights. The developer Zynga had an in-app billing concept to ensure the consumers stickiness. The advantage to the developer is the consumer had already tasted the pinch of the product and it would drag the consumers to buy in the full version.
What is more crucial to the developer is where to have the in-app billing in place. It can be in
 
Content - Digital content which can be delivered within the application
Functionality - unlock additional functionality within the application. For instance, game levels can be unlocked by in-app purchase.
Subscriptions - Subscription renewals to content or services.

Even though in-app billing can be a new revenue stream for developers, it has its own grey areas. The IAP (In-app Purchase) might have a simple Interface, however consumer has to learn on how to send text, click a buy button, etc to invoke IAP. The real challenge for the developers is when they build a simple interface to show the description or any status messages, they had to look for right place for it in their applications. The positioning of the IAP matters the most to make the IAP app successful.

Letting users download an app for free and pay later through an in-app purchase of additional content has proved successful in other app store like Apple who started the in-app purchase model  in October 2009.In my opinion, it will be a significant revenue generator for developers using the App Store.Sooner we will be seeing more developers get into this concept of monetization. Where to stand in future is a complete choice of developers!

Comments

Interesting piece of article. In app I consider it a necessary evil. Necessary because it is the way the world is moving and as rightly outlined this gives choice for customers to buy what they want (after experiencing certain part of application). I called it an evil because this is monster which has not been leashed properly. In App provides lot of challenges starting from what is outlined in blog about the placement of IAP to payment gateway and dynamic monitoring of the content delivered to right people at right time. But I totally agree that this will be one of the leading Freemium model going forward.

Great article. I guess Fremium model would be the future of Indian mobile application industry. An average Indian subscriber with less than 2$ in his/her prepaid account would definitely hesitate to make an upfront payment to purchase an application.

Good one Arun. it will be great if can see these added features in Flypp soon.

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