Different business models can lead to significantly different average revenues per download (ARPD), according to the latest analysis from Distimo, with in-app purchases (IAP) generating an increasing share of the total.
The report – How the most successful apps monetise their user base – found that IAP generated a record 76 per cent of all revenue in the App Store for US iPhone users during February 2013, up from 53 per cent in January 2012.
The proportion of iPhone IAP sales zooms up to at least 90 per cent in some Asian markets, including China, Hong Kong, Japan and South Korea.
The report warns, however, that while the in-app monetisation model is generally successful in all countries, the degree of success can vary markedly and cannot be taken for granted.
Germany, for example, which is one of the top revenue-generating countries for the iPhone App Store, had a relatively low 61 per cent of sales generated by IAP.
Business model differences
In a breakdown of where US iPhone download app revenue came from during February 2013, Distimo found that 71 per cent was IAP via free apps – the so-called ‘freemium’ model – with 5 per cent from IAP revenue via paid apps. The rest was paid-for apps (without IAP).
Perhaps not surprisingly, out of the three business models – freemium, paid apps with IAP, and paid download – freemium apps generate the lowest average revenue per download (ARPD).
The freemium ARPD for the top 250 grossing US iPhone apps in February 2013 was $0.92, with Distimo noting that 92 of the 170 freemium apps in its survey made less than the $0.99 minimum price point for paid products.
This compares with $2.46 for paid apps with IAP, and $2.25 for paid apps.
The higher ARPD for paid apps with IAPs indicates that “users are not put off by the fact that in addition to the one-off fee they already paid for their app, they also have to pay for additional features”.
The report also noted a higher price for US iPad apps, although with one notable difference. While paid apps ($4.04 ARPD) were more lucrative than their iPhone conterparts ($2.25), the ARPD for paid iPad apps with IAPs ($3.72) was less than for iPad titles which were paid download only ($4.04).
Freemium iPad apps have an ARPD of $2.26 on an iPad, versus $0.93 on an iPhone.
Distimo’s study looked at business models and revenues per download on the Apple App Store from January 2012 through to March 2013.