BII REPORT: How App Makers Are Making Money

in app purchasing

The rise of “freemium” apps, mainly games, that generate money from in-app commerce is well established on Facebook.But it is also driving a huge amount of the revenue generated on Apple’s iPhone App Store.

BI Intelligence has produced an analysis of App Store data, taking a look at the successful pricing, business, and monetization strategies of the highest grossing “freemium” iPhone apps.

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Here’s a quick breakdown of the dynamics surrounding iTunes app monetization: 

  • Most of the highest grossing apps are free to download: Two thirds of the highest grossing iPhone apps — the ones that generate the most money from iTunes — are completely free to download.
  • Ecommerce is driving the business: These apps generate 100% of their iTunes revenue through in-app commerce. (Advertising and other revenue sources beyond iTunes aren’t measured.) Almost all of the money-making paid apps in Apple’s top 100 grossing list also employ in-app commerce. Beyond freemium, successful paid apps can potentially double their revenue by offering in-app commerce for premium upgrades.
  • The top performers include some big names: Recent top-grossing apps generating iTunes revenue entirely through in-app purchases include Poker by Zynga, Pandora Radio, Bejeweled Blitz, and MLB At Bat. 
  • And they are taking home a lot of money: The precise amount they earn varies by app and by day, but top-10-grossing iPhone apps can routinely generate $50,000 to $200,000 in revenue per day.

In full, the report looks at:

  • What in-app commerce on Apple looks like, and how it works
  • What products and services leading apps have sold via iTunes, and how
  • What price points for apps and products have had the most success in driving revenue

To access BI Intelligence’s full reports on In-App Commerce, sign up for a free trial subscription here.

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