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.
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
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