I'm in the process of hiring someone on ODesk to create a first version of an iOS app idea I have. In your experience, which type of model generates more revenue? A paid app from the get-go or a free app with in-app purchases?
Free apps, I presume, would get a lot more initial downloads than a paid one. Anyone have any first hand experiences on which path to take?
I think this little statistic will put it in perspective: 92% of all app store revenue came from "free with in-app purchase" apps in November 2013 (source: Distimo)!
Here is the full blog post by Distimo with more insight into the statistics.
In terms of the strategy on how best to profit from in-app purchases, here are a few tips:
1. Map out your on-boarding process
Create flows of at what point of the user's interaction with the app will you pitch in-app purchases. Only when the user has had a good feel for the app is the time to drop the purchase suggestion.
2. Provide limited time offers
This tactic works especially well if your app is geared towards multiple purchases (like buying chips in a poker game). After the first purchase, offer a 50% discount and put a time limit on it. But don't keep on giving the discounts, otherwise they'll get accustomed to the discount price. Offer it randomly after every x purchases.
3. Provide multi-quantity buys with discounts
If your app has a monthly subscription model, offer a yearly plan with one month free. In terms of subscription pricing, you want to avoid a single package. 2-3 packages are ideal. More than 3 are bad as they offer too many options that confuse the user.