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Today we’ll be talking about the in-app purchases feature in mobile apps and how to integrate them with your business app. But before that, we need to take a slight detour to basics.

Smartphone apps have become an essential part of our lives. These apps didn’t exist 12 years back, and now we have a mobile app for everything, literally everything. For instance, there is an app that just has a button that does absolutely nothing.

So, from taxi apps to food delivery, from gaming apps to dating, and from social media apps to work assisting apps, there is a virtually infinite buffet of apps for you to choose from. But there is one more interesting thing about these apps. Have you ever observed that most of the top apps we access on our Android and iOS smartphones are free?

It may feel weird that the biggest apps from the richest firms in the world are actually free. Then how do they make money on such apps?

How Do Free Apps Make Money?

This is such a vast topic that we could write a whole new blog on how free apps make money, but I’ll explain it briefly.

There are several ways to earn from an app, even from a free app. The most popular means of revenue from free apps are:

• In-App Purchases
• In-App Advertisements
• Freemium
• Sponsorship
• Email Marketing

What is In-App Purchases?

Out of all the options mentioned before, for this article, we will be focusing on In-App Purchases. Several years ago, the App Store allowed developers to charge customers directly within the mobile app.

Obviously, paying in an app that you downloaded for free didn’t seem a very good idea at first for the users. This approach took a while to catch on, but at present, it’s one of the top means of revenue for many app companies and individual developers.

People have different thoughts about the in-app purchases model. But one thing is for sure, you may love it, you may hate it, but you can’t ignore it.

There are a few strategies in the in-app purchase approach:

Free Trials

This approach mostly works for gaming apps and photo editing apps. The App Store doesn’t directly allow free trials of apps, but with in-app purchases option, you can offer users a demo and trial of their apps at no cost.

For instance, a game developer can offer a free download of the full version of their game, with 1/10th of the levels unlocked. This strategy worked amazingly for a long time. If the app users loved the game, they would purchase the rest of the game via the in-app purchase approach.

With this approach, there is a higher chance of people giving a shot to your app and downloading it. Since users can download the app for free, they are more inclined to try it out, and hopefully, upgrade later.

Freemium Model

This is the next level of strategy after the free trial one. The word freemium comes from two words “free” and “premium.” In the freemium approach, the app is free to everyone, but those who use the app regularly and like it can upgrade for more features.

Let’s see this with an example to understand better. Let’s say you have built your own photo-editing app like Picsart or Snapseed. Such apps are usually free, with most of the basic features. For the advanced features though, users have to pay. That additional filters and editing tools come into the in-app purchases.

Currency Model

Now comes the most common example and popular example of the in-app purchase model. This model is used primarily in social and gaming apps. The currency model of in-app purchases for the users who like to have more than the normal experiences on the app, a little extra boost, or more premium service.

If I explain with an example, it’s those advanced weapons, vehicles, or game pass that you purchase in games like PUBG or Asphalt. With social or dating apps like Tinder, people purchase extra likes and other premium features.

Implementing In-App Purchases in Android Apps

The in-app purchases in Android are managed by Google Play’s in-app billing service. For Android devices, the in-app purchases can be applied to only those apps that you publish through Google Play.

In simple terms, the Google Play app handles the connection between the Android app and the Google Play server. But, Google Play is not in charge of your content delivery. However, the financial transactions happening in the app is up to Google Play to handle.

You must also create a Google Wallet merchant account to integrate in-app purchase feature. You need that account to use the in-app billing service on Google Play.

This merchant account lets you manage in-app products and subscriptions very effectively and many useful features like improving synchronous purchase flow.

There’s always a case where mistaken in-app purchases would be made by app users, or maybe their young kids. Now usually in an Android device, if an app user has made a purchase of an in-app product or a subscription, there is no refund window.

So, if a user needs a refund for an unintentional in-app purchase, they’ll need to contact you directly through the standard payment processor, Google Wallet. I would recommend backing up the information of in-app purchases on your server for your own records.

Implementing In-App Purchases in iOS Apps

The iOS apps’ In-App Purchase service is much similar to Android’s. Store Kit framework is used to embed in-app purchases in an iOS app, but you also need to design an In-App Purchase store.

About the actual implementation of the in-app purchases service, you need to see Apple’s programming guide. See the guidelines of the In-App Purchase services to make sure your idea of the service matches Apple’s.

Now, the way in-app purchases work in iOS apps is like this. Once you’ve made the payment, the Store Kit communicates with the App Store for secure payment processing. Once the transaction is made, the app is notified, and the purchased items should be provided to users.

Apple also provides a sandbox environment to test your app, and in this case, our in-app purchase service before you launch it. So, before letting the in-app purchase service out in the market, you can make sure it is good to launch without any errors or bugs.

Integrating In-App Purchase service to an app is a lot more complicated than many think. The reason for this complexity is that there are money transactions involved and more than a few moving parts in the process. So, approaching an app development company for such a task is the best step you can take.