In-app Purchase

What is an in-app purchase?

An in-app purchase (IAP) is a product, feature, functionality, content, or subscription that a user can buy within a mobile app. Users make in-app purchases via the app store, a debit or credit card, or through a third-party provider like PayPal or Stripe. Available through Apple App Store for iOS and Google Play Store for Android devices, in-app purchases generate revenue and boost user engagement, conversions, lifetime value, and retention rates

In-app purchases vs. other mobile app monetization

Most apps are created with the intention to monetize their use. In fact, consumer mobile app spending is on the rise, reaching $33.8 billion during the second quarter of 2023.

There are a few ways developers can encourage mobile app spending. A prime example is charging for app downloads. However, this creates a barrier to entry before a customer ever interacts with your app. This is why almost 97% of Android apps in the Google Play store are free to download. Additionally, you can display ads within the app. Unfortunately, in-app advertising is expensive and is often ignored by users. 

Due to the drawbacks and challenges of charging for app downloads and in-app advertising,  many app developers choose to offer in-app purchases, which are more enjoyable and less intrusive than ads and tend to boost user engagement. 

Types of in-app purchases

There are four types of in-app purchases:

  1. Auto-renewal subscriptions: Products or services, like streaming services, that app users purchase on a recurring basis. Example: Spotify
  2. Non-renewable subscriptions: Products or services purchased for a period of time. Example: Magazine subscriptions
  3. Consumables: One-time-use products (like extra lives in a game) that can be used up and then repurchased. Example: In-game currency
  4. Non-consumables: Products like ebooks or advanced features that can be purchased once and reused indefinitely. Example: Advanced editing tools in a photo app

Pros and cons of in-app purchases

As with any monetization method for apps, in-app purchases have their pros and cons. 


  • Revenue generation: Because most apps are free to download, in-app purchases give developers a way to generate revenue without charging for the initial app download.
  • Increased engagement: If someone invests money in the app, they’re more likely to continue using and exploring it.
  • Understand user behavior: Tracking in-app purchases makes for valuable data about user behavior. This data provides insights to help you make your app more relevant and appealing.
  • Cross-sell opportunities: If you offer multiple products or services within your app, you can use in-app purchasing as a way to cross-promote.


  • Poor user experience: Overzealous developers may include too many in-app purchase opportunities that lead to a poor user experience. When users feel bombarded by purchase prompts, they disengage.
  • Development and monetization challenges: In-app purchases make developing, implementing, and managing an app more complex and costly. Not all apps are suitable for in-app purchases.
  • Competition: With millions of apps available on users’ mobile devices, your pricing and features must be competitive to attract customers.
  • Regulations: Depending on the country and region, there may be specific restrictions on in-app purchase offerings.
  • Fraud: Fraudsters often take advantage of digital platforms like apps, using fake credit information to make purchases. Cost-per-action campaigns are particularly vulnerable to fraud.

Best practices

When done right, in-app purchases can drive significant revenue for mobile app businesses. Here are some things to keep in mind in order to experience the best chance at success:

  1. Transparent pricing: Clearly display the price of in-app purchases and indicate if any charges are billed on a recurring basis. 
  2. Valuable offerings: Your in-app purchase offerings should provide real value to users and be differentiated from your free app offerings. Make sure users know exactly what they’ll get if they make a purchase. 
  3. Seamless user experience: Reduce the likelihood of dropoff with smooth purchase experiences and convenient payment methods.
  4. Special offers and discounts: Incentivize users to convert with limited-time discounts on in-app purchases. Use in-app messaging and push notifications to make users aware of special deals. 
  5. Free trials: If applicable, let users try before they buy. Make sure you clearly communicate the trial terms — and if they’ll be automatically billed when the trial ends!