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As we gear up for SilentGrowl■ We have some ideas for services that would largely be free to sign-up.■ How do you make money with free services?■ In-app purchases are largely used in social and gaming apps.■ Continue to generate revenue, rather than one large, lump sum upfront.
1. The Bait and HookThe psychology here is simple. Lure in the customer withan all-too-accessible free download. With that initialbarrier removed, developers then only need focus oncreating a fun and engaging gaming experience. Afterthose first few minutes (or hours) of use, it’s that mucheasier to get the customer’s buy-in to spend a littlesomething to continue the experience. The desire to makeit to the next level can be almost addictive. A fullyinvested customer will be more willing to pay to use.
2. Make It EasySome of the most successful games are relatively simple - AngryBirds is a perfect example. But even for the more complexgames, the early objective should be to make it as easy aspossible for customers to understand the rules of the game andget started. According to veteran game developer MikeAmerson, maker of the hits My Virtual Girlfriend and MyVirtual Boyfriend, this is a key strategy. "Make sure the initialengagement isnt frustrating. Use techniques like tutorials andtips, then allow the user to practice and gain a few wins beforeshe has to face any real challenges. Then as the gameprogresses, it becomes harder to achieve those same results."But by then, the customer is already invested.
3. Timely OfferingsOnly after the customer has downloadedthe app, has a good feel for it, and maybe feeling fairly confident in their abilityto win, is it time to drop the in-apppurchase suggestion. At key "chokepoints" in the game, when the developerknows the customer will need just theright tool to obtain a higher level ofachievement, a friendly pop up alertsplayers of the opportunity to make apurchase that will keep the gameexperience going. The UK’s NaturalMotion, makers of CSR Racing, havemastered this strategy - and have $12million in monthly in- app purchaserevenue to prove it. After workingthrough a few easy levels, it is nearlyimpossible to win a race without makingupgrades or purchasing another car.
4. Introduce New ItemsMobile game developer TinyCo is aproven leader in this next strategy.In its game Tiny Zoo Friends, wherekids manage a virtual zoo, thecompany introduces new farmanimals for purchase every week.One animal, "The Cash Cow" (notsure if pun was intended or not),cost one young fan nearly twomonths allowance. According toTinyCo CEO Suly Ali, the revenuefrom this character alone was in theneighborhood of $50,000.
5. For A Limited Time OnlyOnce customers become accustomed to making in-app purchases, developersthen introduce the limited-time-only scenario. Make the next purchase forhalf off, or at a reduced rate, but only if you buy before the offer runs out.Most shoppers will recognize this strategy from a wide variety of retailenvironments - because it works. Imposing a time limit to a discount provokesthat buy-now-or-lose-out feeling of urgency. It’s the ultimate pay rewardsystem.
Conclusion■ By some estimates, in-app purchasers spend on average $14 per transaction, which is why freemium has become the dominant means of monetizing apps.■ For serious players, buying a game for $.99 up front is almost always cheaper than a freemium model where youll need to ante up a lot more over time. Keep that in mind the next time you download a “free” app.