What is an in-app purchase?
Meet us on the road! Check out where we'll be next! View Events ×

Get Fluent in Performance Marketing

Plain language explainers to help you keep up with the evolving digital landscape.

In-App Purchase

What is an in-app purchase?

In-app purchases (IAP) are transactions that users make within mobile apps and games to gain access to additional content, features, or services. IAPs can include anything from virtual currency and power-ups to new levels and characters.

IAPs are a popular way for app developers to monetize their apps, and they can be a very lucrative revenue stream. In 2022, global consumer spending on in-app purchases reached $133 billion.

How do in-app purchases work? IAPs are typically processed through the app store that the app was downloaded from, such as the Apple App Store or Google Play Store. When a user makes an IAP, the app store will deduct the purchase price from the user's account and send the money to the app developer.

Types of in-app purchases:

There are many different types of IAPs, but some of the most common include:

  • Consumable IAPs: These are IAPs that can be used up and need to be purchased again once they are gone, such as virtual currency or power-ups.
  • Non-consumable IAPs: These are IAPs that can be used repeatedly once they are purchased, such as new levels or characters.
  • Subscriptions: These IAPs allow users to access additional content or features on a recurring basis, such as premium streaming services or game memberships.

How to measure in-app purchases:

IAPs can be measured using a variety of metrics, including:

  • In-app purchase revenue: The total amount of money that users spend on IAPs within an app.
  • Conversion rate: The percentage of users who make an IAP after opening an app.
  • Average revenue per user (ARPU): The average amount of money that each user spends on IAPs within an app over a period of time.
  • Cost per acquisition (CPA): The average amount of money that advertisers pay to acquire a user who makes an IAP.

App developers can use these metrics to track the performance of their IAP strategies and make adjustments as needed.

Why are in-app purchases important to marketers?

IAPs are important to marketers because they are a great way to generate revenue from mobile apps. IAPs can also be used to achieve a variety of marketing goals, such as:

  • Increasing app engagement: IAPs can incentivize users to spend more time in an app by offering them new content and features to purchase.
  • Improving user retention: IAPs can help to keep users coming back to an app by giving them something new to purchase and experience.
  • Driving app downloads: Advertisers can promote IAPs in their app ads to encourage users to download and install their apps.

Who needs to know what in-app purchases are:

  • Digital marketer
  • Performance marketer
  • App developer
  • Mobile advertiser
  • Marketing manager
  • Brand manager
  • Product manager
  • Sales manager
  • CEO

Use in-app purchase in a sentence:

"After downloading a new mobile game, I quickly realized that many of the advanced features and upgrades were only accessible through in-app purchases."