In-app purchases are items or features that users can buy directly within a mobile app. These can be things like digital goods, upgrades, subscriptions, or access to premium features.
Why It Matters
Why Founders Should Care About This Term:
- Creates Direct Revenue Streams through user purchases without needing ads.
- Supports Freemium Models, allowing free access with paid upgrades.
- Increases Lifetime Value (LTV) by encouraging recurring or one-time spending.
- Enables Tiered Monetisation, so users can choose their level of engagement.
- Gives Control Over UX, as you decide what’s free vs. paid.
Use This Term When...
- You’re planning monetisation strategies for your app.
- Deciding which features should be free or premium.
- Designing user flows for unlocking or purchasing content.
- Implementing recurring subscription plans.
- Discussing compliance with Apple/Google in-app purchase rules.
Real-World Example
In one of our projects, we implemented in-app purchases to let users subscribe to premium content. This helped the client monetise high-value features while still offering a free version.
Founder Insight
Many founders underestimate how much design and psychology goes into successful in-app purchases. It’s not just about adding a paywall — it’s about making the value obvious and friction low. Without proper planning, users won’t convert even if your app is great.
Key Metrics / Concepts
- Conversion Rate: % of users who make a purchase.
- ARPU (Average Revenue Per User): Measures how much income you generate per user.
- Churn Rate: Tracks how quickly paying users cancel or stop buying.
- Purchase Flow Drop-off: Where users abandon the process before paying.
- Subscription Retention: How many users stay subscribed over time.
Tools & Technologies
- RevenueCat – Handles in-app purchases and subscriptions across platforms.
- StoreKit (iOS) – Apple’s official framework for handling in-app transactions.
- Google Play Billing Library – For managing Android in-app purchases and subscriptions.
What’s Next / Future Trends
Subscription-based in-app purchases are becoming the norm, with AI now personalising offers based on behaviour. Expect future systems to be smarter at predicting what users are willing to pay for and offering it at just the right time — all while complying with tightening regulations around transparency and pricing.
Related Terms
- Monetization Model – How your app generates revenue, including freemium strategies and in-app purchases.
- App Analytics – Helps track user behavior, conversion funnels, and purchase patterns to optimise in-app sales.
- User Retention – A key success metric for in-app purchases; the longer users stay, the more likely they are to buy.
- Gamification – Often used to encourage engagement and purchases through rewards, points, or premium features.
Helpful Videos / Articles / Pages
Call to Action
Still unsure how in-app purchases fit into your monetisation strategy? Book a discovery call with our team — we’ll walk you through the right tools for your tech stack.