Lite versus In-App Purchase – What’s In A Game?

When I released Coconut Craze, I actually released a Lite Version and a Paid version. My strategy was to leverage the download numbers of a Lite (free) app and the upsell people into the paid version at $0.99 so they could have more features. Makes sense, yeah?

Well, the timing kind of screwed me. They approved the Lite version initially, but Rejected the paid version for a Game Center issue. Even though I set the Lite version to release a few weeks after Coconut Craze paid, it always seems to go live. The solution is to remove it from all stores worldwide so that it's not available for download. Not perfect, but it works.

Once I had the paid version up, I opened up the Lite to the markets and wanted to update the icon. Unfortunately, my update was not approved because they felt that the Lite version was too much of a tease without any meat, so to speak. They said that by calling out a “Buy Now” offer I was creating too much waste and that I should update the app to unlock the functionality via in-app purchase which would require development.

I was kind of pissed, but then realized it made sense. I ended up making the Paid version free and using some new ad networks which dwarfed the revenue I would have made on the Lite -> Paid model anyway. More importantly, I had a very real experience with that model and allowed me to speak to the pros and cons of Lite vs In-app purchases.

Beyond The Cross-sell and Into the Up-sell (a brief overview)

With the creation of the In-App Purchase, developers are torn between it and the lite option. Some predicted that the lite version will become obsolete. But the two do not have to exclude and isolate the other. Both options are still viable depending on the kind of app that you are developing. Here’s a look at the features of each option to help you decide what will work best for you:

Lite

  • It is easier to implement than the In-app Purchase version. This option might be better for you if you are daunted by the complexities that come with implementing an In-App Purchase. Based on Apple’s Store Kit documentation, an In-App Purchase requires additional programming and back-end infrastructure. If you are new to the iOS developer platform, the Store Kit Application Programming Interface (API) might overwhelm you.
  • If your app is a single function utility, then you may be better off with a lite version. Otherwise, it might be problematic if you attempt to target specific features to be offered through the In-App Purchase.
  • It has a smaller file size because only the content that is offered for free is included. Thus, a lite version will be a better option, considering the download bandwidth limitations on mobile devices. This will be more beneficial and effective as a promotional sales tool.

Note that most phone carriers limit file downloads via the mobile network to up to 20-50 MB. If the size of your app is bigger than that, a user would need to look for a Wi-Fi connection before he can download your app. This will be detrimental if you are after impulse buys and spur of the moment downloads. Your potential customer may no longer be interested to get your app by the time he finds a Wi-Fi network.

Thus, with a lite version that is 20-50 MB and below, your app becomes more accessible to a broader range of potential customers who can download your app into their mobile phones through their carrier’s mobile network even if a Wi-Fi network is not available.

In-App Purchase

  • This will be a better option for you if the functionality of your app can be neatly divided into a free feature set and additional premium features for a small upgrade fee. In games for instance, you can offer additional levels and powers or weapons as In-App Purchase items.
  • You need not worry about putting the two versions together. It is easy to compile two versions of your app – a lite version and a paid version – within the Xcode
  • In general, the In-App Purchase is a viable option for most game apps. However, you should remember that to unlock additional content via the In-App Purchase, you need a much bigger application to store all the hidden content.
  • With the In-App Purchase, new features or content are unlocked directly within the app so you do not need to transfer existing user data. On the contrary, when you use a free lite version, you need to download the app separately when you purchase the paid version. Transferring any existing user data from the lite version to the paid version may be characterized as a logistical nightmare for developers.
  • While paid versions bring in the money, you need to consider the fact that the App Store requires paid apps to provide free updates to existing users. Currently, the Store does not have a mechanism for charging users for updates. Thus, when a user purchases a paid version of your app, that is the only time that he invests on your app. You need to get new buyers to purchase your app so you can fund on-going development costs for releasing updates. Thus, when pricing your app, you may want to take into account your expenses for research, development and update launches so you can properly sustain your business.
  • An In-App Purchase is flexible. This means that it allows you to give your users a million options to buy add-on content and additional features. They can keep on buying these at their own comfort level and convenience. They can control the amount of money they wish to spend on your app and this will be beneficial to your sales. Strive not to limit the amount of money your users can spend on your app to ensure that you have an effective and long-term business model. You will be surprised to know that a big chunk of your income will come from a small number of loyal users who buy several In-App Purchase items.
  • It is ideal to maintain both lite and In-App Purchase versions of your app. Remember that while a free version of your app can include In-App Purchase items, it is only classified as an app that can be downloaded for free and it will only be eligible to appear in the App Store’s Top Free Apps Chart. However, if you maintain separate free lite and paid versions, your app has the chance of being part of both the Top Free Apps Chart and the Top Paid Apps list in the App Store.
  • An In-App Purchase version helps your app become profitable even if it is not part of the Top Charts of the App Store. After all, you can earn income within your app. This feature will greatly help independent developers who might not have the necessary clout and resources to be part of the Top Charts of the App Store.
  • The In-App Purchase has a lot of potential for growth. It can be a very powerful tool for mobile sales. It likewise has the potential of being the most popular means of monetizing app development on the iOS platform.

Based on the foregoing, there appears to be no contradiction or outright competition between a lite version and an In-App Purchase. At the end of the day, it all boils down to the type of app that you are developing along with its feature set and architecture.

See ya!

Carter

 

How to Make An App
 

COMMENTS

  • Andrew June 20, 2012

    At the end of the day, it all boils down to the type of app that you are developing along with its feature set and architecture.

    That’s for sure. Thanks for the in depth analysis. I get stuck weighing the pros and cons of each system. It’s great to have different options for selling because both will attract different users. I think the developer should test both with different types of apps. What works best is really up in the air and testing each option is wise and will give you more of a sense of how certains apps should be handled, marketed and designed. It’s a crazy world that lies in your hand.

    Thanks ,
    Andrew

  • Carter Thomas Carter June 20, 2012

    Hey Andrew,

    Thanks for posting. Also important to note is that Lite versions of apps are a dying breed. I know this for two reasons:

    1. My adventure with the Coconut Craze launch taught me that Apple is not pumped about the Lite versions. They approved the initial version, then rejected all updates, which essentially left me helpless. In their rejection description, they asked me to put in-app purchases and not cross sell.

    2. At the WWDC last week I sat down with the review team and asked them point blank about Lite vs In app purchases. Their response was that The really want to move away from Lite versions to consolidate the number of apps in the store and to make the experience seamless for the user.

    Carter

  • Andrew June 20, 2012

    I can see why they would phase out the Lite version, and if they do it will definitely change the landscape of the App Store. I see more and more companies taking advantage of the in-app purchase model (freemium) to maximize revenue. I find this affects the quality of customer ratings though. Games with in-app purchases seem to do fine and the customer expects this, but when utility apps advertise a feature and only include that feature with an in-app purchase, after the customer has already shelled out his 0.99, the average customer seems to feel cheated. I’ve read many reviews like this when it comes to utility apps. I think the price point for a good utility app is .99 cents, with all features included.

  • Scott December 3, 2014

    RE: “… using some new ad networks which dwarfed the revenue I would have made …”

    If you don’t mind me asking, which ad networks are you referring to here?

    NOTE: I’m resubmitting the question because I didn’t check the “Notify me of follow-up comments by email” option in my previous submission. If you choose to respond, please publish and respond to this comment so I get the notification. Thanks.

  • Carter Thomas Carter Thomas December 3, 2014

    @Scott – I used Chartboost mostly. Now I would use CB, AppLovin, and then backfill the rest of the inventory with Playhaven and something like AdMob just to get 100% fill rate. For Banners I would use Admob. Hope that helps!

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