'Freemium' iPhone Apps Growing as Successful Business Model

101929 top grossing iphone nov11 2010 500

GigaOM takes a look at so-called "freemium" iPhone apps: applications that are free to download and offer basic functionality but generate revenue through the use of In App Purchase content. According to the report, freemium apps are becoming increasing popular with developers, who are finding it a viable business model, and the number of such apps generating sufficient revenue to rank among the top-grossing App Store titles is increasing.

A look at the top-grossing iPhone apps today finds 34 of the top 100 apps are free, but make their money through in-app purchases of mostly virtual currencies as well as other premium features. Remco van den Elzen, CEO of analytics firm Distimo, said he believes in-app purchases now represent about 30 percent of all iPhone App Store revenue. "We're seeing more developers implement more in app-purchases especially with games," he said. "Freemium Apps are also picking up significantly. A lot of developers realize it's a successful model."

Another analytics firm tracking such data revealed that in January only two freemium iPhone apps ranked in the top 50 grossing apps, a number which rose to 10 by the end of October and stands at over 20 today.

The striking success of freemium iPhone apps comes even as their prevalence in the App Store remains low, with only about 1.34% of iPhone apps using the model during the third quarter of this year.

Interestingly, the freemium business model has yet to catch on with iPad applications, as none of the top 200 grossing iPad apps utilize the strategy on a platform where higher purchase prices for applications are the norm.

As the report notes, iPhone developers are learning how to offer a solid app experience for their free versions while also pushing attractive upgrade options via In App Purchase, finding that the strategy can be more lucrative than offering ads in their applications and attract a more loyal base of customers.

Related Forum: iPhone

Popular Stories

iOS 17 on Phone Feature

Gurman: iOS 17 to Provide Several 'Most Requested Features'

Sunday March 26, 2023 6:05 am PDT by
Apple changed the strategy for iOS 17 later in its development process to add several new features, suggesting that the update may be more significant than previously thought, Bloomberg's Mark Gurman reports. In January, Gurman said that iOS 17 could be a less significant update than iPhone updates in previous years due to the company's intense focus on its long-awaited mixed-reality...
iOS 16

iOS 16.4 Will Add These 8 New Features to Your iPhone

Sunday March 26, 2023 8:06 am PDT by
Following nearly six weeks of beta testing, iOS 16.4 is expected to be released to the public as soon as this week. The software update includes a handful of new features and changes for the iPhone 8 and newer. To install an iOS update, open the Settings app on the iPhone, tap General → Software Update, and follow the on-screen instructions. Below, we have recapped eight new features and...
apple mixed reality headset concept by david lewis and marcus kane

Some Apple Employees Seriously Concerned About Mixed-Reality Headset as Announcement Draws Closer

Sunday March 26, 2023 8:25 am PDT by
Some Apple employees are concerned about the usefulness and price point of the company's upcoming mixed-reality headset, The New York Times reports. Apple headset concept by David Lewis and Marcus Kane Initial enthusiasm around the device at the company has apparently become skepticism, according to eight current and former Apple employees speaking to The New York Times. The change of tone...
iOS 16

Apple Releases iOS 16.4 With New Emoji, Safari Web Push Notifications, Beta Changes, Voice Isolation for Calls and More

Monday March 27, 2023 10:03 am PDT by
Apple today released iOS 16.4, the fourth major update to the iOS 16 operating system that initially came out last September. iOS 16.4 comes two months after the launch of iOS 16.3, an update that added Security Keys for Apple ID. iOS 16‌.4 and iPadOS 16.4 can be downloaded on eligible iPhones and iPads over-the-air by going to Settings > General > Software Update. It can take a few minutes...
Steve Jobs Theater dusk

Apple Reportedly Demoed Mixed-Reality Headset to Executives in the Steve Jobs Theater Last Week

Sunday March 26, 2023 5:53 am PDT by
Apple showcased its mixed-reality headset to the company's top 100 executives in the Steve Jobs Theater last week, according to Bloomberg's Mark Gurman. In the latest edition of his "Power On" newsletter, Gurman explained that the "momentous gathering" is a "key milestone" ahead of the headset's public announcement planned for June. The event was intended to rally Apple's top members of...
top stories 25mar2023

Top Stories: iPhone 15 Pro Design Leak, iOS 16.4 Coming Soon, and More

Saturday March 25, 2023 6:00 am PDT by
We're still almost six months away from the official unveiling of the iPhone 15 lineup, but it seems like every day we're learning more about what to expect from the next-generation models. Notably, this week gave us our clearest look yet at what appear to be some changes for the volume and mute control hardware. iOS 16.4 and associated releases are also right around the corner with some new ...
apple tv 4k red image

Apple Releases tvOS 16.4 for Apple TV 4K and Apple TV HD

Monday March 27, 2023 10:00 am PDT by
Apple today released tvOS 16.4, the fourth major point update to the tvOS 16 operating system that came out last September. Available for the Apple TV 4K and Apple TV HD, tvOS 16.4 comes two months following the release of tvOS 16.3. The tvOS 16.4 update can be downloaded over the air through the Settings app on the ‌‌‌‌Apple TV‌‌‌‌ by going to System > Software Update....