Mobile apps have come a long way. From streaming music to managing finances, almost every digital experience now runs through an app. And for businesses, apps are not just tools for engagement — they’re powerful revenue generators.
Beyond app downloads and subscriptions, one of the most effective ways to monetize an app is through in-app purchases (IAPs). This model lets users unlock premium features, exclusive content, or additional services directly inside the app.
In this guide, we’ll explore what in-app purchases mean, how they work across platforms, and how you can implement them — even if you’re building your app without coding.
What is an in-app purchase?
An in-app purchase (IAP) refers to any transaction made by a user within an app to access additional features or content. It could be a paid upgrade, a subscription, or a virtual good.
You’ve likely seen the phrase “Offers in-app purchases” while downloading apps from Google Play or the App Store. Games, streaming services, and productivity apps commonly use this model.
In-app purchases allow free or freemium apps to generate recurring revenue while keeping the core experience accessible to everyone.
How to identify apps with in-app purchases
Both major app stores label apps that include IAPs:
- Apple App Store: Displays a note beside the price or “Get” button. Scrolling to the app’s information section shows a list of available in-app purchases.
- Google Play Store: Marks apps with a “Offers in-app purchases” label. Developers may list prices or descriptions of purchasable items under the product details.
Types of in-app purchases
In-app purchases can follow different models depending on the product, service, or user journey. They generally fall into two major categories: subscription-based and consumption-based.
1. Subscription-based IAPs
This model lets users access premium features or content for a defined period. It’s a steady and predictable source of recurring revenue.
a. Auto-renewable subscriptions
These renew automatically at the end of each billing cycle — weekly, monthly, or annually. Users can opt out anytime. Examples include Netflix, YouTube Premium, and Spotify.
b. Non-renewing subscriptions
One-time subscriptions that grant temporary access, such as a one-month pass or premium upgrade. Users can manually renew if desired.
2. Consumption-based IAPs
These cover one-time or repeat purchases of digital items or services.
a. Consumable purchases
Items that can be used up or repurchased — such as in-game coins, lives, or energy boosts.
b. Non-consumable purchases
Permanent upgrades that remain linked to the user’s account, such as ad-removal features or lifetime filters in a photo app.
Both the App Store and Google Play support all these IAP types, though Apple requires developers to classify them explicitly in App Store Connect.
How app stores earn from in-app purchases
App stores charge developers a commission for processing in-app purchases and managing transactions securely.
Currently:
- Apps earning under $1 million annually pay around 15% commission.
- Apps earning over $1 million move to the 30% bracket.
Apple and Google’s commissions apply only to digital goods and services — not physical products or ad revenue. This fee model has been the subject of debate but remains the standard across app marketplaces.
How much do app stores earn from IAPs?
Even though Google Play leads in total app downloads, Apple’s App Store consistently dominates in revenue.
Here’s what the numbers show:
- In 2021, consumers spent $85 billion on iOS apps versus $47 billion on Android apps.
- By 2026, projected consumer spending is $161 billion for iOS and $72 billion for Android.
- In-app purchases account for 48% of total global app revenue, compared to 14% from ads and 38% from paid downloads.
Globally, users spend more than $380 billion annually on in-app purchases. The total mobile app market is expected to reach $674 billion by 2027, with IAPs leading the charge.
Which app categories earn most through IAPs?
Games dominate — contributing nearly 80% of in-app revenue on Google Play and about 66% on Apple’s App Store. Other high-earning categories include:
- Social networking
- Entertainment and streaming
- Photo and video editing
- Music and lifestyle apps
This explains why developers across industries are integrating IAPs — they’re proven to increase engagement and profits.
Advantages of the in-app purchase model
The IAP model offers numerous benefits for developers and users alike.
1. Works perfectly with the freemium model
Apps can attract large audiences with free access while monetizing a portion of users through upgrades and exclusive features.
2. Lower barrier to entry
Free downloads encourage adoption. Once users are engaged, they’re more likely to pay for premium content.
3. Flexible and user-friendly payments
Users can spend incrementally instead of paying upfront. Subscriptions or small upgrades make premium access affordable.
4. High retention and engagement
Unlockable rewards, new content, and exclusive access keep users active longer, improving lifetime value.
Disadvantages of the in-app purchase model
While powerful, IAPs can pose challenges if implemented poorly.
1. App store commissions
App marketplaces take a share of every in-app transaction, reducing the developer’s overall margin.
2. Maintenance and technical overhead
IAPs require integration with secure payment gateways, subscription tracking, and user entitlement management, which can increase backend workload.
3. Customer support complexity
With added payment and renewal options come higher user support demands — especially around billing, refunds, or accidental purchases.
Despite these challenges, in-app purchases remain one of the most lucrative and sustainable app monetization models worldwide.
How to implement in-app purchases on AppMySite
If you’re using AppMySite — the no-code mobile app builder — implementing in-app purchases is simple and code-free.
AppMySite lets you design, build, and deploy Android and iOS apps effortlessly. You can integrate monetization options like ads and in-app purchases directly through your dashboard.
Here’s how it works:
- Log in to your AppMySite account.
- Go to the Monetization section.
- Select In-app purchase and configure settings.
- Connect your App Store Connect account for iOS or Play Console for Android.
- Add product details, pricing, and purchase logic.
Once configured, you can start selling premium content, features, or subscriptions securely.
AppMySite ensures all IAPs comply with Apple’s and Google’s guidelines, allowing developers and businesses to earn recurring revenue easily — without coding or complex setup.
Conclusion
In-app purchases have become the backbone of mobile app monetization. From streaming apps to games and productivity tools, they enable developers to generate recurring revenue while offering users flexibility and choice.
As the global app market continues to grow, IAPs will remain a primary driver of app profitability. Whether you’re developing from scratch or using a no-code builder like AppMySite, implementing in-app purchases can help you turn your app into a sustainable business.
Design your app, add IAPs, and start monetizing your user base — the possibilities are endless.
