App Purchasing (Paid, Lite and Freemium): What’s working, and what’s appropriate in apps for kids?

by Moms With Apps on July 24, 2011

Here is the first in a follow-up series of posts from Ahmed Siddiqui, the developer of Go Go Mongo, who is compiling articles of interest from the MobileBeat 2011 Conference in San Francisco. He started by highlighting an overview of industry trends for app developers discussed at the conference. In this post he specifically covers app purchasing methods like “freemium” vs. “paid” vs. “lite”, how they work, and the ethical considerations of using these methods in apps for kids.

Today’s blog post will serve as the primer for others in the series by discussing the concept of “Freemium”.

In the app store, we have 5 types of apps/games:

  • Paid app
  • Lite app
  • Free ad-supported app
  • Freemium app
  • Subscription app

Paid/Lite/Ad Supported

The paid app is obvious, it is an app/game you pay something for, in many cases this is $0.99.  The Lite app is typically the first few levels of the paid app, and is designed to get you to purchase the full paid app.  The free ad-supported app, is typically the full app but will display banner ads on the top, and most recently started displaying video ads, which I will discuss in a later blog post.

Freemium/Subscription

The next two are newer types of apps that came about once Apple created the concept of the “in-app purchase”.  This is where the app will ask you if you want to purchase some additional items within the game (you do not need to go back to the app store to download another app).  A subscription app works in a similar manner, except that it can be a recurring payment, like for a magazine subscription.

In the conference, it appeared that the first two types, the Paid app and the Lite app, are becoming less popular.  Many publishers are switching to ad-supported, freemium, or subscription apps.

This trend poses a big problem for educational app/game developers.  This is primarily because their apps are aimed towards younger kids where the parents are making the primary purchasing decisions.

Barriers between free and paid

My current game, Go Go Mongo! has a Lite version and a paid version.  We typically see a 20 to 1 download ratio for Lite versus paid, and the paid version is only $0.99, so the barriers between free and $0.99 is quite high.  Parents don’t have any hesitations to downloading free apps, but have a tough time parting with their dollar.

Are free ad-supported apps safe for children?

In many cases, moving to a completely free ad-supported app has its own challenges.  Younger children typically do not know how to read the ads, so the ads are not so effective anyways, and if something flashes on the screen, they WILL click on it, and not know how to navigate back to their game, requiring parent intervention.  Furthermore, there isn’t enough finite control for the developer/publisher on the types of ads being served to the kids, unless the developer/publisher is willing to scan through thousands of ads, which they most likely aren’t doing.  As a parent, it is much better just to pay the extra dollar and ensure that the kids aren’t seeing any inappropriate ads.

The next option is to make the game a freemium game.  This actually will require a re-design of the game in most cases.  Here, the child can play the game without having to pay for anything, but in order to progress, they may need to purchase additional modules.  These transactions are managed by Apple’s in-app purchase system, where a little pop-up comes up asking the child to purchase the item.  If the child presses OK, it asks for the iTunes password.  This will require the child to ask his/her parent to input the password so that he/she can proceed.

The issue is that there is a 15-minute buffer period to ask for the password again, so in case the child runs into another in-app purchase, he/she can actually make the purchase without having to enter in the iTunes password.  This can be troublesome, and there have been many cases against the makers of these games where the child ended up spending thousands of dollars on these in-app purchases within the 15 minute buffer window (case of the $99 smurfberries).

In-app purchases can be turned off in the global settings of the iPhone/iPod Touch/iPad, but many parents are not aware of this feature.  As educational game developers, we need to carefully evaluate this feature because it seems like this is the way everything is headed.  How can we utilize this feature in the most ethical way?

Freemium solutions for educational/kids games

One solution is to sell “content packs”.  This is where once a child masters a certain subject, offer an in-app purchase for the next set of games.  A good example of this would be a math game where once the child masters addition, they will have the option to purchase the “subtraction pack”, which will download the next set of levels.

Also, if the game features a character, perhaps offer the child a pack to customize their character only after they complete a set number of activities.  This would be a one-time purchase, that will give the kid access to multiple hats, shoes, etc.  This means that the parents have to pay a little more for a grouping of items instead of paying a-la-carte.  However, this could serve as a really great way to reward children for completing levels.

The next solution is to build a subscription-based app/game, which I will discuss in my next blog post, titled:  “The use of subscriptions in kids games.  Its not just for magazines!”

Developers and parents, what are your thoughts and experiences with App Purchasing? What do you prefer? What do you avoid?

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{ 6 comments… read them below or add one }

SagePixie July 25, 2011 at 12:24 am

I’m going to take the time to answer this because it is very important to me.
I home school my kids ages 7 and 9. Both my kids had their birthdays in the last 3 weeks and both of them got new 64gig iPod touchs. They had gotten so very much out of the iPad they had been sharing for the past year it was a no brainer.
Educational apps and traveling to experience life out in the real world are the cornerstones of our educational experiences.
I have purchased over 400 apps.
I’m obviously ok with paying for apps but my preference is a lite version. When my kid gets to the end and wants more I’ll happily punch in the password. Too many times I’ve experienced paying out for an app to find it’s not well put together for either the device or the appropriate age group. Dora, I’m looking at you….
I will not buy an app that has in app purchases that are required to play the game. The sole exception to this was the puppet show app for iPad and I bought the extra levels when I first purchased the app so in my mind it was part of the initial price.
I HATE when an in app purchase does not work for all my devices but only on the one I purchased it on.
If a free ad based version of the game exists I want an option to buy an ad free version. I can’t think of an example where this was possible and I didn’t eventually pay for the ad free version even on apps for me.
When my children and I shopping for apps I look at three criteria (after interest has already been established)
1. Are there in app purchases? If there are the answer has been 99% of the time been NO
2. Comments. Are people happy? Does the app freeze?
3. Updates. Is this software being taken care of? Are they reading the comments and fixing things? I don’t want an abandoned app.
So far I’m not a fan of the subscription model. It seems to be a sneaky in app purchase kind of thing. Most of the ones I’ve seen have been a 99cent app with $2.99 subscriptions that when totaled up come out to over $8 most higher.
You used math as an example. Let’s says my child wants the game but is already proficient in addition and subtraction. That forces me to pay for the initial download and two subscriptions to get to where the game is challenging and interesting. I’d rather see separate apps. This has been done well by several in the gaming. I’d like to see more set ups like angry birds with separate apps that are all well maintained but form a larger story.
I also acknowledge that for learning apps it can be challenging to offer several skill sets for mastery. I feel very lucky that so many different options are available for example the fry list of vocabulary words or addition so that these skills that require rote memory can be spreadnover several apps to counteract any boredom with the repetition that may crop up.
Ok that last sentence wasnt well worded. Time for this Mom to get some shut eye. ;-)

Margaret July 25, 2011 at 9:25 am

First, thank you for writing this. For years I have given the option to my kids to put some of their allowance money each month towards itune purchases. This works well. I like this approach because it is upnfront and outside of the game. The model of purchasing in game items like. Might do with farmville seems most appropriate to the board adult than the inquisite young child. I’d like to see a licensing model where parents can choose a bundle like they might do with a cable company and through a subscription get the games within that bundle for the price of the subscription.

AppHipMom July 25, 2011 at 11:54 am

In researching an article of best educational apps for kids, I found that most educational apps are paid ones.

Personally, I prefer Lite versions over Freemium solutions. Lite versions give me just enough to know whether we like it or not. I do look whether there are in-app purchases & I tend not to download those. I rather know that I paid $0.99 or $1.99 or whatever the price is & get the full version. I hate looking at ads, but if the app is for my use, I’ll tolerate it. But it’s difficult for younger kids to put up with it.

I also factor in people’s reviews of the app in the App Store. I look at the last time the app was updated. I’ll read online reviews.

In my research, I have to say there are so many fantastic educational apps out there! The best ones in my opinion are the ones that will grow with your child, ie games with varied difficulty levels.

Michelle July 25, 2011 at 5:46 pm

My 9yr old niece got caught up on the Smurf game. She did not read what was on the screen and pushed a button. Her parents are out the $100 and she is much more careful. I don’t think it should be allowed without a password. I have no problem entering my password to confirm a purchase. For those who don’t care… Would you go ahead and sign in on my iPhone? I have a few purchases to make!! =)

Adam July 28, 2011 at 12:27 am

Sage Pixie, thanks you for taking the time to share your thoughts on this topic from a parent’s perspective. I know that all the app developers that frequent this site (including myself) are constantly looking to do the right things for the parents out there using our apps. Secondly, thank you Ahmed for this great article and update on the current situation regarding app purchasing trends. I agree with Pixie Sage, and feel that the best model for children’s apps is to have a free version with the option to upgrade.

Matt March 4, 2012 at 9:49 pm

As a teen who frequents the AppStore more and more these days, I must say that you’ve neglected to include the category of games which is free but unsupported in any way. This type has nearly died out, since most developers added IAPs to their full free games (like Army of Darkness, Paper Toss, Kingdoms Live, etc.)
Secondly, I have no qualms about buying an app that contains IAPs as long as these purchases are not required for me to progress/complete the app. Smurfsville and Dragonvale are good examples. While the items certainly speed up progress, they’re not necessary like in some games which require you to unlock every 10 levels or so for 99c each time.

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