How not to make money with your app, in 3 easy steps

Earlier today Penny Arcade had a disheartening story about Gasketball, a fun new game for iPad. It took a pair of veteran iOS developers almost two years to bring it to market, and by all accounts they made a great game with a solid 4.5 star rating.

Superficially, they also made the right choice for monetization: they decided to release a free game to drive downloads, and focus on making money through In-App Purchases. Unfortunately, their launch faltered:

[The] asynchronous multiplayer has already helped to make the game a hit: It has been downloaded around 200,000 times, and for a time enjoyed a choice spot near the top of the iTunes games charts.

This may seem like one of the happy success stories on the iOS platform, but the reality of the situation is more grim than it may at first appear. Gasketball was released for free, with a one-time in-app purchase that unlocks the rest of the game offered for $2.99. The conversion rate to the paid version of the game sits at 0.67%.

As the developers found out, it’s not enough to have a great game and hope In-App Purchasers will make sure your efforts are rewarded. They made 3 key mistakes:

1. Don’t give away too much for free

In the original release of Gasketball, users could enjoy the game for hours without realizing they’re missing something. If you give away too much for free most users will never feel like they are missing anything.

2. No strong Call To Action to drive In App Purchases

The game also used an extremely subtle Call To Action to get loyal fans to upgrade. “Optimizing for conversions” is a science onto itself, and companies like Unbounce have some great writing on this topic.

Unfortunately, in its first release (somewhat corrected since, as the screenshot above shows) Gasketball went a step too far in the opposite direction. As the writer experienced:

I had downloaded the game based on the positive word of mouth, and had already enjoyed what felt like a wide amount of content without paying anything. I wasn’t even aware there was anything to pay for to unlock, and when I learned I could buy the game to support the developer I went looking for that option in the game’s menus. It took me a few minutes to figure out how to pay for the game, and I was specifically looking for the menu.

3. Very low price point with no significant upgrade options for app’s true fans

Finally, In App Purchases rarely get conversion rates above few percent. That means if all you get from your users is $2.99 (or just over $2 after Apple takes their cut), you will have a long road to profitability.

Instead, layer your premium features to let those who really love your game give you more money. Your premium users will often drive the lion’s share of your revenue, and they don’t mind paying when they spend hours inside your game. The same way sports teams sell jerseys, buttons, cards and keychains to capitalize on all the good will they engender, create something your hard-core fans can acquire and enjoy.  

Gastketball has added a few small premium purchases since the release, but at 99 cents they are still too small to move the LTV (lifetime value) needle.

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