In-App Purchases for Indie Mobile Games: How to Build a Smart Freemium Strategy

This post originally appeared on Playbook, Chartboost's blog dedicated to the business of mobile gaming.

If you’re an indie mobile game developer looking to monetize a free-to-play game, you’re already managing a beast of a task. So you need to make sure that your in-app purchase (IAP) strategy isn’t overly complex. If you start small and think of your IAPs as a way to engage new users, you’ll be well on your way to success.

With that in mind, here are six specific ways to best maximize your time and development resources while still competing in the free-to-play market.

Focus on converting free players to paying players

When managing a free-to-play game post-launch, you want to keep an eye on three main metrics: the amount of traffic your game sees (daily average users, or DAU), the average revenue per paying user (or ARPPU) and the percentage of conversion of free users to paying users.

One effective way to increase this last key metric is to offer compelling IAPs. But, first, I’d like to make a key distinction: When your goal is converting new players — as opposed to increasing engagement among existing core players — those IAPs can’t be merely aesthetic incentives.

Why? Offering typical IAPs, such as asking your users to pay to remove ads or offering themes around holiday or current events, won’t give new users a strong enough incentive to convert. For indie games that don’t already have a dedicated user base, it’s better to offer that stuff up for free — after all, it’s potentially engaging content that you don’t want to hide behind a paywall.

Offer a range of prices and don’t shy away from decoys

It’s also important to think strategically about your pricing. Offer a range of prices — it’s smart to offer less expensive items ($1 or so), but remember that someone will always pay a higher price, so take advantage of that potential revenue by including more expensive IAPs (up to $99), as well.

If you’re offering more than one IAP, a range of prices may help players pick the most appealing price point. Consider using “decoy” items in your IAP offerings, as well. A decoy item is asymmetrically dominated and encourages payers to purchase items of higher value. In some cases, a decoy will appear to offer lower value than a similarly priced high value item, and players looking for a better deal will choose the higher value option. Alternatively, offering a decoy item that seems extremely over priced would encourage players to buy a more reasonable alternative.

And when you’re selling currency as an IAP, give players an additional sense of value by adding “bonuses” when they purchase bigger amounts. For instance, if $1 buys 100 coins, $2 can be worth 250 coins, $3 can be 450 coins, etc. so your users are incentivized to spend more.

Offer upgrades or power-ups for your in-app purchases

Instead, think about your IAPs as items that players will want to buy to enhance their gameplay. If you focus on power-ups and upgrades, and do it right, the benefits will be twofold: You’ll gain a better understanding of your gameplay as a developer and will make the main game loop better (i.e. more interesting and deeper for your players).

Badland by Frogmind, for example, took a smart approach to this. When the team released its previously-premium iOS game on Google Play, they decided to make it free-to-play to match the current market on Android. They offered 40 levels for free, with power-ups that can be purchased or earned. These power-ups help players learn how the game’s physics work, which in turn helps players become better at predicting those physics in future play sessions. 

Avoid having only premium upgrades

Having only premium upgrades can work with mid- or hard-core gamers, but casual players don’t convert the same way. While players who are already engaged in your game at higher levels of skill may spend on purely premium upgrades, new players won’t. For that reason, players should be able to earn upgrades and pay for them. They need to feel as if they’re able to earn rewards through skill in the game — and that you’re not encouraging them to “pay to win.”

Candy Crush is a great example: You get five extra moves by trading in virtual coins that you’ve earned, but you can also spend money to get the same thing. This makes players feel as if doing well in previous sessions will get them better results in future sessions.

Consider purchasing an in-app store SDK

Instead of wasting time re-inventing an in-game store, small studios should focus on improving the game loop itself. There are several back-end tools to help you get your in-app store rolling, such as Soomla, a store SDK that’s simple to add to your existing game code. It lets you easily change items and pricing on the fly, so you can direct your time and energy elsewhere.

Create upgrades that enhance the meta-game

If your game is mid-core, your power-ups should also be tied to the meta-game, not just the core game loop. The meta-game can be an invisible part of the core loop but you should always be thinking about how to keep players not only earning or consuming but staying engaged with the game on a higher level.

To do this, you need to get into the psychology of your target audience. What makes an in-app purchase irresistible? What does the purchase help your players do? If you can figure that out, you’re closer to deciding the best IAP to offer for your particular game and fanbase.

Keep it simple

Everything in free-to-play is about launching, learning and iterating. Don’t try to build a comprehensive IAP system right out the door. Tracking too many variables will take up too much of your time and resources. Start small and add a simple in-app purchasing system. Add in five power-ups or so, for example, then see how they perform. Expand on the incentives that work the best, and go from there.

Ideally, what you’re offering with compelling IAPs is a way for players to have more fun and interesting experiences. Building your main IAP strategy around power-ups or upgrades gives your players more of what they already love while encouraging their engagement, making them more likely to purchase.