Report: In-App Purchases Make Up 72% Of iPhone App Revenues

A new report on app pricing from analysis firm Distimo finds that in-app purchases make up the vast majority of revenues from the iPhone App Store, despite being available in only a small proportion of apps. Though only 4 percent of the top 200 top-grossing apps on the iPhone support in-app purchases, those apps create a full 72 percent of the revenues from those titles, according to Distimo's estimate. That's an increase from a mere 28 percent of revenues that came from in-app purchasing in 2010. While 48 percent of all reported app revenue came from in-app downloads on so-called "freemium" apps, an additional 24 percent came from added in-app purchases from pay-to-download apps. Distimo reports download rates for all iPhone apps are up since the company's July 2010 report, but free apps have represented the lion's share of that growth, up 24 percent compared to just a 7 percent increase for paid apps. Distimo's report also shows average prices for iPad apps coming down 21 percent since last July, to $3.94. Moreover, iPad app download rates are starting to approach those for the iPhone, leading Distimo to recommend app makers create universal apps optimized for both devices.