Google recently began providing the capability for developers to add in-app purchase capability to their apps, functionality that the iPhone has had since 2009. Using In-App purchasing, an app can provide additional services or content that are paid for after the app has been downloaded and is being used. Games, for example, can provide additional weapons or combat gear for an additional cost. Another app might provide a first accounting lesson for free, but charge for the subsequent lessons in the series. In-App purchases is a powerful way to monetize your app and keep users coming back multiple times to make purchases.
What to Consider
If you are considering adding In-App purchase capability to your Android app, you'll want to understand some of the basics before jumping in.
Does Your App Have Enough Functionality?
First, In-App purchases are all the rage right now, but you'll want to consider if this approach is right for your app. Not every app is best suited to In-App purchases because you when you offer your app for free, you have to provide enough functionality to make the app usable and yet entice someone to buy more features with the full app. Games lend themselves well to this approach. However, other apps may not. A free app with hobbled functionality (where the user has to keep buying functionality for every little feature) will grow tired of this approach. He may wish to find another app that has one price but includes all the features he wants.
Remember the Billing Piece
In-app billing may only be applied to digital goods sold inside applications distributed through Android Market. The standard 30 percent fee applies to all in-app transactions. This means Google will not allow physical goods to be sold from within the app, only digital content. Subscriptions would fall into the category of digital content. Google will have the same challenges that Apple has in keeping transactions from occurring outside the app. What's to keep a developer on Android from sending the user to a mobile website to complete a transaction, thus avoiding the 30 percent charge? Apple can reject an app that is attempting to send users to another site to make a purchase, but Android does not have as comprehensive of a review process.
Decide on a Return Policy
Google's 15-minute return policy does not apply to in-app purchases. All refunds of in-app purchases are at the discretion of the developer. So you need to determine up front if you will offer refunds, for how long, and under what circumstances. Restoring in-app purchases is also the responsibility of the developer. Purchase history is tied to your Google account, so if you switch phones, your purchases can go with you to the new phone. As a developer, you'll need to anticipate this issue and provide a mechanism so that users can download previously paid in app purchases.
Clarify the Charges
Make sure that your in app purchase is clearly defined in your app. You'll want to have a clear description of what the purchase will provide the user, how much it will cost them, and so on. You also need to make the purchase process very clear so that there are no misunderstandings when someone makes a purchase about recurring charges or not. Because refunds are difficult to provide in Google, it's best to state your refund policy in your app.
Test the Pricing
Don't be afraid to test different pricing for your app. Sometimes your pricing may be a bit too high and you're not seeing the number of downloads you had expected. In most cases you'll need to modify the prices on your in app purchase page of your app and recompile. But, you can repost the app very quickly on the Android site without a lengthy review.
Free apps have about a 10X install rate as compared to paid apps. So, it makes sense to review the in app purchase option for your app and give away your basic app for free. With more downloads, you're more likely to get users that buy additional components of your app. The beauty of in-app purchases is that you can generate repeat revenue from the same customer. A paid app only sells once, but an app with in-app purchase options can sell new content over and over to the same person.
Take a look at your app and see if it's a good candidate for in-app purchases. If your app is a game, you can sell more ammo, planes, tanks, or other weapons. You can add additional levels of play and charge for those as well. If you are selling a non-game app, you'll need to determine whether you can provide enough free functionality in your app to be interesting and offer in-app purchases for must-have features that the customer can't get anywhere else.