Today, I would like to share my shallow knowledge and personal experiences about IAP. I personally play lots of games and also test a lot of games on a daily basis. Just want to share my experience and hope it would be helpful to a certain extent. I'm not a native English speaker and so you are probably going to find lots of amusing grammar mistakes and wrong sentence structure. Pardon me please. ;)
NOTE: Below article only represents my personal opinion. It has nothing to do with my company.
Some facts I want to highlight about IAP (in-app purchase):
Only 1~2% of users pay for IAP --> 99% of your players are not paying anything
90% of apps on Google Play are free --> people are so used to install free games on mobile. It's EXTREMELY hard to persuade players to purchase a premium app unless you are a big title.
Even if people purchase IAP, to what extent and how much they purchase continually is a big issue.
Don't rely solely on IAP or pay-upfront.
Here I am talking about 80% of the mobile games in the market. The above doesn't apply to big titles such as Omniyoji, Clash Royale or whatever other big titles. From my personal perspective, I never play any mobile game for longer than 4~5 months. The best may be around 3 months. I always quit a game when I have to make IAP purchase to proceed further or attain higher level in that game. It's not because I'm poor. It's only because, I don't feel like to. Unless the game itself is SUPER GOOD, normally I'll just switch to another game.
Here are some past examples when I paid for IAP:
Triple Town: I made a purchase for unlimited moves. Reason: Firstly, I like the game. Secondly, I want unlimited moves so that I don't have to wait for long to play. Besides, it's not like the energy/lives kind of things that will be easily used up. By paying around $5~6 for a permanent item, I feel it's a worthy trade. Takeaways: instead of making the app $5.99 pay-upfront, you might consider to make the $5.99 an IAP item whereby if people make the purchase, they can play without any move limits or time limits.
超脱力医院: I made a purchase for 400 fish cans (something like diamonds in games) at $8. Reason: Firstly, a show of appreciation. I've been playing the game for 2 months and I feel it's about the time to pay back the developer for their excellent work. Secondly, I'm kinda forced to. This game has a feature called 'daily goals'. If I complete the goals, I will be awarded with coins/fish cans/better doctors etc... The reward is pretty decent and I thirst for it. One day, the goal asked me to complete a task but this task requires me to purchase some items in the shop. Well, it didn't bluntly ask me to 'make a purchase', instead, it asked me to 'upgrade 6 rooms to level 5'. However, you need the fish cans to upgrade that many rooms and hence in a way it's asking players to purchase fish cans. I really want to continue this game at that time and therefore I made the purchase. Takeaways: This special task came out when I'm just about to fall in love with this game and when I'm getting sticky to the game. Hence, I made the purchase. As a developer yourself who's reading this article, I would suggest the same method to you ---> make IAP purchase a hidden part of the 'daily targets' that needed to be completed by users. But, it shouldn't always come out. It should only come out once or twice maximum. Otherwise, players will quit the game.
Monopoly (大富翁) 4: I made a purchase for 'ALL new maps+new characters'. Reason: I like monopoly games and this one is a classic one. They only offer 5 maps for free to users. If I pay some dollars, I can unlock all the new maps and new characters. Hence, after 1 month, I decided to make a purchase. Takeaways: make 'unlock all the new maps/levels/characters/stories' an option in the game. BUT, you need to make sure the free levels/maps are attractive enough to make your players want to play more.
Some examples of ineffective IAP and my suggestions on improvement
a. Limited lives/energy to play game: I will NEVER purchase this kind of IAP.
Reason: it will be USED UP!!!!!!!! A lot of games give the option, e.g., 5 lives for $2. Assume play one game you need to spend one life. Then, in player's mind, it translates to ---> "I need to spend $2 for only 5 rounds of games. Well, I might just wait for lives to be refilled while I quit the game and do other things. " Results: player leave your game.
Better option: On weekends, $4.99 for unlimited lives for 24 hours. On weekdays, $0.99 for one night unlimited play. Isn't this much better? In players' mind, this translates to "hmm ok maybe today is Saturday...I'll most likely play for a long time, let me just spend $4.99 for one day fun of game!"
b. Remove ads: not as effective.
Reason: it could be an option. However, it's not efficient and it disrupt the game experience for those who are not willing to pay.
Better option: don't put interstitial ads that pop out from nowhere. Instead, use rewarded video ad and utilize it to promote your other IAP items. How to do it? Let me give you a quick example. Assume you have an IAP item --- a legendary gun, and it's sold at $3.99. However, you noticed that no one is buying it. Now, what you can do is to give an option saying 'watch a rewarded video ad to have a try of this gun for free for one day'. This sounds pretty good to players! Most likely they will choose to watch the ad. After one day, you take away the gun. At this moment of time, player already had a taste of the benefits of that legendary gun (higher accuracy, higher dps, etc). They are much more likely to make a purchase BECAUSE they already proved to themselves that this gun is worth of buying. Even if they are not buying, well, you already earned revenue when player chose to watch the ad, isn't it? ^^
Things you should do about IAP:
Make it a good game first
Learn toutilize rewarded video ads to promote your IAP items
Focus IAP on 'permanent items' instead of 'non-permanent' items. People like to purchase things that they feel like it's their own and won't go away. Good-to-sell/recommended items: skins, characters, maps, unlimited moves, weapons, clothes, decorations, unlimited lives for X hours, unlimited lives for weekends, etc. Hard-to-sell/not recommended items: limited lives, limited diamonds, limited energy, limited power-up items. I would recommend you to use rewarded video ads to reward players with 'limited items' rather than put it on IAP store. (earn the money from limited items through rewarded video ads rather than ask players to purchase)
If you want players to make continual purchases, then make the price as low as possible. For example, unlimited lives for one weekday night 6pm~12pm, I would suggest it to be not more than $2. The best would be $0.99. And next to this option, add a package that is 'unlimited lives for weekday nights at $4.99'. Hence, players are much more likely to purchase because it's just one dollar. It feels like nothing. Then, after players become sticky to your game, they will tend to make the $4.99 purchase. The second benefit for this item is that ---> they already purchased for the entire weekdays, of course they have to play EVERYDAY so to make the purchase worthwhile.
If the item is not meant for continual purchases, then make the price reasonable.
Create an opening IAP item. This is a very common concept, same as 'foot-in-the-door' sales strategy. How it works is that you offer a super cheap IAP item for players to make their very first purchase. It can be just $0.99 or $1. Make player purchase at least something first and then make them progress to purchase more. NOTE: still, don't sell a 'non-permanent' item as the beginning item.
Reward people for purchasing IAP items behavior. Give players something in extra or unexpected after they made the purchase. This generate positive feeling in players and they subconsciously remember this feeling --- "purchase IAP in your game = good shopping experience".
Monitor everything that is happening. Well, since I'm from Unity, I'll definitely suggest you to use Unity Analytics to track everything if your game is made with unity. If you find your user retention rate is good (it shows that at least you have a good game) but the IAP sales is bad, make changes and stop selling whatever that you are selling now. If you find your user retention rate is bad, please forget about IAP and focus on building a good game first. Your IAP sales is bad not because you have a bad IAP strategy, it's merely because you have a non-sticky game. Players aren't stupid, they only pay for those they feel worthy.
All in all, make people willing to purchase IAP item has simple logic.
From a player's perspective, people pay for a game that has the below factors:
Foundation: sticky game, reasonable price
Self-esteem factor: after I purchase, I'll be more superior than other players. i.e., skins
Self-identify factor: more applicable to multiplayer game. ---> after I purchase, this character represents myself, hence, I need to purchase something to make the character like me. i.e., clothes, decoration
Entertainment factor: after I purchase, I can play this game worry-free and undisruptive. i.e., unlimited moves/lives for X hours/days
Thirst for new things factor: after I purchase, I can experience new things. i.e., new maps
Thirst for winning factor: more applicable to MMORPGs. i.e., buy better weapon to beat other players in PvP
Appreciation factor: it's a good game, I'll purchase something in return. (hardly see though >.<)
Hope the above helps. :)
I'll write part 2 next time. Maybe it will be more about ads.