Apple Allows In-app Purchasing for Free App Store Apps

According to multiple sites, Apple has changed the rules regarding in-app purchases for App Store developers. Previously, in-app purchases were restricted to paid apps. If the reports are correct, developers of free applications can now also take advantage of in-app purchases. This is a welcome change, not just for developers, but for consumers as well.

Why is it so welcome? Because it should mark the end of having two versions of many App Store programs, which makes things easier for both developers and consumers. Presently, many developers create a free "lite" version of their program--typically this is done with games, but I've seen it done in other categories as well--to get people interested in the full version of their program. If you use the free version and like it, though, the upgrade process hasn't been as simple as it should be--due to the restriction on in-app purchases within free apps.

As a result of the restriction, to upgrade you must buy the full app in the App Store, and remove the lite version from your device. Add in a bit of time to rearrange the program icons to your liking, and upgrading is way too much work. Additionally, any work you'd done in the trial version would be lost (at least without the developer jumping through all sorts of hoops to use their own servers to sync the data).

With Apple's change in policies, though, there's no longer a need for the "lite" version of a program. Instead, developers can build a free application that demonstrates some degree of their program's full strengths, and put the rest of the features behind an in-app purchase option. If you create a game, you can give away the first three levels, and lock up the remaining 97 until the user has paid. If you write a to do list application, you could restrict the user to managing only a handful of to do items, and then unlock the full capabilities after an in-app purchase.

Another potential winner with this change are developers who want to develop a subscription-based apps. Today, these programs must be sold for at least a token amount, so that the developers can offer the subscription feature using the in-app purchasing. Even that token amount, though, may dissuade consumers from trying the program. Now, they can distribute the app for free, and still be able to use the in-app purchasing to sell the subscription content.

As a user, besides the ease of working with only one application, it should eventually become easier to search the App Store. Search today, and you'll find multiple instances of "Some App" and "Some App Lite;" "Some Other App" and "Some Other App Lite," etc. With the announced change in the rules, these types of duplicates should vanish, as developers will simply distribute "Some App" for free, and unlock additional features, levels, etc. via the in-app purchase feature.

Developers should welcome this change, as managing a single application is much preferred to managing two distinct but nearly identical applications--bug fixes and new features will only have to be added to one code base, only one app will have to be uploaded to the App Store, and Apple will only have to approve one version of the program.

It will be interesting to see if this change helps drive prices down even further in the App Store. The question is whether a developer can drive more demand (and eventually, revenue) from a "free" version of their app with some locked-off functionality, or from two separate applications, one fully-featured with a price tag, and the other a permanently feature-limited free version. If developers think "free + in-app purchasing" will drive more revenue, then we will eventually see even more "free" apps appearing on the App Store. As a consumer, I know I prefer the easier app management that comes from the one-app solution, but it will be the developers who determine which types of applications we'll see going forward.

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