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March 25, 2024
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What is an IAP-based monetization model for mobile games?
8 popular types of in-app purchases for mobile games
Navigating the mobile gaming landscape is no easy feat. With mobile user acquisition (UA) already posing its own set of challenges, it’s crucial to strike the right balance between engagement and monetization in the post-install user experience. With the arrival of a new player into the funnel, mobile game publishers (specifically product, monetization, and lifecycle teams) find themselves facing unique hurdles beyond keeping players hooked with original gameplay loops: They must now seek out new opportunities to enhance the gaming experience through player purchases.
With a freemium game model based on in-app purchases (IAP), publisher teams are tasked with converting players into spenders to build revenue and increase the lifetime value (LTV) of users – without compromising the engagement and retention of the player.
Yet growing player spend is becoming more difficult, with data.ai’s State of Mobile 2024 finding that consumer spend in mobile games fell 2% overall in 2023, and economic headwinds continue to squeeze discretionary spending budgets. Figuring out where, how, and when to introduce IAP in your mobile game’s experience is an important thing to get right in 2024, and a vital practice to carry over into the years ahead.
In this article, we’ll cover the basics of the mobile game IAP model, popular types of in-game purchases to offer players, and key genre considerations for your game.
An IAP-based monetization model – a type of freemium game model – allows players to enjoy your mobile game for free while offering additional bonus content, upgrades, and more for purchase. So while players don’t pay for their initial download of the app, they can (and do) pay to unlock extra value and experiences within the game.
The IAP model is one of the most popular monetization types for mobile games, and while consumer spending in mobile games has cooled in recent years, the industry still brought in $107.3B USD in total revenue in 2023.
👀 Related reading: Clicks to coins: Your guide to in-app advertising for mobile game monetization
In-app purchases (IAP) or in-game purchases are monetary transactions within a player’s gaming experience. Whether they purchase a power-up for their character, buy a new weapon, or unlock a new level, in-app purchases give players the opportunity to unlock more from their gaming experience and further their progression and enjoyment in the game.
Most in-game purchases come in two forms, durable and consumable, referring to the length of time the IAP is accessible for the player to use.
While the specific IAP you offer in your game should vary based on the genre and target audience, you can explore some popular types of IAP below to further grow your revenue and LTV.
👀 Related reading: Mobile gaming trends of 2024: Top 7 developments set to define the year
Power-ups and boosters are a popular type of mobile game IAP that offer temporary enhancements to the player’s gameplay experience. Whether it gives a character extra power or speeds up their round of gameplay, power-ups are an enticing purchase option for many players.
One of the first examples of a power-up in gaming history goes back to Pac-Man in 1980, when the Power Pellet was offered to players to give Pac-Man the ability to attack the surrounding ghosts (instead of the other way around).
Putting power-ups behind paywalls is a popular form of IAP as it doesn’t stop the player from playing the game, but rather enhances their progression, which strikes a nice balance between engagement and monetization.
Type: Consumable
Example: Double Planes in Homescapes is a booster that doubles all the planes on the field, improving the players’ ability to clear the field.
In-game currency is the most popular IAP option for mobile players to buy as it gives them the flexibility to decide what they spend it on and when they want to spend it. In-game currency lets players interact with more ownership in the game’s economy and is also a great add-on to include with other purchases, like in bundles or loot boxes as additional value.
According to Mistplay's 2024 Mobile Gaming Spender Report, in-game currency is the most popular type of purchase that High-value spenders (those who spend $100+) make in 2024.
Type: Consumable
Example: Supercell’s Hay Day offers two types of in-game currency, diamonds and coins, which can both be purchased with real-life money from the player but vary in value. Having the higher-value currency of diamonds in Hay Day allows players the freedom to fully enjoy the scope of the game without any blockers, as the currency can be used to skip wait times, buy the in-game resources they need to progress, and more.
IAP bundles in mobile games are just what they sound like – a “bundle” of valuable items for players to purchase as a pack. Bundles offer flexibility for publishers to test different collections of in-game items, currency, skins, and more to see what works. Plus, bundles are a great way to target specific players with desirable IAP, at specific points in the game. Think of an affordable “Starter Pack,” priced low to introduce players to the value of IAP in expanding their gameplay experience.
Bundles also lend themselves to different types of campaigns, like a seasonal “Christmas Bundle” with Christmas-themed items, or a more personalized “Birthday Bundle” for the player to take advantage of.
PocketGamer’s article on best practices for implementing IAP starter packs in free-to-play games details that offering a Starter Pack bundle between three and seven days into gameplay could be a sweet spot to feel exclusive and introduce some urgency. However, it should be available long enough for players to think about making the actual purchase.
Type: Varies
Example: After a player makes their first purchase in Coin Master, they’re offered a limited-time Adventure Pack bundle that includes extra resources to encourage more investment from the player.
Exclusive characters and items are a type of in-game purchases that varies greatly across mobile games, such as RPGs, Shooters, and Strategy games with their own repertoire of playable characters, units, and equipment options. Google’s 2022 Mobile Gaming Insights Report found that unlocking special items/characters was the second-most popular IAP with 30% of players spending money on this type of purchase in the last six months.
Pairing a powerful or unique item with the exclusivity of it only being available through IAP makes it particularly enticing for players. These types of IAP also pair well with seasonal campaigns, in which case the offer to purchase the character or item is only available for a limited time, further increasing the appeal by adding a sense of urgency.
Exclusive characters and items being released in new content updates make for great LiveOps marketing material, as you can give sneak peeks of the exclusive items coming in the next update. This type of IAP not only improves retention but also acquisition.
Type: Durable
Example: Marvel Contest of Champions by Kabam Games Inc. is a fighting and action mobile title that paywalls popular Marvel characters (“Champions”) for players to unlock and use in battle. New Champions are released periodically as an effective way to keep people coming back to play (and fight) with their favorite heroes and villains.
Extra lives, energy, and hints fall under a common category of in-app purchase in mobile games as a paid option to further progress through challenging levels. This type of IAP is well-suited for Puzzle, Adventure, and Strategy games where players encounter obstacles they’ll need to overcome by either waiting for or purchasing extra energy.
With a sense of progression being the top reason players return to their favorite mobile games, extra energy as an in-app purchase is a great monetization option for many mobile games that have level-based progression systems. It ultimately brings value by allowing players to continue the game without any delay or interruption.
Type: Consumable
Example: Candy Crush Saga offers IAP for players to replenish their health and continue matching candies in their current board.
Purely cosmetic in-game items like skins and wearables are an in-app purchase option that allows players to customize their characters, vehicles, or other in-game equipment. This type of IAP is particularly suited for Simulation, RPG, Shooters, and other multiplayer mobile games, where personalization and aesthetic enhancements are a fun and important part of the gameplay experience to showcase your status and differentiate yourself from other players.
Cosmetic items are a unique type of IAP as they don’t offer any real gameplay value and are purely for aesthetics. However, they are a particularly lucrative piece of many mobile game developers’ IAP monetization strategy. In fact, a Newzoo study reports that 43% of US-based gamers use skins in the games they play.
Type: Durable
Example: Among Us offers a variety of cosmetic options for purchase to customize player characters – players can purchase hats, skins, and even pets to sit on their crewmate’s head. The game also offers cosmetic items for purchase in bundles, which cost around $2–$3 USD.
Loot boxes are virtual crates that contain random in-game items or rewards. They’re a popular in-app purchase mechanism across various game genres, with 58% of the top-grossing Android mobile games featuring loot boxes as a type of IAP in 2020. Loot boxes give players a chance to acquire a range of items, from common to rare, and are prevalent in RPGs, Shooters, and Sports games where chance-based rewards add an element of surprise and can give players an edge against other players or in-game combat experiences.
“Gachas” are essentially another form of loot box IAP, though they’ve traditionally been more popular in Asian markets before growing in popularity recently in Western gaming. Gachas are often featured in mobile RPGs, anime-themed games, and collectible card games, where players can “gacha” to enhance their gameplay experience through diverse acquisitions.
While loot boxes typically offer a broader range of possible rewards, gachas narrow down the pool of potential items to specific characters, equipment, or units, often with varying rarity levels.
Note: In some countries, new legislation is being introduced to put stricter guidelines around loot boxes as they can be constituted as a form of gambling.
Type: Varies
Example: Star Wars: Galaxy of Heroes, a popular mobile RPG by EA Games, offers Reward Crates that players can unlock with keycards (a form of the in-game currency).
An ad-free or VIP experience is a one-time purchase that allows you to play without encountering ads. This coveted option offers an uninterrupted and immersive gameplay environment across just about any mobile game genre or free-to-play game that features in-app ads (IAA).
This is usually a popular choice for mobile gamers due to a few driving factors such as:
In our 2024 Mobile Gaming Spender Report, one anonymous Mid-value spender said “Paying for an ad-free experience was my most worthwhile purchase. It was worth not having to watch ads to progress. The more ads a game has, the more likely I am to quit playing before making a purchase.”
Type: Durable
Example: Monument Valley 2 offers a “plus” version without any IAA, as well as an IAP that players can purchase for a more premium, uninterrupted experience.
👀 Related reading: Understanding churn in mobile games: How to calculate it and why users leave
Pricing in-app purchases in your mobile game can be a tricky thing to navigate – too low, and you may not generate the revenue you need to grow, but too high, and you run the risk of feeling too “pay to win” for players; which is the leading cause for a player to churn, according to our 2023 Mobile Gaming Loyalty Report.
A good way to start your pricing strategy is to look at the data. This often boils down to: What are mobile apps charging, and what are players willing to pay? According to SensorTower’s research, the median price of IAP in 2020 was $5.99 USD (up from $3.99 USD in 2017). Similarly, Unity’s Mobile Growth and Monetization 2023 report finds that $1.01–$5 USD is the sweet spot for IAP pricing to convert a player into a spender.
However, your pricing strategy shouldn’t be pricepoint first. Instead, you should consider the type of in-game purchase you’re offering and price according to the perceived value of that purchase for the players.
Here are some tips to help guide your IAP pricing strategy:
Keep in mind that the price you determine at the launch of your game doesn’t have to stay the same forever. In fact, it shouldn’t. A/B testing and collecting user feedback on your game (inclusive of the IAP options within it) will only further your success as a mobile game publisher.
👀 Related reading: How much does mobile user acquisition cost in 2024?
While crafting an IAP monetization strategy tailored to your game genre and audience is crucial, the journey toward long-term success lies in cultivating player loyalty to your game. By partnering with a loyalty-first UA and engagement platform like Mistplay, you can reward players for playing (and spending) in your titles to increase your LTV.
Read up on how publishers like VividJoan Games achieved 10% higher ROI with Mistplay and contact us today to unlock the power of your player loyalty.
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