Global In-app purchases are projected to hit the $37 Billion mark by 2017. For many app developers, it’s been a bumpy ride. Most users aren’t willing to purchase apps; it’s been the Achilles heel of creating mobile apps. But the good news is that there is a small segment of your users who will use your app for extended periods of time and even make in-app purchases. Hence, frees app are still capable of generating revenue because of the items that can be bought within the apps. And this has become a lucrative industry as far as revenue is concerned.

Global In-app purchase revenues

Infographic source

So what is the landscape like for those who are interested in improving their in-app conversion rates? The numbers are encouraging. Although only a small minority of app users actually spend money on in-app purchases, the interesting bit is that the amount of money spent by these customers is almost 20 times more than what the companies earn from paid apps.

Having said that, freemium apps are growing faster than the premium apps in terms of in-app purchases. While paid downloads only grew 7% in 2010, free app downloads grew 34% in the same year. That is a strong indicator that companies can still greatly benefit from free downloads. So the saying “free downloads don’t earn you any money” is actually false to some extent. As a matter of fact, mobile app developers and companies can actually gain more by offering freemium apps and allow users to pay in order to access more features. It is possible we could actually see the day when there aren’t any paid apps in the top 100 revenue list. As of now, freemium apps with in-app purchases account for 48% of total App Store revenue.

In a big way, the future of app revenue looks bright as more and more users turn to mobile applications. As the Internet of Things technology evolves and its adoption rate improves, application industry will invariably continue to expand as well. This will ensure that the app consumer market is growing as well. Therefore, mobile app enterprise is going to experience even more growth than ever.