This week the Washington Post published an article that the FTC will review Apple iPhone in-app purchases. This is said to be necessary as many children may not understand the consequences of the purchases they make in games, leaving parents with high end of the month credit card bills. The FTC will according to their Chairman Jon Leibowitz  ”[..] look closely at the current industry practice with respect to the marketing and delivery of these types of applications.”. Here at Distimo we decided to have a quick look in the data about in-app purchases.

First, when we look to the United States 10 most grossing applications of January 2011 (Table 1) four applications do feature in-app purchases.  Of those four, three are free applications i.e., all revenue is generated by in-app purchases. For example number 2 on the list Tap Zoo is a free application ranked higher than Call of Duty: Zombies that is priced $4.99. Tap Zoo will have many more users and hence the average spending of each player will be lower. This is supported by the top in-app purchases in December:

Tap Zoo Vial of Stars ($0.99) Pouch of Stars ($1.99) Vial of Coins ($0.99) A Can of Stars ($4.99) Pouch of Coins ($1.99) A Bottle of Stars ($9.99) Can of Coins ($4.99) Jar of Stars ($19.99) Bottle of Coins ($9.99) Jar of Coins ($19.99)

Smurfs’ Village Bucket of Smurfberries ($4.99) Bushel of Smurfberries ($9.99) Bucket of Smurfberries ($4.99) Bushel of Smurfberries ($11.99) Barrel of Smurfberries ($24.99) Wagon  of Smurfberries ($99.99) Barrel of Smurfberries ($29.99) Wheelbarrow  of Smurfberries ($59.99) Wheelbarrow  of Smurfberries ($49.99)

When looking to the example highlighted in the Washington Post article, Smurfs’ Village, we notice an equal pattern of the cheap in-app purchases being more popular than the more expensive ones. However, the prices for Smurfberries are higher and hence the impact of a purchase is larger, especially with respect to the $99.99 Wagon of Smurfberries. The practice of offering a very expensive in-app purchase is used by many developers, but mainly in games. As we see in the data, the most expensive in-app purchase is often more popular than the cheaper purchases. So, marketing and delivery practices of developers could very well be focused on the expensive in-app purchases.