Money-making apps 'a reality' for SA developers

2014-01-28 13:42
Free apps are able to generate revenue via in-app purchases. (Duncan Alfreds, News24)

Free apps are able to generate revenue via in-app purchases. (Duncan Alfreds, News24) (Duncan Alfreds)

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Cape Town - The door is still open for South African developers to hit the proverbial lottery with an application that fills a particular need, industry insiders said.

App development can be a hit-and-miss affair with relatively few apps that resonate with people who are willing to pay for it.

One area where local developers can score is to use the glued eyeballs of a free application to generate cash via in-app purchasing.

While the temptation to produce paid apps may result in a windfall, the sheer competition in the number of apps available means that many consumers might simply avoid your app altogether.

The answer may lie in producing a free app, known as a freemium app, and charging for additional content.


"Looking at the statistics, the freemium model has more than proved itself to be successful with respect to games. According to a report in Mashable late last year, in seven of the Apple App Store's 10 largest categories, the majority of revenue came from in-app purchases found in free apps," Lynette Hundermark, Apps Business director at Prezence told News24.

Under this model, a game for example, is free to play, but users have to pay for additional help, often in the form of tokens that allows a player to progress faster.

Games like Minion Rush, Jetpack Joyride and Real Racing 3 all make use of the freemium strategy where players either have to collect coins, tokens or "cash" to buy cars, items or costumes that cost real money.

But the strategy can backfire, resulting litigation.

In the US, Apple has agreed to refund $32.5m to customers whose children had made online purchases from the company's App Store without parental consent 15 minutes after the password was entered.

According to a survey by B2B International and Kaspersky Lab, children using their parents' computers have lost money through unintended online purchases.

One insider warned that the freemium model would not generate the in-app sales desired if it was not widely adopted.


"The freemium model is great but only if you can achieve a critical mass of users and show strong value-add in the paid-for services," Lionel Moyal, Intervate managing director told News24.

Tease apps, where almost all the functionality is paid could cause consumer resentment if the app did not deliver on its promise.

"Consumers are able to get some much functionality for free from so many apps. Tease Apps will just be discarded if they cannot demonstrate that the paid-for functionality delivers value," Moyal said.

Hundermark said developers should strive for balance in delivering functionality in a free app that was intended to generate revenue.

"Veer too far into holding back the bells and whistles your app offers and a possible customer may not see the value in the paid version of your app. At the same time, offer too many of your bells and whistles, and a user may not see the necessity of upgrading to your paid version."

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