As I hinted at in my brief post yesterday, I haven't seen any actual data that would support the model being feasible outside of games in the App Store. I love seeing innovation like Paper but it's not clear to me if their business is about Paper or being a creative agency.

If you go look at the top grossing in categories such as Productivity, Finance, and Navigation...most of the highest grossing apps are paid. And those that are free, are produced by big brands or startups that have the ability to promote like crazy and upsell both in and outside of the App Store. The app is an extension of their brand or service...not the product itself.

I agree that paid apps are here to stay, especially with non-games. On the other hand, while Grades 2 failed monetarily, I have definitely seen some hard data to indicate certain kinds of freemium non-games can work really well. I think @alexandermarktl is going to write a post soon about his success with iTranslate subscriptions and I'm pretty sure I heard that Paper does great business too (among others).

Also, another potential added benefit for indie developers like us to build at least one mass-market, free app is that it can give you an amazing marketing tool with which you can get apps to the top 10 without the help of Apple or the press. The ability to push a message to hundreds of thousands or millions of users means a lot. Whether you do it through a little alert in your free app or by using your free app to build up a large mailing list (or both), I've seen this strategy work wonders.

That said, we are still primarily building paid apps but we are working on a free app that we hope will fuel our paid business.

Two things:

1) Paper definitely would fall into the startup category and has had a super amount of support from Apple. So, let's assume they are doing great...that doesn't matter because almost no developer is going to get that same TLC from Apple. My point was that Paper specifically doesn't have to do well because it might be a driver for their design business.

2) Generally, these are still the exception to the rule and that's really the key. Even if there are a handful of successes outside of games, most of them are edge cases or fall into the brand/startup categorization.

And by the way, we've tested the push alert strategy. We even did it with a single one-time alert and there was a massive outcry. So, we won't be doing that again!

1) Would love to get @julianwa's thoughts on this. Hope he'll chime in. I'm pretty sure they are pretty solidly in the product business.

2) I think paid is definitely the safer route (which may be why we see so few examples of successful freemium models). I would encourage indies to at least try building one freemium app since I've seen the kind of marketing power it can give to a business.

And to your point about push alerts, the devil is really in the details. I've seen it done very well without much pushback and resulting in a top ten app. Factors involve: is it a free app? Does it look like a big full screen ad or an unassuming alert? @alexmarktl might have thoughts on this.

The @Timer experiment is going quite well. As a relatively simple timer app, I didn't expect it to make millions or anything, but the data is fascinating. 56% of revenue is from the $10 Ultimate Bundle. I purposely made the Ultimate Bundle crazy expensive (for a timer app anyway) to get a feel for pricing elasticity. Will people really pay more when they can try before they buy? The answer seems to be a resounding yes. @Timer isn't making a ton of money, but it’s encouraging to see people willing to spend $10. Had I launched it as a $10 paid app, I would have made some good money as friends and family bought the app, but I bet sales would have gone to zero rather quickly. Maybe that should be my next experiment, a $10 timer app.

But to the bigger question here. I don’t think freemium will work for every non-game app, maybe not even most non-game apps. And I completely agree that paid apps aren’t going away anytime soon.

What does need to happen though is for developers to move beyond expecting one-time sales to cut it in the App Store. Just as Paper may be an anomaly in freemium, the long term sustainability of paid apps in the App Store is also an anomaly. Most apps get some buzz at launch, then drop off a cliff.

There are quite a few ways to move beyond the one-time sales model. Freemium/one-time-unlock (Paper), freemium/subscriptions (Simplenote), paid with IAP (Hipstamatic), updates as new apps (1Password 4), and all sorts of variations on the above models.

We definitely need to experiment...and in fact, that's really the only way to survive.

Right now, for the categories we're focused on, I'm focused on the 1Password, Twitteriffic, Instacast, etc. approach as the best way to deal with the one-time sales issue. There are problems with that itself (of course) but at least for the apps we put out, this seems to make the most sense with paid w/IAP being a close second.

If we were a funded startup or a mobile group in a big brand, I'd definitely advocate freemium. I just don't think that works for indie developers doing non-game apps. But I'd be very happy to see more and more Timer's showing otherwise.

A question: Major updates can take a long time to develop and require a decent income to make them worthwhile. Pay-once-for-major-updates works and is often well received, or at the very least, well understood.

If an app was free with IAP, and you released a major update, I think most users would assume the update would be free *and* they'd expect their IAP to remain unlocked? How would that work longterm?

So far we've avoided freemium because things can get pretty complex, pretty fast.

I recently released a "freemium" non-game iOS app (Deko), and it's been doing moderately well. There's a single IAP that unlocks exporting of high-resolution images. I'm still pretty amazed at how negative reviews can get though, feeling that since the app is a free download, all features should be free. Accusations of us ripping people off are fairly common. (all the while they could just take a screenshot of the app)

As for an actual sustainable business model with IAP, some apps have been using subscriptions, e.g. Simplenote. As a user, I think if a lot of apps did that, it'd probably get old pretty fast. Subscription fees really start adding up at some point.

Marc, I think you can mitigate some of those long term complications by just planning ahead. In my timer app, I purposely used the wording “All current and future X” because I decided to price the bundles high enough that it justified a one-time purchase.

Depending on the app, there are lot’s of potential strategies for selling new IAP and upgrades over time. Paper is a great example of this. In the most recent update they gave users the choice of sticking to the default color selector or paying to upgrade to the new color blending tool. I bet the Paper team have a very long list of potential IAP that they can add to the app over time.

I also think releasing a new version of a free app is fair game. Like Temple Run 2.

I think theres definitely mileage in the subscription model for non-game apps; we (developers) have barely scratched the surface. It would generate a sustainable income and fund future development of the app, as well as allowing consumers the chance to try-before-they-buy, especially if the app provides content.

We introduced a subscription model in iTranslate back in December and it is working really well. User reception was and is very good (our biggest initial concern).

I will write a blog post about our experiences with it, but first I need to finish launch preparations for a new App that's coming soon ;-)

I am more than happy to contribute.

Since we're into Productivity/ Business categories, Paid model seems to be working well. Have a look at our article readdle.com

However, we're trying new things, because one time purchase won't get you much over time, yet you still have to spend loads of money to issue updates.

Subscription model might be worthwhile trying. As for the free apps, it is completely different battleground. Our latest free app, Documents, went to the top charts and dropped off pretty fast, although it has 5 stars reviews (did 600,000 downloads during the first week).

I'll keep you posted on what works.

In our primary target market, which is education, freemium is heavily shunned by parents and institutions. Therefore paid (and possibly subscription) are really the only avenues you can tackle.

Many people in this thread may target institutions as a secondary target, but schools and colleges cannot deploy apps that contain in-app purchases across multiple devices. This means that if you in some way target this area, and many productivity apps do, that you must have a paid version alongside your freemium product.

With regards to parents shunning freemium, I think it goes without saying that having the ability to make a purchase in an app that children use is flirting with danger. There is currently a big movement against this.

@David Barnard Yeah. Definitely seems like you need to plan, and be all-in on the strategy. I don’t think there’s many mid points, in same way mixing ads and paid apps can get messy.

As a game developer, it bothers me that two different freemium approaches are lumped together under the same umbrella.

The approach that Paper and most freemium apps use, along with a few games such as Letterpress and Ghost Trick, seems more to me like a new take on shareware. The initial app is free, but supported by one time upgrades.

The second approach is virtual consumable goods. It is almost exclusive to games and has the potential for far greater profit. The majority of top grossing games utilize this model, which makes sense since there is no limit on how much a player can potentially spend.

Given their lack of limited resources and the inherent ethical issues, I have a hard time picturing how apps could use the latter model.