One benefit of living in the Philippines that we've finally been able to take advantage of is its proximity to Hong Kong. Earlier this month we hopped on some $30 flights and paid a visit.
We treated ourselves (it was my girl's birthday, after all) and stayed in a tall and narrow modern boutique hotel in Sheung Wan. Just three rooms to a floor, and quite spacious by Hong Kong standards. It had everything you'd expect from a nice hotel: big comfortable bed, fluffy robes, flatscreen TV, and a sparkling-clean bathroom (with hot water, a big deal for us!).
But what made this hotel particularly special were not the things that were present, but the things it gave away. The fridge was restocked every day with free beer, water and juice. Local phone calls were free. The internet was both free and fast. There was even a menu of DVDs that you could have delivered to the room.
The place felt like a home, because at home no one charges you to use stuff.
The Greedy Hotel Line
Another place that feels like home is the iPad, a computer at its most personal. Also like hotels, it is filled with opportunities for spending your money. Of these, the in-app purchase is one that runs the most risk of feeling like one of those already-expensive hotels that choose to nickel and dime you on every extra service while in their clutches (Sorry, I mean their hospitality). $10 to wash a pair of socks? No thanks.
If $10 to for cleaning socks feels ridiculous, how does it feel to pay $10 to flip a few bits in an app you already have installed? Perhaps not that bad, because I just did it without hesitation to try all the brushes in Fiftythree's new Paper drawing app for iPad. But I'm no ordinary iPad user, and I actually don't think Paper's that far from crossing this line.
The Risks of In-App Purchase
They're twofold. Firstly, you risk people missing out on the features that you put behind the purchase wall. Marco Arment explains this well in Episode 70 of his Build and Analyze podcast. He was asked whether he'd considered using in-app purchases to enable special fonts in Instapaper. His feeling was that most people wouldn't buy the fonts, leaving them with an inferior experience. They'd miss out on something special. In his words:
People love these new fonts! … The idea of restricting [them] to a very small subset of people who are willing to pay for [them]… would be worse for my sales long term, because people wouldn't think of it as the app with the great fonts.
Secondly, you risk people perceiving you as the greedy hotel. If your users don't place the same value on your in-app purchasable items, then it can feel like a money grab, and you lose their favour. This is why so many people reacted badly to Hipstamatic Disposable charging for what felt like single imaginary rolls of film. It's why I bet hardly anyone's bought those silly extra photo filters in Path, and why Instagram hasn't dared put a price on any of theirs.
What Can You Do About It?
Of course, one major benefit of the in-app purchase is that it lowers the barrier to entry; a free download will result in many more people trying your app. From that point, you want to keep them there and make some money, but still have everyone feel good about it.
This might mean a single, slightly larger purchase instead of many micro-purchases, exposing all the extra features in one hit. Paper does this, but due to the iTunes price tiers in Australia, it was actually cheaper for me to press "buy" on each brush individually. Or it might mean building some things into an up-front cost (I certainly knew this was the case with my hotel stay). Will an app with a non-zero price tag but fewer in-app purchases actually result in a more revenue and a better userbase?
There's no single answer here, so I think it's important just to think hard and tread carefully. I would love to hear your thoughts on this. Get in touch over here.