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For Nimblebit's Pocket Frogs specifically 49% of revenues come from the $29.99 In App Purchase options (Premium Potion Packt and Premium Stamp Pack).

You gotta give gamers the chance to give you some REAL money.

Flurry has just released some staggering statistics that confirm that this is true. In particular, they say that the average transaction value for an iOS or Android purchase is $14.

I’ll repeat that: average IAP spend on iOS and Android is $14.

That’s 14x the revenue that most developers get with a Lite + Premium strategy, and is based on an analysis of how 3.5 million consumers spend their money in games.

if you are still making games where the maximum revenue you can make from a single customer is $0.99 (or even $1.99), I’d stop right now. You are wasting your time and effort.

Let's work some maths here. Yesterday I posted that going free from 99c can increase downloads by about 35x.

If you have a 99c game, every download gets you 99c and no more. Say it gets 10,000 downloads. Let's round the gross revenue up to $10k.

Make it free and your downloads increase 35x. You can now expect 350,000 downloads. You only need about 3 cents revenue per download to make the same money.

Now we know the average purchase is $14. This means that if you get only one in app purchase for every 400 downloads you're better off if you were offering your game for 99 cents: you'll have 875 purchases totalling on average $14 each.

The key to this growth is the freemium business model. Flurry says "games drive 75% of revenue generated among the top 100 grossing iOS apps, of which 65% were generated from freemium games".

New business models are driving smartphones to $1 billion of revenue in the US alone. Although that is still a long way from the $10 billion of retail revenue from AAA games in the US, it’s a great performance.

I find the emergence of these new, successful business models tremendously exciting. I look forward to seeing what new changes are just around the corner.

This is the reality: freemium is the best path to revenue for game developers.

Anybody else surprised though that iOS & Android combined is still only 10% of AAA?

Consider other platforms: smartphones are not the be all and end all.