In-App Purchase (IAP) is the umbrella term for any revenue collected from a user after they install your app. Apple and Google both mandate that IAP transactions flow through their native billing APIs (StoreKit on iOS, Google Play Billing on Android) — third-party payment processors are not allowed for digital goods sold inside the app.
There are four sub-types of IAP, and they have different revenue and tax implications: consumables (used once and gone — coins, hints, energy refills in games), non-consumables (bought once, owned forever — ad removal, premium themes, unlockable levels), auto-renewable subscriptions (recurring charges until cancelled — productivity, dating, fitness, news apps), and non-renewing subscriptions (bounded-duration access that ends at term — season passes, single-event tickets).
Across MWM's catalog, IAP dominates over paid pricing as the monetization model. Among monetizing apps with measurable downloads, 92% are free-with-IAP and only 8% use paid up-front pricing. The revenue gap is wider still: free-with-IAP captures 99.4% of total mobile app revenue, while paid-app revenue is a rounding error at 0.6% of the catalog total.
Commission rates: Apple and Google both charge 30% on the first year of any auto-renewable subscription. The rate drops to 15% after the user has been subscribed for one full year — Apple calls this the "loyalty discount" and Google's policy mirrors it. For consumables and non-consumables, the rate is 30% indefinitely. Apple's Small Business Program lowers the commission to a flat 15% for any developer earning under $1M / year in App Store revenue — Google has a similar tier.
Category-level IAP penetration is remarkably uniform. Social & Communication leads at 98.4% of monetizing apps using free-with-IAP. Games — despite their paid retro reputation — sit at 89.5%, the lowest only because premium paid games still cluster there. Across the board, paid pricing has become a niche choice reserved for productivity tools, premium emulators, and bespoke creative apps.
IAP dominance by category — share of monetizing apps that use free + IAP
| Category | Free + IAP share |
|---|---|
| Social & Communication | 98.4% |
| Lifestyle & Well-being | 96.4% |
| Media & Entertainment | 93.1% |
| Education & Knowledge | 92.8% |
| Productivity & Tools | 91.9% |
| Game | 89.5% |
Strategic takeaway: if you're starting a new mobile app in 2026, the default question is no longer "IAP or paid?" but "what kind of IAP?" Consumables work for games with replenishing engagement loops. Subscriptions work for ongoing value (content libraries, AI usage, productivity). Non-consumables work for self-contained features (ad removal, premium themes). Mixing types is fine — most successful apps run a portfolio.
Four IAP types compared — StoreKit / Google Play Billing
| Type | What it is | Example | Receipt validation |
|---|---|---|---|
| Consumable | Used once then gone — re-purchasable | Currency packs, energy refills, hint packs | Server-side on each purchase |
| Non-consumable | Bought once, permanent | Ad-removal, premium themes, full-game unlock | Verify ownership on launch / restore |
| Auto-renewable subscription | Recurring at fixed cadence until cancelled | Monthly / annual app subscription | Server-to-server webhooks + receipt |
| Non-renewing subscription | Fixed duration, expires (no auto-renew) | 1-year magazine pass, season pass | Server-side expiry tracking |
Most successful apps mix types — e.g., a free-to-play game with consumable currency + non-consumable ad-removal + auto-renewable battle pass. Choose by use-case fit, not by which is "best" — they answer different monetization questions.