As late as 2012, the app stores were still seeing a healthy mix of revenue coming from paid only apps. But in the least few years, we have seen a huge surge of revenue coming from in-app purchases. In China, over 94% of January 2014's app store revenues were from IAP, while only 4% came from paid apps (without any IAP).

In the United States during the same time period, over 79% of revenue in the app store came from IAP, while just 17% came from Paid Apps.

Therefore, due to the rising trends of IAP, we recommend generating revenue from freemium, subscription, and IAP models.

See the attached report byDistimofor a deeper look into the trends away from paid downloads.

Ultimately, free apps with in-app purchases are the most profitable with the largest revenue shares. While the average revenue per download is higher in the case of paid apps, the revenue shares within the app store are not nearly as impressive as free with IAP.

Resource

How the Most Successful Apps Monetize Globally

By Christel Schoger, Analyst at Distimo. Gives a great breakdown of the trends. Published in February 2014.