Beware of Children’s Games with In-App Purchases

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Remember back in the days when a cell phone was an emergency and/or luxury item only to be used to make calls? Or when video games came with everything you needed already preinstalled without having to purchase additional upgrades? Yeah, times have surely changed…

Although the big three consoles (Nintendo, Playstation, and Xbox) are still very much relevant today, video games have continually exploded in popularity since becoming available for download as application software (apps) on smartphones, tablets-even watches.

With that being said we must warn you to be careful of games with in-app purchases.

What are In-app Purchases?

As the name implies in-app purchases are purchases that you can make directly from within the video game application. Although every game is different, in-app purchases generally include items such as increased game currency, access to outfits or skins, special characters, etc.

Why are they Used?

To understand why in-app purchases are so prevalent we must first understand the business of apps. Have you ever walked around a store and stopped in front of someone offering you a free sample? Well, companies offer that sample in hopes that you will like the product enough to actually purchase it. It’s a “try-before-you-buy” concept.

Most apps operate in a similar manner. Instead of paying for an app prior to download, you get to download the app for free and pay for upgrades later as needed.

Let’s contrast how video games worked previously versus today. If you were to purchase a brand new video game for a console you’re looking at spending around $40-70. Seems pretty pricey right? Compare that to downloading a video game for free and you can clearly see why apps have grown in popularity. But there lies the problem. That $40-70 usually includes everything you need to play the game (usually because nowadays consoles have gotten hip to the app game and now offer exclusive auxiliary character skins and features) whereas the try-before-you-buy plan can lead to more costly spending.

How can In-App Purchases be Costly?

Imagine you’re playing a game that you recently downloaded. As expected it starts off pretty simple but then those levels gradually get harder….and harder…and harder. As you begin to struggle completing each level it finally happens…you lose! Ugh, the worst phrase a gamer could ever see/hear. As you take a quick break to compose yourself you notice somewhere in the app you can buy addition tokens, hints, etc. which you could really use right now. And that’s how these purchases can become a problem.

The illustration above shows the biggest problems with in-app purchases-they’re tied to our emotions which creates a domino effect of financial miscues. It’s too easy to get so focused on the objective of the game that you’re more inclined to purchase goods impulsively-forgetting that you are spending real money.

How well does this strategy work? Well, let’s just say this marketing technique has lead to billions of dollars in revenue for the app development industry. Luckily, there are three simple ways you can prevent overspending on those in-app purchases.

Prevent Unwanted Purchases

As mentioned there is nothing inherently wrong, misleading, or dubious about in-app purchases. However, if you would like to prevent unwanted or overindulged purchases here are three options we suggest:

  1. Search (and support) developers that create ad-free games.
    • Although rare there are developers that create complete ad-free games generally for younger children. Here are a few of our favorite apps: 123 Numbers, ABC Kids, ABC Spelling, Colors and Shapes, Khan Kids
  2. Monitor your child’s game play
    • We hear constant complaints from parents that didn’t know their child was making all of these purchases. By watching your child play their games you not only understand how often the app promotes advertising to your child but you can.
  3. Purchase a gift card exclusively for gaming
    • You should never use your personal bank/credit card for gaming purposes. Instead just purchase a gift card with an allocated amount on it and use that for making purchases. Not only will you have a created a dedicated budget but you will also protect your important accounts from potential overdraws and/or identity theft.

As we continue to head towards a more digital world, we need to be aware of the impact technology will have on our children’s finances. By understanding the allure of in-app purchases you can curb emotionally uncontrolled spending. 

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