[crgt]

We worry about this as well, actually. In fact it's been interesting to get the comments pushing back on IAP, because our concern to date has been that we gave away too much content for free. What's interesting about that Flurry article I linked to is that it's a fraction of the market that's driving the majority of the IAP revenue...so even if most parents don't go for the in-app purchase option, the ones that do should (we hope!) help us keep our lights on.

[marakas]

Have you considered going straight for the paid option ( ie. no free content ) and seeing how much demand you have? I think the app looks a lot better than most of the stuff already out there, and the price point would reassure parents that they are getting a high-quality product for their kids.

[crgt]

We've tried a premium-only approach with previous apps and we've gotten feedback that our users like the option to try before they buy - which is what led us to IAP.

Also, when we've tried a premium-only approach our apps have been made available for jailbroken devices within a couple of weeks, with little chance to directly monetize these pirated free copies of our apps. See, for example: http://theikidsblog.com/blog/2010/11/30/arr-there-be-pirates...

This time around our approach was to build a premium product, price it accordingly and let people try it out via the free version. It's hard to know what the best way to handle it is - but that's definitely part of the fun of the wild west of mobile apps these days..and as I mentioned in an earlier comment, the freemium model seems to have a lot of traction..