An in-app purchase (also known as an IAP) is a purchase made within an app to unlock extra content or features. They are most common in mobile apps for iOS and Android, although developers of programs in the Windows and macOS app stores use them as well. IAPs may be a one-time transaction or a recurring subscription.
Many developers use in-app purchases as a variation of the shareware model, often called "Free+". By releasing their app into app stores for free, they can encourage you to try it without committing to a purchase. The two most common methods involve presenting a limited set of features for as long as you want or offering a time-limited free trial. If you like the app, you can unlock the full version with an IAP. Some app developers use IAP subscriptions to help them fund continuing updates to an app, similar to periodically releasing a new version at a special upgrade price.
Free mobile games are the most significant users of in-app purchases. They frequently use IAPs to remove time limits on gameplay, add new levels, or provide more cosmetic options for a player's avatar. So-called "pay-to-win" games can be played for free but are easier or more rewarding if you buy unlockable items. Be mindful of these games since in-game purchases often add up faster than you realize.