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I want to implement an IAP system as well as a fully paid one in my game.

There are about 8 levels in my game. I want the paid version to cost around $4 and in case of IAP, each level can be unlocked for 0.99 cents.

Do I have to create two separate apps (one for paid and one for IAP) or can I have both of these in a single app? The user can then decide if they want to buy the entire game or unlock a few levels using the IAP feature.

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    \$\begingroup\$ Won't this be typically done by offering two IAP packages options, one by unlocking everything for $4 and one for buying single levels for 99¢? \$\endgroup\$
    – Vaillancourt
    Commented May 12, 2021 at 14:02

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I find this model odd... I'm a new user, and I have to decide early on if I want to buy one level or 8. If I buy one, that money is wasted if I determine later I want all of them.

I recommend having the game be free with (for example) 2 levels, but IAP to unlock the other 6. So I can try it, and buy more if I want. Choose between one IAP for all 6, or 6 IAPs, each for one level. Because you can't do dynamic pricing if they've already bought levels, this is a better route.

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