Mobile App Development ROI – How Much Money Can an App Make You?
You may be interested in hiring a mobile app development company to bring your million-dollar idea in app form.
That’s definitely a great idea considering the total revenue in the app market may hit $437.8 billion in 2022. A number that will reach $565 billion by 2026.
Yet like any entrepreneur, you may be curious about the return on investment you can get from your app. After all, you don’t want to spend time and money only to end up with a dud.
How Much Money Can You Make with an App?
The short answer is – depends.
Currently, the top 200 apps in the app store earn approximately $82,500 daily. Meanwhile, the top 800 apps excluding these 200 generate $3.500 in daily revenue.
The category of your app will also determine how much it makes. Game apps generate around $22,000 per day.
That said, there are several things you can do to maximize your app’s ROI. Here are some ideas to discuss with your mobile app development provider.
- Expand Beyond Smartphones – Mobile applications aren’t limited to smartphones only, and neither should you. Apps can be used on Smart TVs, with Smart speakers like Alexa, and even Wearables. So, take into consideration these devices if your app idea can be used for them.
- Consider the Subscription Apps Model – Subscription apps can help you generate more revenue via in-app purchases. While the general app may be free, you can provide valuable features for a price. Just make sure to price your packages properly to attract your audience.
- Create Funnels that Lead towards Monetization – Based on the purpose of your app, find funnels to generate revenue from users. For instance, a language learning app with gamification can include additional resources to help users complete complex challenges.
How to Estimate Your App’s Value After Rollout
Finally, your mobile app is in app stores and being downloaded by different users. Now, the question you probably have on mind is how much it’s worth.
There are several methods for evaluating an app. The most commonly used method entails multiplying the app’s average monthly revenue by a number of months. For instance, if your app generates $500 per month, you can expect it to make $3,000 in six months.
However, this formula may not be suitable for apps still at their initial stage. For newly published apps, value is based on the worth of an individual user, or Average Revenue Per User. For that, you need to divide total users or downloads by total revenue.
In addition to the above, the following factors will help you effectively assess the value of your app.
You need to measure your app’s performance regularly to ensure ROI on your mobile app development.
With the help of tools such as Google Analytics for Mobile Apps, you can determine your app’s growth. This is especially important if you plan on selling your app business later on.
Number of Downloads
One of the primary metrics to watch is the number of downloads your app receives. If the number is less, the app isn’t receiving the traction it needs to succeed.
You’ll need to be proactive to ensure the ROI on your app. You can start by examining the traffic to your app on different stores. If traffic isn’t an issue, your app may not be converting because –
- It doesn’t solve users’ problem effectively.
- The marketing texts didn’t compel potential downloaders.
- Other users provided negative reviews and low ratings.
You should be able to measure users’ levels of activity and engagement, preferably on a granular level.
In some cases, this metric is more important than the number of downloads. That’s because it can reveal how your target audience is using the app.
The number of active users can also lead to an accurate valuation. Further, it can inspire future updates that positively impact the app’s design and performance.
The abandonment rate indicates the percentage of customers who fail to use the app after downloading it.
This is an important metric considering 25% mobile app users abandon apps after using them once. Moreover, 77% of daily active users abandon apps after three days.
A high abandonment rate will impact your app’s value. Therefore, you need to fix this by assessing your onboarding process. With your findings, you can optimize this process to ensure downloaders continue using your app.
The age of your app can determine its value. This factor indicates the app’s stability and sustainability if accompanied by numbers proving its profitability over time.
Ideally, you should assess the app once it hits the one-year mark. And if you intend to sell your app in the future, wait until it turns three years old. Buyers will then consider it an asset and pay you accordingly.
Customer Acquisition Cost and Customer Lifetime Value
Customer acquisition cost (CAC) and customer lifetime value (CLTV) are important elements for assessing the value of your app.
CAC indicates the amount you spend to acquire a new customer. Meanwhile, CLTV refers to the revenue a customer provides while using the app.
Ideally, the ratio of CLTV to CAC should be 3:1. If CAC is higher than CLTV, the value of your app won’t last in the long-term.
Positive ratings and reviews are a great way to determine the success of your mobile app. They also impact your conversion rate.
The search engine algorithm of Apple App Store factors in user reviews while displaying search results. Similarly, Google Play uses reviews to determine app quality.
Ready to Start Your Mobile App Development Journey?
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