The industry of apps relies on user base to generate revenue. The biggest challenges are of maintaining and growing that user base, improving the functionality of the app and true engagement to avoid becoming outdated and irrelevant to the user. Like any business, it’s about constant innovation to stay ahead of the game. It’s also about understanding the true value of each user’s value. The more valuable the user is, the greater the need to keep them satisfied, keep them and grow revenue.
How much is each user worth?
For every download there’s a service cost that goes to the App store. Subtract that from the price of each app and a developer will have the true revenue value that each user brings to the developer on say a monthly basis and therefore their worth to the developer. Taking the average amount spent by active users per month, each user is worth $0.04. This isn’t a lot of money. For apps that are well known such as WhatsApp, MineCraft, Farmville and many others, $0.04 per month per user makes sense because of the high volumes of downloads per month. More than a million downloads per month would bring them close to $50 000 revenue per month before service fees.
Leveraging a user’s worth
Because it’s very clear that the amount brought in by an active user per month is very low, the onus is upon developers to aim for higher numbers of downloads per month for better value. Even though subscriptions sit on the top of revenue – making business model on the apps stores, they do so with a much smaller base. The faster way then to get both the user – base numbers and revenue is through offering free apps. Users are likely to take up free apps especially if the core functionality of the app is an element they don’t have to pay for. The developer can then hope to increase their revenue through say in –app purchases or advertising or other revenue models, other than upfront payments, leveraging on the high number of users the app has. The higher numbers will go a long way in counteracting the service cost per user, which are never meant to exceed the user’s worth at all times. Failure to manage that would mean losses with each download and could end up costing the developer so much.
Apps Stores and a user’s worth
The one differentiating factor on a user’s worth also depends heavily on the app store that they download the app from. It’s a given fact that users who download apps on iOS store are worth much more on a monthly basis compared to other stores. The iOS users tend to spend more and are not highly moved by the increase in prices of apps, as long as they aren’t drastic ones. The iOS apps are perceived to be of much higher quality even when can still find better apps on other stores. A developer could therefore perhaps increase the worth of their single user based app depending on where they sell it.