The Math of the App Business: App Monetization in One Simple Equation

Share this post:

It’s no secret that mobile apps are notoriously hard to monetize. With over 1.5 million apps in both the App Store and Google Play and market forces that have all but necessitated the move to a freemium model, app publishers everywhere have their work cut out for them.

Yet, we’ve seen time and time again that the curse of the app stores need not shake your spirits. In 2016, mobile apps are predicted to generate over $58 billion in revenue, and the popularity of mobile is only going to rise with an increasingly connected world. The question, then, is:

How can you stake your claim on a share of this massive opportunity?

The answer comes down to knowing your numbers.

Monetizing your mobile app requires understanding the math behind the app business. This understanding—of your metrics and revenue drivers—ultimately enables you to dissect your business model. It allows you to hone in on any bottlenecks that could be costing you business and identify any areas of improvement that can be optimized to better achieve your goals.

The math of the app business is neither scary nor intangible. The truth is, the entire app business can be summarized with one equation. Know this one equation, and you’ll be able to masterfully leverage and manipulate each of its integral variables to demonstrate a clear, quantifiable effect on your bottom line.

Ready to dive into the math of the app business and claim your share of this massive market? Download our newly refreshed eBook, The Math of the App Business, and move the needle on your mobile revenue today.

The free guide to the math of the app business

What You’ll Learn

Our newly refreshed guide is full of research on best practices in app monetization and tips and tricks we’ve discovered working with some of the world’s most profitable apps.

You’ll learn:

  • The one equation behind every app business
  • The seven metrics included in the equation, and tips to drive each
  • The data behind app discovery and conversion
  • Insights into the mobile customer journey and how you can positively affect customer decision points at each step
  • Strategies for customer retention and engagement
  • Tips on increasing your app’s value, in the eyes of your customers

The guide also comes with an appendix full of resources you won’t find anywhere else, including our original Mobile App KPI Calculator that makes app measurement and reporting a breeze.

The One Equation Every Publisher Needs to Know

We believe app monetization doesn’t need to be complicated. In fact, the entirety of the math of the app business can be summed up in a single equation:

The one equation behind the math of the app business

Here, monthly active users, average revenue per user, and total revenue are all straightforward, quantifiable variables that form a single, consistent equation. The other four variables are your levers. Tweaking any of them changes your total revenue, but the relationship is less predictable.

The beauty of this equation lies in its simplicity. When making decisions about the direction of your app, remembering this one equation allows you to quickly assess if you’re moving the needle on any of the components and, thus, improving your bottom line.

As we work with developers on how they can grow their business, we find ourselves returning to the equation on a regular basis in order to track progress. Importantly, successful developers are now routinely working against this equation when thinking about their product roadmap, features, and customer feedback. Categorizing your work in terms of the impact and results you anticipate driving provides a clear way to ensure that the tasks that are most important are getting done.

Our free guide breaks down this equation with actionable steps you can take to impact each of the four levers: installs, retention, customer research, and personalization. Tweaking any of these easily manipulable levers will directly alter your revenue stream—a metric that, by itself, may seem unshakable.

Start Moving the Needle Today

Grab your copy of The Math of the App Business guide to app monetization
Ready to take charge of your app’s revenue and monetization? Grab your free copy of The Math of the App Business today!

Is there other content you’d like to see? We’re all ears if you have suggestions for a future eBook or blog post. We brought back The Math of the App Business (first released in 2012) in response to popular demand, and we’d love to learn what you’d like to read next. If you have any thoughts or suggestions, please leave them in the comments below!

Get Your Free Demo Today
See How Easy Alchemer Is to Use
Start making smarter decisions
Related Posts
professional man viewing mobile device in the city