Forecasting revenue

Solar2D General Questions/Discussion
#1

Hello

I am about to finish making an app that has a few potentially high floating back end costs (2x API’s and a scalable DBaaS). 

I am now looking to plug a few revenue based questions I have. I have predicted how much 3,000 heavy users would cost me in back end services). I feel I need each user to being in 25c per month in revenue to pay for the costs of 3,000 users using 100 events per day ever day (9 million events a month). I have predicted a heavy user would trigger 3100 api/DBaaS events a month.

Q1) What are the rough number for ads delivered to apps/games (e.g 0.1c per banner ad or say $0.5c per full screen ad)?

Q2) What are the payment terms for revenue gained (monthly, quarterly) etc?

I am hoping the Corona/Fusion Powered API is launching soon and answers my questions.

I can either launch the app for free and force ads or add in app purchase to remove ads or alternatively charge the user for light, medium or heavy usage in the app (counting hits and have a running tally).

If I get $50c per user per month I would be making money (for future revenue gaining campaigns).

I will launch my app in one country first to limit the potential loss until I know the balance is right. Worst case I launch world wide and it is popular and I get $2,000 bills per month and not get revenue to cover the costs.

Any advice appreciated.

Simon

#2

Just curious, how would you plan on enforcing making users pay based on their usage? And which marketplace are you using that would allow that method of pricing?

#3

Q1) Generally, I would say that ad income is very, very, very low, and only amounts up to an interesting number if you have over 200 downloads per day. I had about 25 downloads per day for a year, and raked up a whopping 30 dollar in that year, more or less. 50 cent per user per month seems astronomically high as incoming from showing ads. How often do you yourself click on mobile ads? Me personally: not even once in my life.

Revenue is, in practice, based on clicks, not ads shown, by the way.

Q2) Payment terms are usually that pay-out is done once a total amount is reached. For example: 200 dollars.

All this varies depending on the ad provider you use, but I’ve tried a few, and in the end it all boils down to the same.

My opinion:

  1. Your ad-based business model won’t work. IAP conversion percentage is typically also very low.

  2. Regarding your worst case scenario: if your app is popular enough to rake up database costs, you’ll probably be able to just change it to a paid app and still sell.

Cheers,

Thomas

#4

Thanks, given ads revenue is very low I will go for 100% in app purchases for advances costly features until the app floats.  I certainly down want the app to dive into negative revenue at the start (family first).

#5

Vince, possibly give users xx,xxx usage credits a month free then have in app purchases to top up credit and or pay to expose the best features.

iOS first then Android but using hybrid cloud encrypted db writes to limit piracy/hackers (as much as possible).

#6

@Feartec

That seems like a clever solution. Are you creating a game or some sort of utility app?

#7

Just to clarify a few things.  Yes, you make money by people clicking on ads (and in some cases installing the advertised app).  However the ad industry use a measure called eCPM (effective Cost Per Mill).  In the early days, show an add counted and you might get $3-5 bucks per 1000 ads you show.  Today people don’t care about how many times you show the ad the care about user engagement.  Once people realized that CPM wasn’t doing anything (and those $3-5 numbers dropped below $1 (and it’s way low).  They started doing CPC measurements (Cost Per Click) but then people would click and really not do anything, so people went to the CPI (Cost Per Install) model.  Because CPM, CPC and CPI are drastically different in how they are added up, the industry just does eCPM which scales the other models into the CPM model giving you the “effective” CPM.

Some services tout $10 eCPM, but $4-5 is more like it if you’re app is popular enough and generating enough impressions to get your click thru rate high enough to get the higher earning ads. 

Now for the other question: payouts.  Many add services run on what’s known as Net 60.  That means they have to wait to get paid by the advertisers and then they sit on your money until 60 days is up (assuming you’re reached the minimum payout rate).  After that you should get paid monthly (for two months ago).

Rob

#8

Just curious, how would you plan on enforcing making users pay based on their usage? And which marketplace are you using that would allow that method of pricing?

#9

Q1) Generally, I would say that ad income is very, very, very low, and only amounts up to an interesting number if you have over 200 downloads per day. I had about 25 downloads per day for a year, and raked up a whopping 30 dollar in that year, more or less. 50 cent per user per month seems astronomically high as incoming from showing ads. How often do you yourself click on mobile ads? Me personally: not even once in my life.

Revenue is, in practice, based on clicks, not ads shown, by the way.

Q2) Payment terms are usually that pay-out is done once a total amount is reached. For example: 200 dollars.

All this varies depending on the ad provider you use, but I’ve tried a few, and in the end it all boils down to the same.

My opinion:

  1. Your ad-based business model won’t work. IAP conversion percentage is typically also very low.

  2. Regarding your worst case scenario: if your app is popular enough to rake up database costs, you’ll probably be able to just change it to a paid app and still sell.

Cheers,

Thomas

#10

Thanks, given ads revenue is very low I will go for 100% in app purchases for advances costly features until the app floats.  I certainly down want the app to dive into negative revenue at the start (family first).

#11

Vince, possibly give users xx,xxx usage credits a month free then have in app purchases to top up credit and or pay to expose the best features.

iOS first then Android but using hybrid cloud encrypted db writes to limit piracy/hackers (as much as possible).

#12

@Feartec

That seems like a clever solution. Are you creating a game or some sort of utility app?

#13

Just to clarify a few things.  Yes, you make money by people clicking on ads (and in some cases installing the advertised app).  However the ad industry use a measure called eCPM (effective Cost Per Mill).  In the early days, show an add counted and you might get $3-5 bucks per 1000 ads you show.  Today people don’t care about how many times you show the ad the care about user engagement.  Once people realized that CPM wasn’t doing anything (and those $3-5 numbers dropped below $1 (and it’s way low).  They started doing CPC measurements (Cost Per Click) but then people would click and really not do anything, so people went to the CPI (Cost Per Install) model.  Because CPM, CPC and CPI are drastically different in how they are added up, the industry just does eCPM which scales the other models into the CPM model giving you the “effective” CPM.

Some services tout $10 eCPM, but $4-5 is more like it if you’re app is popular enough and generating enough impressions to get your click thru rate high enough to get the higher earning ads. 

Now for the other question: payouts.  Many add services run on what’s known as Net 60.  That means they have to wait to get paid by the advertisers and then they sit on your money until 60 days is up (assuming you’re reached the minimum payout rate).  After that you should get paid monthly (for two months ago).

Rob