Monetization

Users decide to pay money for the purchase of the content within the application. The number of the unique users who pay per day (or per longer period) is shown in the Paying Users metrics.

The Paying Share metric shows the percentage of users from all unique users active over the period, who made the payments. Ideally, each user - paying and the Paying Share equals to 100%. In fact, this indicator is much less, and its growth by at least 1%  is a great achievement for the project. According to Newzoo, in 2014 32% of all mobile game users made payments. And this figure can be considered too high, as we are talking about the percentage of people who made at least one payment at least in one game within the year.

The increase of the share of paying players may be extended by adding new content for buying, by changes in prices, by advertising campaigns with sales.

The Paying Conversion metric, in turn, shows for each day (or a longer period), what percentage of paying users is among all those who have logged that day (period). As is the case with the Rolling Retention, try to find the leaps in the behavior of this indicator. Quite possibly, it will point out for you some of the conditions in which the percentage of paying users from the number of logged users is maximal (advertising campaigns, banner ads, etc.).

Each payment by the user is a separate transaction in the database, while one user may make a number of transactions within a period (you most likely would be happy for that).

The total number of transactions for the period is shown in the Transactions metric. And the Transactions by User metric shows the average number of transactions made by one paying user for a selected period. If no user made repeated payments, then the Transactions by User equals to one.

The total amount of all payments of the users for the period is shown in the Gross metric. However, the developer would not get that money in full: app store takes its commission. As a rule, the commission is 30%, so 70% of the Gross comes to the developer and is shown in the Revenue metric. If the commission is not equal to 30%, it can be easily changed in the settings of devtodev account.

In fact, it is for the Revenue indicator you started the development of your application.

One more important indicator is the measure of monetization, ARPU (Average Revenue Per User). It is calculated as the sum of payments for the period (Gross) divided by the number of unique players within the period (DAU, MAU, WAU). ARPU shows how much money in the average is gained by one player, while both are taken into account: paying and non-paying users. ARPU is perfect for measuring business performance and comparison of several projects.

ARPU is useful to be considered as a whole (at least to compare the efficacy of several projects), and separately for each user segment. In particular, it is possible to calculate ARPU for new users and ARPU for the "core". ARPU for new users will be significantly lower, but its comparison with the "core" ARPU will show you how important it is, that new users become the "core".

Compare ARPU for different user levels, for different periods since the first launch. Generally, the longer a user in the project and the higher his level is, the higher is ARPU.

The ARPPU (Average Revenue Per Paying User) metric is calculated as the sum of payments for the period (Gross) divided by the number of unique paying players (Paying Users). ARPPU shows the level of prices in the application and how these prices influence the paying users, how much money they are willing to spend for the period.

If each player is paying, then the ARPU equals to ARPPU by the definition.

To increase ARPPU, simply raise prices in the project. The most paying users will continue to pay, but the ARPU (which is more important to measure the effectiveness of business) risks falling.

So all the steps to change the monetization of the project should be taken in the way  to increase both ARPU and ARPPU. In online games for these purposes the introduction of the new attractive content gets the most: more players begin to pay, and those who paid before start paying more to buy more attractive weapons. As a result, both the percentage of paying users and the average amount of payments increases for the period. In other words, Paying Share, ARPU, ARPPU grows.

Also we should mention the Average Check metric, which is calculated as Gross divided by the number of payments Transactions. It is very similar to the ARPPU metric, however ARPPU, unlike Average Check, ignores the repeated payments from the same paying user. If we assume that each paying user paid only once for the period, Average Check will be equal to ARPPU.

Finally, the last (but not the least) is the Lifetime Value (LTV) indicator. It shows how much money is spend by the average user at all time of the application usage. There are lots of articles written about LTV, it is truly one of the most important indicators of the effectiveness of the application, it combines both the duration of user activity and his payments.

Lifetime Value is useful to determine the price of user acquisition. The rule is simple: Lifetime Value must be greater than the price of user acquisition, otherwise the business is not effective.

To maximize the LTV, understand that Lifetime Value is both Lifetime and Value (in this case, ARPU). In other words, the longer the user is with you and the higher the average income from him is, the higher the LTV. The project must be liked by the user, then the lifetime, ARPU and after them LTV increases.

Monitor the changes of this indicator to understand the reasons, identify the factors that maximize LTV, and plan all the changes to your project based on this.

It is also useful to consider LTV in the context of different custom segments: by the country or language, by the registration date.

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