Due to the significant amount of data that is consumed by smartphones and other mobile devices, mobile application development in Dubai industry is highly important in the internet space. While building an app, focusing on the app development process and upholding a tidy UI/UX is vital. The most return on investment (ROI) is the second most crucial phase after the creation process. To determine the ROI of a mobile app, you must first value the app using a standard formula.
The estimated timetable on the particular marketplace is the size of the app's user base, which impacts the total app valuation. An app's valuation is a sign of how successful it is. When it comes time to sell a mobile app, its value is determined by how much it is worth. An app's worth is assessed by taking into account variables like downloads, income, and prospective earnings from updates or future downloads. Each organization uses a different formula to determine this estimate.
A mathematical formula should be used to value your application if your end customers are making purchases or if your service requires a subscription model. There are still some businesses that value their business using the formula revenue-expenses=profit. However, profit and app valuation are often two different ideas. Consider app abandonment (stopping using the app after just one use) and churn rate when determining value (customer lost in a given period). The two key parameters for determining the app's valuation are CLTV and CAC.
Customer Lifetime Value, or CLTV, is the total income or net profit a customer generates throughout the course of using an app. The LTV determines the success or failure of your app. Therefore, the net margin per user is equal to the average gross profit. LTV is characterized by:
Average Gross Profit per User times Average Lifetime (months) is CLTV.
We can obtain CLTV in several ways:
CLTV = (1/Churn) ARPU
Wherein money is derived from a variety of sources, including in-app purchases, advertising, subscription-based revenue, and application costs.
Churn Rate = Percentage of all customers lost during a specific period of time
Customer Acquisition Cost, or CAC, refers to the entire sum owners have spent to "retain" or "acquire" a new customer. CAC involves a variety of marketing costs, including those for paid tools, paid promotion and advertising, and compensation for the associated marketing team. CAC can therefore be defined as:
Total Marketing Expenditure for a Specific Period / Amount of Users Acquired During That Period = CAC
The appropriate CLTV & CAC ratio for the majority of app firms is 3:1. Make sure your CAC doesn't surpass the CLTV ratio in order to achieve long-term, profitable performance. The overall mobile application valuation formula now appears to be as follows:
App valuation = active users * (CLTV-CAC)
The process is essentially as follows: initially, you must determine the lifetime value of consumers and the churn rate. The acquisition cost per user needs to be highlighted next. After this point, calculating the return on investment should be simple. Hashed system is known for its best services for mobile app development in Dubai. We have highly mobile app development experts who make customized
mobile apps.
