+1 vote
I am close to publishing my new mobile gaming Application. I have a question considering my monetization:

So lets say my App will have 1 Million Downloads after 1 month (Lets not talk about if it is possible or not, we just assume it will be this way). My previous plan was to have some advertising (banners and videos) to make money out of the game. Then I thought i could give the User the Option to pay 2$ so he does not have to deal with advertising anymore.

Now my question: Is the 2$ to less? Lets say the person plays the game for 1month, would i make more money per person playing the game and watching the adds than i would with the 2$? So should I just include advertising and no premium option or make a higher price? How much money do publisher make per user?
by (130 points)

2 Answers

+2 votes
No $2 is not too little. You'll have to understand the unit economics of ad monetization for this to be clear.

Pay outs are based on eCPMs (effective Cost Per 1000 Impressions). The range in which ad payouts occur can range anywhere between $0.10 to $25 eCPMs, depending on the audience, the geo and the type of advertisers your app is attracting. Bear in mind $25 is on the very high end of the spectrum of ad revenue payouts. At a $25 eCPM there's typicaly an ad monetization team behind the game, and the placement has qualified the traffic.(For example the placement consists of only users who have spent money the app in the past 6 months). Your average placement will most likely be closer to a $1 to $3 eCPM.

 

Lets for example take a $2 eCPM and a $25 eCPM and a user that plays everyday and does 3 veiws for a month.

at $2 eCPM a view is worth: $2/1000 = $0.002 per view

at $25 eCPM a view is worth: $25/1000 = $0.025 per view

The user that plays everyday and does 3 views a day generates this many views: 3 views per day x 30 days = 90 views

$2 eCPM LTV: 90 views x $0.002 per view = $0.18 of life time ad revenue

$25 eCPM LTV: 90 views x $0.025 per view = $2.25 of life time ad revenue

 

This is the unit economics of a user that retains for 30 days but about 0.5%-5% of users will retain for 30 days. Meaning there's a very real chance that 95-99.5% of your users won't make it to day 30. You can look up mobile game retention benchmarks to get a sense of how long your users will typically say.

 

Anyway to answer the question. Even on a best case scenario at a $25 eCPM, your user is only worth $0.25 more than the $2 IAP. The reality is that there is little chance that you will be missing more than $2 of ad revenue by adding a $2 IAP to remove ads. The $2 IAP for no ads is not too little. You could increase the price to $3 or $4 but that just decreases the likely hood that people will buy it.
by (990 points)
0 votes
Hi Lukas. If you still haven't published your app, I would look into options for adding rewarded videos in your app. What type of game is your app? Rewarded ads could potentially make it easier for you to monetize your users, by making the ads more desirable rather than an interruption. One way could be to launch your game in a limited amount of markets to validate your monetization strategy.

There are a lot of great games on the market to be inspired by. Best of luck with your game!
by (1.5k points)