This post first appeared on Medium.com.
In Feb 2015, my Poo Keeper — an app to keep track of your poop — was updated with a big change:
The app changed from paid $1.99 to FREE (with ads).
I changed the revenue model.
This post is to show how the app performed — in terms of downloads, active users and revenues — before and after the change.
Before: As a $1.99 Paid App
Poo Keeper was first released in April 2014.
Until Feb 2015 (for 10 months), it was a paid app at $1.99.
I will be showing the data in the 6 months period (Aug 2014 to Feb 2015) before I made the change. Similarly, I will show 6 months after the change for comparison. We will look at 2 charts: New Users and Active Users.
The total new users for 6 months is 281. The revenue from these paid apps is 281 x $1.99 x 70% commission = $391. For most business, this is terrible revenue.
Every day, there is 1 “weirdo” just like me, who will pay $1.99 for my shit app. I am proud of that.
The active user rose steadily from 31 to 88 in 6 months.
In the startup world, one would exclaim:
“Our active user base increased by 200% in just 6 months”
IMO, the growth is not too bad. Having an increasing active user base is the strongest hint that I could change my business model, since if they use the app frequently (daily, if no constipation!), it should drive the ads revenue substantially in the long run.
After: As a FREE App
So in Feb 2015, I released a new version that is free, but it will display advertisements. FYI, I use MoPub as mediation, integrating 5 ad providers: iAd, Google Adsense, InMobi, Millennial Media, and MoPub Marketplace.
This is the data for 6 months, from Feb 2015 to Aug 2015.
The total number of new users acquired in the 6 months is 12,680. Compared to 281 before the change, this is 45 times more!
The active user is impressive too, increasing from 88 to 1,711 active users. That is 20 times more (or 2,000%)!
Now, we look at the most important figure — ads revenue.
Total ads revenue is $270.
There is another revenue, which is the $1.99 in-app purchase (IAP) to remove the ads.
Very few users pay to remove the ads. In the 6 months, only 19 users paid, resulting in $25 revenue.
So, total revenue is $270 + $25 = $295.
- Revenue before change: $391
- Revenue after change: $295
The change has decreased revenue by 25%. Not good.
When I changed the revenue model, I know for sure it will drive downloads. What I need to find out is:
Would revenue from ads be more than paid app?
The answer, sadly, is no.
Sadly no? Maybe Not
Let’s look from another perspective. The daily revenue for the 6 months period is:
- Before change: $2.16 per day
- After change: $1.49 per day
Daily revenue has decreased. However, the daily revenue from ads has not reach a plateau/stable state, yet. It is still increasing (refer to the $270 ad revenue chart above).
Question is: Is it possible that it can exceed $2.16 per day?
To find out, I generated the ads revenue in the last 30 days (Aug 2015).
The total revenue is $110, that averages out to $3.66 per day.
Hey, that’s more than $2.16! That is a 69% increase after changing the revenue model. In other words, previously I can afford only a Starbucks filtered coffee, now I can afford a caffe latte, every day.
Now, that’s a good change (:</div> </div> </section>
Changing to Advertising Model
I suppose Poo Keeper is suitable to use advertisement as a revenue model, because it is an app whereby a user will use daily (if no constipation). Contrary, if the usage frequency is low (eg. utility apps), then the ads revenue will not add up fast enough. Also, making the app free drives much more downloads, therefore acquiring an active user base much faster.