After completing the process of creating an app for a new client, the question often arises, “how long should we give to deem the app a success?”
The first step in determining success is to specify just what success means in the context of your app and business model.
Setup some meaningful key performance indicators that are relevant to your organization. Some general examples might include:
- App Store customer ratings
- User retention
- ARPU (average revenue per user). This is the total revenue for the app divided by the number of active users.
- Cost per user. This is the total cost incurred to host each user: e.g. cloud service, content delivery network, engineering maintenance, etc.
Now that we have settled the success criteria, it is time to decide how long to wait to deem the app a success. For this we rely on normal business measures.
For an app who’s purpose is brand awareness, a company should use its normal timeline for a successful marketing campaign.
When an app is being launched for profit, targets for revenue and profit must be set. This should be treated no differently than other services that your company launches.
So, the question really becomes ‘how long is your company willing to pay the service fees until the ARPU hits the break-even point?
In short, the business model for a mobile app does not differ from the standard business models. The same ordinary standards and principals should be applied.