How To Calculate App Development Costs and ROI for Your Mobile Project?

Your business budget should always scale to the size it needs to succeed. And here, a correct and realistic sales forecast will help you in the best possible way. How to do it right, what to rely on and how to analyze the data received - read in our article.

What is Mobile App Return on Investment (ROI)?

Mobile application ROI (return on investment) is the amount that you receive after investing. As a business owner, you must carefully monitor the flow of money in order to understand exactly how your business is functioning and whether it is making a profit or loss. From an investment perspective, calculating the ROI on a mobile device is just as important for a business.

Thus, all the expenses that were incurred during the operation of the company are your investments. This also includes the purchase of raw materials and the hiring of developers for the project.

How to Estimate Mobile App Development Costs?

A mobile application is the engine of progress, so this investment is really important. As with all businesses, an application requires income and a return on investment.

The return on investment can be calculated using the following formula:

ROI = (Final Value - Initial Value) of Investment / Value of Investment * 100%

Based on such calculations, you can clearly understand where your business is going and how successful or unprofitable it is.

2 Key Metrics to Consider for a Mobile App ROI Calculation?

Consider a few basic metrics that help calculate the profitability of a business. Considering different metrics, you can get a complete picture of the state of affairs.

• CPI (Cost Per Install)

This is the most relevant metric for mobile app digital advertising campaigns. It helps correlate the number of app downloads thanks to ads. Divide the entire campaign budget by the number of new installs.

• LTV (lifetime value)

This metric matters for the long term. This metric allows you to calculate retention, monetization and virality. The user will constantly interact with the application and it needs to be analyzed.

It is calculated like this:

LTV = (1 + K) X ARPU

Where 1 is the number of referred users, and ARPU means the average revenue per user.

The Breakdown of Mobile App Expenses & ROI Based on App Type (Native vs Cross-Platform)

When calculating ROI for a mobile application, all available financial conditions must be taken into account. Let's consider them in more detail.

Expected benefit

Here you should take into account the main advantages of the application and predict the expected income from this. If your project does not involve commercial implementation, the measure of success will be the cost savings that you receive throughout the year.

Initial time to market

This is the time that will be spent on the development of the application. This indicator will be influenced, among other things, by the nativeness or cross-platform nature of the application. In the case of native, you can get much more advantages, including in the issue of time periods.

Active maintenance time

Active maintenance includes, for example, fixing bugs, adding features, and so on, after the release of the application to the market. This is especially important to consider if your company is outsourced.

Labor costs

It is important to calculate the cost of maintaining each individual specialist (taxes, payments, workplace). The sum of these costs will help calculate the total cost of working on the project.

Save time when developing native and cross-platform applications

Cross-platform complicates the work by the need to adapt to all devices at once. Native solutions often have proven SDKs and clear product requirements, simplifying work and reducing time and costs.

5 Tips to Improve Mobile App Return On Investment

1. Improve user experience based on user feedback

Never forget that improvement is part of the maintenance process for your application. Something will become obsolete, something will have to be abandoned, something will fail and all this will need to be finalized.

2. Increase ad spend

The more people who know about your app, the more likely they are to want to test it and share with friends. Advertising costs should be included in your expenses. Don't forget to use analytics and tools like geofencing.

3. Improve your app funnels

You need to clearly understand where the conversion comes from and how your product works. You must study statistics and find patterns and problems. Only then will you be able to respond quickly and effectively.

4. Run a targeted marketing campaign

Marketing is the foundation of your monetization and market presentation. You have to look attractive to users, offering your audience exactly what they need. Use pushes, promotions, A/B testing, they can all help you.

5. Provide Rewards and Offers in Mobile Apps

Users love to feel their own value, give it to them through rewards and bonus systems. Various loyalty systems are highly valued by users.

How You Can Generate Revenue Using Mobile App

Your mobile application is your platform where you can deploy offers and increase the profitability of your business.

Among the main formats of earnings within the application:

• making in-app purchases;
• sponsorship offers and their promotion;
• subscription to certain terms or content;
• crowdfunding for development;
• one-time registration fee.
• 
  

Thus, the most compelling methods of monetizing mobile applications are associated with the ability to offer the user more comfort and unique content.

How Do TopDevs Help to Define the Best-Fitting Monetization Methods for Your Needs

The work of our team is always based on data analysis, we offer a development strategy based on data from studying a competitor and your business. We study your niche and help shape business requirements for a future application, as well as a loan and metrics that will indicate efficiency.

Based on all this, we form a development strategy and monetization formats that are suitable for your specific case. Thanks to our extensive experience in various industries, we actively help our clients from various fields.

The Bottom Line

There are several million apps in the iOS App Store and Android Play Store. But not all of them can claim real success. It is precisely those products that are developed and improved on an ongoing basis that are in greater demand.

Always think a few steps ahead and be specific. Only in this way can you get the desired result and develop your business. Another important aspect is a reliable contractor who can realize your ideas.