Business owners are often very curious about how much it costs to have a new app built. It’s important to understand that development represents only one part of an app’s cost. In order for an app to be successful, you need a strategy to attract users. Marketing and promotion costs include any advertising you do to get people to sign up for the new app, as well as costs associated with making your app available for sale or download via third parties.
The term used to describe app user acquisition cost is cost per install, or CPI. CPI is calculated by dividing the total costs of relevant sales and marketing activity by the number of installs during a given period. For example, if you spend $1000 on Facebook ads promoting your new app and 100 people sign up, you’ve realized a $10 CPI. Obviously, lower CPI numbers are appealing: the typical cost for successful apps on both iOS and Android devices is under $2.
CPI is not the only relevant metric. Android Authority reports that “the average app loses 77 percent of its users in the three days after they install it”. It’s important for app owners to know what percentage of customers use the app, and of those users, which percentage further the relationship by creating an account or making a purchase. The costs for those customers can be significantly higher. eMarketer puts the cost of an account opening user at $8.21, with the price for a user who makes a purchase a jaw dropping $64.91.
With that in mind, it’s important for business owners to have an efficient plan to capitalize on their app’s appeal. A successful app cannot exist in isolation: it must be an integrated part of your overall marketing mix. Promoting your app on your website, social media, and in store is step one; resourcing your app campaign appropriately with a promotional budget is step two. It’s important to pay attention to metrics to ensure all levels of customer acquisition make sense for your business.