Revenue (MRR, ARR)
Revenue and recurring revenue are your most important business metrics. They directly impact your app business's financial health and sustainability. Revenue is the total income generated by your app, while recurring revenue represents the portion of income that is predictable, stable, and expected to continue in the future.
Why Revenue and Recurring Revenue are important
- Business sustainability: Generating consistent revenue allows you to cover operating costs, invest in growth, and maintain a profitable business.
- Predictable income: Recurring revenue provides a stable income stream, enabling better financial planning and decision-making.
- User satisfaction: High revenue and recurring revenue often indicate a valuable app that users are willing to pay for or engage with.
- Investor interest: Demonstrating strong revenue and recurring revenue can help attract investors or increase the valuation of your app business.
How to Measure Revenue and Recurring Revenue for Your Mobile App
- Identify revenue sources: Understand the various ways your app generates income, such as in-app purchases, subscriptions, advertisements, or affiliate partnerships.
- Calculate total revenue: Add up all the income generated from each revenue source over a specific time period (e.g., monthly or yearly).
- Determine recurring revenue: Identify the portion of your total revenue that is stable and expected to continue, such as subscription fees or long-term contracts.
- Track revenue over time: Monitor revenue and recurring revenue trends to identify patterns, growth opportunities, or areas that need improvement.
There's no one-size-fits-all benchmark for revenue and recurring revenue, as these metrics vary widely depending on factors such as app category, target audience, and business model. However, some industry averages can help put your app's performance into perspective:
- Average revenue per user (ARPU): Varies by app category and monetization strategy, but a common range for mobile apps is €0.50 to €5.00 per user.
- Subscription renewal rate: For subscription-based apps, a renewal rate above 70% is considered healthy.
- Average customer lifetime value (CLV): Depending on the app category and target audience, CLV can range from €20 to €200 or more.
Strategies for Boosting Revenue and Recurring Revenue
- Optimize pricing: Regularly test and adjust your app's pricing strategy to find the optimal balance between user acquisition and revenue generation. Consider offering tiered pricing plans to accommodate different user needs and budgets.
- Improve monetization: Explore different monetization methods, such as freemium, subscription, or ad-supported models, to maximize your app's revenue potential. For example, offer a free tier with limited features and a premium tier with added functionality.
- Upsell and cross-sell: Encourage users to upgrade to premium plans or purchase additional features through targeted in-app messages or push notifications. For cross-selling, consider partnering with complementary apps to offer bundled packages or exclusive discounts.
- Increase customer lifetime value (CLV): Focus on retaining users and increasing their engagement through personalized content, tailored recommendations, and regular app updates. Loyal users are more likely to make in-app purchases or subscribe to premium plans.
- Promote your app: Invest in marketing and user acquisition to expand your user base and increase overall revenue. Leverage app store optimization (ASO), social media marketing, and targeted advertising to reach your ideal audience.