CaddieOpen in CaddieDownload for Mac

Breaking the Money Taboo: Real Talk on App Store Revenue

Shared by Caddie Library · Updated
App Masters10:40Open on YouTube
Chapters show their main points

The bottom line

An app makes more money by fixing what happens after the download: onboarding, paywall and pricing. Only 17% of apps reach $1,000 a month, so fixing the funnel first protects your runway.

Key takeaways

  • Reaching $1,000 a month is hard, and it is the first goal to hit. 1:27
    • RevenueCat's data shows only 17% of tracked apps reach $1,000 in monthly revenue.
    • Once an app hits $1,000, reaching $5,000 and then $10,000 gets easier. Photo and video is one of the easiest categories to start in.
  • An app needs only 15 to 25 downloads a day to start. 4:19
    • One case study went from $250 to $1,000 a month with just 15 downloads a day.
    • Apple Search Ads is an easy channel to test, since the app only has to be live.
  • Buying more downloads does not help while the funnel after them is broken. 5:19
    • One client gets 23 downloads a day, about 140 to 150 a week, and almost no sales apart from one spike.
    • A founder has a fixed runway, so extra ad spend only burns it faster.
  • Onboarding, paywall and pricing are what move trial activation and trial-to-paid. 6:43
    • Healthy trial activation is 5 to 10% of downloads. Healthy trial-to-paid is 30 to 40%.
    • If trial-to-paid is low, test pricing and trial length first. Three-day trials on yearly offers tend to churn heavily.
  • Fixing the funnel can grow revenue with no new features and no new downloads. 8:19
    • One app went from $1,000 to roughly $8,000 to $10,000 a month after changes to onboarding, paywall and pricing.
    • Its trial-to-paid rate ended up around 35%.

We have a leaky bucket right now and pouring more on the top is only going to help you spend more money.

Steve Young, App Masters

Chapter summaries

0:00 Why $1,000 a month is the goal to chase

Big revenue goals fail when they skip the first $1,000, so that is the number to track.

  • RevenueCat shows the whole subscription funnel in one dashboard. 0:52
    • It works like ChartMogul or Google Analytics for app subscriptions.
    • It tracks install, trial and paid rates.
    • The source is RevenueCat's State of Subscription Apps report, and Steve Young contributed to the chart.
    • He says founders should know these rates on the back of your hand.
  • Founders aim too high and skip the first step. 1:57
    • Many target $100,000 a month without first hitting $1,000.
    • $1,000 is not a living wage, but it is the first mark to hit before scaling.
    • He calls it putting the horse before the carriage.
    • The pattern continues upward: once at 10, 20 is easier, and once at 20, 50.
    • Travel apps reach $1,000 faster than average but slow down at $5,000.
    • Rushing from zero to $100,000 wastes money on Facebook, Apple Search, Google and TikTok ads.

3:22 Downloads are only the top of the funnel

Downloads must come first, but they are just the first step of a funnel that has to convert.

  • Downloads come from several channels, so pick the best one. 3:48
    • The main sources are ASO, Facebook ads and organic social.
    • Without downloads at the top, nothing else in the funnel happens.
    • Facebook ads need an SDK and extra setup.
    • Organic can mean a good Instagram presence.
  • A client asked for more downloads when the problem was conversion. 4:45
    • ASO work gave the app decent rankings.
    • The client feared relying on campaigns that spike downloads and revenue.
    • He wanted continued growth, not spikes.
    • Steve's answer was that nobody was converting.
    • How the campaigns got cheap downloads is saved for later parts.

5:21 More downloads can't fix a funnel that leaks

Paying for more traffic only multiplies a loss while people download and never buy.

  • Buying more downloads costs more and returns nothing when they don't convert. 5:50
    • Do the math first: higher spend for downloads that pay nothing.
    • The client asked to put more money in, which is easy to do. It still wouldn't bring more money back.
    • The advice for anyone in this spot: pause and look at the funnel before spending again.

6:34 Fix the funnel one step at a time

Each funnel step has its own levers, and pricing and trial length matter most for paid conversion.

  • Trial activation comes from onboarding, paywall layout and pricing. 6:43
    • Downloads and channels come first. Activating the trial is the next step.
    • Small download numbers are enough, so the focus belongs on this step.
  • Pricing and trial length move trial-to-paid more than the paywall does. 7:58
    • Add reminders and tweak the paywall, but expect a smaller effect.
    • Young's view is that pricing and trial length have the biggest impact.
  • New features and agency-driven ad spend are the wrong fix. 8:17
    • Agencies that sell more Facebook ads and lower cost per install profit from the extra spend.
    • An agency pushing downloads while trial activation is weak is the wrong agency.
    • The client was told to move to a lower plan, so his runway lasts while activation gets fixed.

In the growth library

Steve P. Young, Founder, App Masters. Before buying more downloads or building more features, check each step of the app funnel: downloads, trial activation, and trial to paid. Fixing onboarding, paywall and pricing took one client app from about $1,000 to $8,000-$10,000 a month with no extra downloads.

Lessons that draw on this:

More from App Masters · The whole library, and ask it anything

Transcript299 lines
0:00

coming up let's talk about one of the most important things when it comes to running a business especially an app business and that's money so let's get real on how much an average app makes and some of the biggest mistakes beginning app Founders make when it comes to making that money stay tuned what is up appnation it is thep Young founder vms.com and let's get into this video where I'm going to really break down what it means to make a certain number of dollars in the App Store per month and what you should be really really focused on before you go on and add more and more features into your app so I'm going to break down the report that Revenue cap put together and I'm going to link it up into the YouTube description podcast description as well but it's a great report about the saate of subscription apps now Revenue cat here's a chart that I personally got to contribute to so reaching $11,000 in

1:00

monthly revenues is hard now this is all the apps that Revenue cat is tracking themselves and so Revenue cat for those who aren't familiar it's sort of like a chart Mogul or Google analytics for your app subscription so gives you all the key performance indicators within one great dashboard install the trial trial the paid all these rates that you should know on the back of your hand they're all within Revenue cap here's the key number I want you guys to pay attention to only 177% of all apps reach at least $1,000 in monthly Revenue now personally I felt that pain I talked to a lot of entrepreneurs app Founders big and Tiny and I could feel that it is hard really really hard to make money within the app space and so knowing this number is 177% of all the apps only 17% make $1,000 a month you really have to get to that 1,000 Benchmark I talked to a lot of Founders and they have these astronomical goals which is great but at

2:03

the same time they're getting what is it the horse be the carriage before the horse they want to hit all these $100,000 a month type of goals without ultimately trying to hit $1,000 now great I know $1,000 for most people you can't live off that Revenue but it is one of the first things I try to hit and then ultimately scale so the good news is once you hit that 1,000 it becomes easier to hit five to ultimately hit 10 so great report go check it out I'm going to break down some of the key indicators of certain apps that hit 1,000 faster so here me here's some strategies and I'll break down in part two of this video so stay tuned next week when I'm going to break down some of the strategies to get to your first $11,000 a month Go download the report if you want to see my insights but here's the good thing photo and video getting to that first 1000 is one of the easiest categories to get into now

2:50

travel pretty good faster than average but slows down to 5,000 but once you hit that one first 1,000 it becomes a lot easier to hit 5 10 and then once you hit 10 becomes easier to hit 20 once you hit 20 50 so forth right really break it down I think ultimately people try to go from Z to 100,000 really really fast and guess what you can do in between that spend a lot of money and waste a lot of money on Facebook ads on Apple search ads on Google ads on Tik Tok ads you can waste a lot a lot of money so I'm going to break down everything right now what you should be paying attention to when you are first starting out all right so let's break it down let's bring in a whiteboard I'm going to do something different for you guys first thing you want to pay attention to is obviously downloads if you don't have the downloads the top of the funnel you're not going to ultimately get anywhere in between right so just think about as a

3:38

math formula or a funnel right if you want to get sophisticated call it a funnel so after you get downloads you really want to pay attention to and when I mean downloads is so I'm going to break this down a little bit too so downloads this is through ASO Facebook ads this is going to be towards anything else you can think about organic right like social media maybe you got a good presence on Instagram and so forth so that's what you got to focus on what channel is going to be the best and how do you get there now I like Apple search ads too because it's one of the easiest Facebook you need an SDK you need all this stuff Apple search ads you really don't need much other than just having the app live so you can start testing out and getting some downloads now once you have at least 25 downloads a day 15 to 25 that's all you need we have one case study that I will link up as well where he went from $250 a month to

4:29

$1,000 a month with just 15 downloads a day that's one5 downloads a day all right so once you have the downloads I'm going to move this up here the next thing you really want to pay attention to is the funnel now on the downloads front let me show you a real life example of an app that we're currently working with here's the app we're getting about 23 downloads a day right not a whole lot now we we ran some campaigns and I'll share this in part two and three in a future video about how we've been able to generate this many downloads pretty cheaply as well but we're now averaging 23 downloads today so not bad right we've been working on the ASO we've got some pretty decent rankings for this client but here's what I really want to pay attention to because the client was like coming to me and saying Steve I want to get more downloads I want to grow I can't just rely on some of these campaigns that you have that can Spike

5:16

downloads and revenues I want to continue growing I'm like well you're not converting anybody so if you look at the sales it's pretty much zero we're getting 23 downloads a day so on average that's going to be like 150 140 downloads a week and we're not getting any sales whatsoever besides the spike that we ran on the 21st right here you can see it the 21st we ran a spike and we did it but we're not getting any sales so what do you have to pay attention to your funnel your onboarding and your pay wall so this doesn't mean I hope you guys if you guys are stuck here don't go running more downloads don't try to get more downloads because if you do the math you're going to one pay more for these downs and two they're not converting so you're not going to make any money whatsoever from these particular downloads so what's the point of spending more money it's important to note especially for this Indie apppp

6:07

developer it's Runway you have an x amount of money that you want to invest in your app and that should be a cap right you shouldn't be like infinite so he's coming to me and saying Steve I want to invest more money into this and I'm like look you investing more money which you can do easily is not ultimately going to get you to generate more money in return we have a leaky bucket right now and pouring more on the top is only going to help you spend more money so if you guys are in this situation take a pause right now and really look at your funnel so let's go back to the Whiteboard real quick now that we have the downloads anywhere from 15 to 25 a day really ultimately you don't need that much you really have to pay attention to your funnel and this is your trial Activation so I'm going to put trial activation instead and what does that mean you got to pay attention to your onboarding you got to pay

6:52

attention to your pay wall layout and you got to pay attention to your pricing those are the things that are going to move the needle when it comes to the next step of the funnel you got the downloads great you got the channels that you use to get the downloads now you got to activate those trials The Next Step once you start so this number right here should be a good one should be anywhere from 5 to 10% of the downloads if you're finally getting that then ultimately the next thing you want to do is trial to paid now this isn't I'm not too concerned for this there's a couple of factors here so this is the percentage of people who activate a trial and it end up paying you so this on average should be anywhere from 30 to 40% if you're getting anything underneath that you really want to try a couple of things test your pricing maybe it's too high test your trial length what we've typically seen is 3 days

7:41

trials especially for yearly offers tend to have a really poor trial to paid really high churn so test the trial length test pricing and then ultimately those are the two things that I would test so put certain reminders in place maybe go back to the pay wall and see if you can change some certain things but honestly I don't think the pay wall impacts it as much as pricing and TR length that have the biggest impact on this trial that paid and that's how you think about the whole entire funnel you don't need most of the developers I talk to if they want to grow they want to consider just focusing on this or the worst thing too is adding more features you don't need more features we took an app from $11,000 a month all the way 8 to $10,000 a month with no additional features it's because we had the downloads We changed the onboarding and pay wall so we had a pretty high trial activation rate and we increased the

8:34

pricing test pricing so the trial to paid was like around 35% and we went from $1,000 a month no additional downloads all the way to 8 to $110,000 a month and I've seen it time and time again with the clients we're working with the purpose of this whole video is for you guys to stop thinking you need to spend more because I'm sure if you're new to this game and you're not a marketing expert you're going to always focus on downloads and some of these AG gencies that we compete with they want you to spend money with them so they're like oh let's just run more Facebook ads let me try to get lower cost per installs what's the point if the rest of the funnel is broken you're just going to spend more money if you're working with an agency that's telling you you just need more downloads when your trial activation sucks then you're working at the wrong agency and this is how I break it down so this client wanted to spend

9:20

more I said don't spend more this client wanted to spend more with us and I said don't spend more cuz I want your Runway your money in the bank to help sustain you as an Entre R preneur to be as long as possible so I told him like hey man you can keep paying me x amount of dollars per month but that just means you're going to only work with me for a month or two longer and then you're going to cut it what if you brought down that and moved to a lower plan with us that way it can help you longer while we fix this trial activation problem that we currently have and obviously there's much more underneath this that is app dependent but on a broad level this is what will help you increase your trial activation right all right next week in our next video we're going to break down my favorite growth hacks to get you as quickly to $1,000 in Revenue I've been able to do it with multiple multiple apps sustaining it we've been able to do

10:12

it with our apps as well I'll break down our exact process on how to do that all right if you haven't subscribed what the hell you waiting for hit that subscribe button and if you want to work with us to really break down your entire app funnel and make sure you don't end up wasting more of your hard-earned money then go check out ats.com all right till next time I'll see you on the next video