This post first appeared on Medium.com.
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In Feb 2015, my <a href="http://getpookeeper.just2us.com/" class="markup--anchor markup--p-anchor" rel="nofollow" data-href="http://getpookeeper.just2us.com">Poo Keeper</a> — an app to keep track of your poop — was updated with a big change:
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<strong class="markup--strong markup--p-strong">The app changed from paid $1.99 to FREE (with ads).</strong>
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I changed the revenue model.
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This post is to show how the app performed — in terms of downloads, active users and revenues — before and after the change.
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Before: As a $1.99 Paid App
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Poo Keeper was first <a href="/blog/2014/04/new-app-poo-keeper/" class="markup--anchor markup--p-anchor" rel="nofollow" data-href="/blog/2014/04/new-app-poo-keeper/">released</a> in April 2014.
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Until Feb 2015 (for 10 months), it was a paid app at $1.99.
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I will be showing the data in the 6 months period (Aug 2014 to Feb 2015) before I made the change. Similarly, I will show 6 months <em class="markup--em markup--p-em">after</em> the change for comparison. We will look at 2 charts: New Users and Active Users.
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</div><figcaption class="imageCaption">Before Change: 281 new users</figcaption> </figure>
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The total new users for 6 months is 281. The revenue from these paid apps is 281 x $1.99 x 70% commission = <strong class="markup--strong markup--p-strong">$391</strong>. For most business, this is terrible revenue.
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Every day, there is 1 “weirdo” just like me, who will pay $1.99 for my shit app. I am proud of that.
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</div><figcaption class="imageCaption">Before Change: 31 to 88 active users</figcaption> </figure>
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The active user rose steadily from 31 to 88 in 6 months.
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<p id="b3a0" class="graf--p">
In the startup world, one would exclaim:
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<span class="markup--em markup--blockquote-em">“Our active user base increased by 200% in just 6 months”</span>
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IMO, the growth is not too bad. Having an increasing active user base is the strongest hint that I could change my business model, since if they use the app frequently <em class="markup--em markup--p-em">(daily, if no constipation!)</em>, it should drive the ads revenue substantially in the long run.
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After: As a FREE App
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So in Feb 2015, I released a new version that is free, but it will display advertisements. FYI, I use MoPub as mediation, integrating 5 ad providers: iAd, Google Adsense, InMobi, Millennial Media, and MoPub Marketplace.
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This is the data for 6 months, from Feb 2015 to Aug 2015.
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</div><figcaption class="imageCaption">After Change: 12,680 new users</figcaption> </figure>
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The total number of new users acquired in the 6 months is <strong class="markup--strong markup--p-strong">12,680</strong>. Compared to <strong class="markup--strong markup--p-strong">281</strong> before the change, this is <strong class="markup--strong markup--p-strong">45 times more</strong>!
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</div><figcaption class="imageCaption">After Change: 88 to 1,711 active users</figcaption> </figure>
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The active user is impressive too, increasing from <strong class="markup--strong markup--p-strong">88</strong> to <strong class="markup--strong markup--p-strong">1,711</strong> active users. That is <strong class="markup--strong markup--p-strong">20 times more</strong> (or 2,000%)!
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Now, we look at the most important figure — ads revenue.
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</div><figcaption class="imageCaption">MoPub revenue totaled $270 (estimated for mediated networks)</figcaption> </figure>
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Total ads revenue is <strong class="markup--strong markup--p-strong">$270</strong>.
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There is another revenue, which is the $1.99 in-app purchase (IAP) to remove the ads.
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</div><figcaption class="imageCaption">App Store Revenue: $25</figcaption> </figure>
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Very few users pay to remove the ads. In the 6 months, only <strong class="markup--strong markup--p-strong">19 users</strong> paid, resulting in <strong class="markup--strong markup--p-strong">$25</strong> revenue.
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So, total revenue is $270 + $25 = <strong class="markup--strong markup--p-strong">$295</strong>.
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Conclusion
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Revenue before change: $391
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Revenue after change: $295
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The change has <strong class="markup--strong markup--p-strong">decreased revenue by 25%</strong>. Not good.
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When I changed the revenue model, I know for sure it will drive downloads. What I need to find out is:
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Would revenue from ads be more than paid app?
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The answer, sadly, is no.
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<h4 id="b0e6" class="graf--h4">
Sadly no? Maybe Not
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Let’s look from another perspective. The <strong class="markup--strong markup--p-strong">daily revenue</strong> for the 6 months period is:
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Before change: <strong class="markup--strong markup--li-strong">$2.16 per day</strong>
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After change: <strong class="markup--strong markup--li-strong">$1.49 per day</strong>
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Daily revenue has decreased. However, the daily revenue from ads has not reach a plateau/stable state, yet. It is still increasing (refer to the $270 ad revenue chart above).
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Question is: Is it possible that it can exceed $2.16 per day?
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To find out, I generated the ads revenue in the last 30 days (Aug 2015).
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The total revenue is $110, that averages out to <strong class="markup--strong markup--p-strong">$3.66 per day</strong>.
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Hey, that’s more than $2.16! That is a <strong class="markup--strong markup--p-strong">69% increase </strong>after changing the revenue model. In other words, previously I can afford only a <strong class="markup--strong markup--p-strong">Starbucks filtered coffee</strong>, now I can afford a <strong class="markup--strong markup--p-strong">caffe latte</strong>, every day.
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Now, that’s a good change (:
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Changing to Advertising Model
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I suppose <a href="http://itunes.apple.com/app/poo-keeper-let-it-go-your/id857575652?&at=11luru" class="markup--anchor markup--p-anchor" rel="nofollow" data-href="http://itunes.apple.com/app/poo-keeper-let-it-go-your/id857575652?&at=11luru">Poo Keeper</a> is suitable to use advertisement as a revenue model, because it is an app whereby <strong class="markup--strong markup--p-strong">a user will use daily (</strong><em class="markup--em markup--p-em">if no constipation</em>). Contrary, if the usage frequency is low (eg. utility apps), then the ads revenue will not add up fast enough. Also, making the app free drives much more downloads, therefore acquiring an active user base much faster.
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<em class="markup--em markup--p-em">Also, do check out </em><a href="https://medium.com/jade-journal/why-i-created-jade-the-journal-app-for-parents-to-co-write-for-children-e4f3bab84a19" class="markup--anchor markup--p-anchor" data-href="https://medium.com/jade-journal/why-i-created-jade-the-journal-app-for-parents-to-co-write-for-children-e4f3bab84a19"><em class="markup--em markup--p-em">the story on my new app — Jade — for parents to co-write journal for their children</em></a><em class="markup--em markup--p-em">.</em>
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