Torulf Jernström is CEO of Finnish developer Tribeflame. His blog is Pocket Philosopher.
LifeTime Value is larger than Cost Per Install.
LTV > CPI
That's the golden formula for making money.
But to prove your game can perform this, you will need a minimum of $100,000.
Let's start with the LTV part.
Measuring your life time value is a not trivial. Here's a short overview of how you can do it.
The challenge for an indie developer is that you need a significant amount of traffic to be able to measure that number reliably.
- Say you want a 1,000 paying players to have a good sample.
- Say you have 3% paying customers among your players (which should be considered quite good).
- To get a sample of 1 000 payers, you will need 33,000 downloads for your app - 1,000*(1/0.03)
The entry fee
The other part of the equation is the cost per install, CPI. This varies according to type of game, and which country you are advertising in.
To get good paying customers, you will need to choose a developed country to run your test in.
Western Europe, Canada, or Australia might be good candidates, and those countries are expensive.
A typical CPI at this point might be $3.
Now we are ready to sum up - 33,000 downloads at $3 per download will cost you $100,000.
The end game
And that's for a single measurement of LTV with a decent accuracy.
Unless you are a F2P monetisation divinity (or very lucky), you will need to do this a few times to get everything optimised.
This is where an indie developer needs a good publisher or a VC investment.
As explained earlier on, I suggest that you measure the retention numbers on your own, and then use those to convince a strong partner to team up with you.