Comment & Opinion

Why you need to spend $100,000 to prove your F2P game works

Why you need to spend $100,000 to prove your F2P game works

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.

Here's why.

The setting

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.

Comments

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Andreas Vasen CEO at Machineworks
This is a bit too vague for my taste.
The CPI varies greatly according to game genre.
The LTV fomula isn't hard. You can find spread sheets online for free that calculate it.
Or you can bid 50$ on elance.com and have one built for you.
Ross Kravitz Data Scientist at Pandora
The author's point is not that it is technically difficult to compute LTV. It's that you need a sufficiently large sample to calculate it with any precision. With 1000 payers, you might be able to estimate it to within +/- 20%. If your game is whale-driven in terms of monetization, the estimation gets harder.
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