After building an app receiving millions or billions of downloads
What’s next?
The next is the valuation of your app or making the money from your app. In this stage, you try to find the right valuation for your mobile app business.
The valuation is nothing but an agreement between you and your investors that determines the real worth of your business today. The valuations ensure that both parties get a fair deal.
It will also decide, as a part of the venture round, how much equity ownership you are selling to investors.
Now comes ideally,
How should your application be valued?
Market situations will determine your app’s final worth. It could be possible that your app is not performing well against the most relevant competitor. Or is it still generating revenue enough to stay ahead of the rest.
With that in mind, a slight reduction in your app’s value is OK if you are still attempting to figure out how to market it to other appreneurs.
Also, there are a lot of websites that provide their own unique algorithms, which either function in full or in-part to evaluate the published app’s collected value.
Based on these websites majority of appreneurs base their app value and often reference their unbiased output before selling and purchasing apps.
Apply the formula [total users or downloads/total revenue] to each month of the year in which your app has performed admirably by taking into consideration a new set of monthly acquired data.
Averaging the income per user for each month will give you your app’s ARPU.
Utilize your ARPU to determine the worth of your app. Determine the amount of users you might like to add based on current trends in user acquisition rates, and then add that number to your present user base.
After that, add up all of your new users, and then multiply that sum by your ARPU. The most accurate assessment of the overall value of your app will be this new figure.
Other factors to determine App valuation are
Growth rate
The growth rate is the essential factor that any potential buyer will vouch for. It is crystal and clear, app with an inclining growth rate is a better target acquisition rather than an app which is declining or has stagnant numbers.
The growth is also in the area where documentation plays a vital role. Right from the start, your business should use industry-standard tools such as Google Analytics for mobile apps to assess your app’s growth.
While measuring your app’s performance, the more details you have the better it will be. You should look out into generating custom report which will assist you in getting the most out of your analytics.
To further refine your analytics, a variety of other tools are now readily available. The best examples would be App Annie for iOS and AppsFlyer for Android.
User engagement
When you are in the beginning stages of your start-up business, consider your engagement level a crucial factor in evaluation. The harsh reality is majority of start-ups don’t have huge sales volume from the start. That’s why they need to predict their future sales volume or at least have a rough idea of what their sales volume will be in the future. The best way to predict future sales is current engagement.
Let’s say people are spending a lot of time in your app and are returning, which is a green signal that people are liking your app even if they are not paying right now. There is a chance that they will do so in the future.
When paying for apps you need to think about the experiences. you have downloaded an app and if you enjoy it then you will think about paying for in-app purchases. Just after downloading the app, you won’t make those purchases right away because you don’t know about the value they provide yet. Most people think in this manner, so don’t bother about huge sales prior you have even shown value.
Conclusion
Evaluating the real worth of your app or mobile app business is a challenging task but we hope through this article you will have enough information on how to implement this. But still, in case you have a query then get in touch with Stellar Digital the best mobile app development company in Gurgaon offering full-scale mobile app development services. our expert team of developers will resolve all your queries and issues.
