Average revenue is one of the key performance indicators for mobile apps. It is a common practice to use category-specific average app revenue as a benchmark. By comparing your app’s performance to apps in the same category you will know for certain if your app’s monetization models are performing as designed. But is the average app revenue metric really accurate?
The Flaws with Average App Revenue
- General averages include apps that are very different from your app. By just using the game category, it is easy to conclude that the subcategories within include apps that are very different from each other. Also, there are types of game apps that perform better consistently. Even if a lot of these apps have the same concept or mechanics, they still use different monetization models.
- The top apps skew the numbers. The top apps actually pull up the average app revenue especially if they are earning a lot. Even if you narrow down the comparison to a specific subcategory, the difference between the revenue of a top app compared to an app ten steps down the rank is staggering! The top app would make it appear that the subcategory is earning a lot when most of the lower-ranked apps don’t even earn half of the top app’s revenue.
These flaws aren’t just limited to average app revenue. Different monetization models like in-app purchases also use an overall average for benchmarks.
How to Better Benchmark Apps
- Use apps that are very similar to your app for benchmarking. The apps should have similar functionality, features, audience, and monetization models. Select 5-10 apps from the 80th – 20th percentile your app’s category or vertical.
- Use average revenue per user. Narrow down your selection of apps by comparing average revenue per user. The specific metric to use is the average revenue per daily active user (ARPDAU). This is to eliminate any unfair revenue comparison based on the number of app users.
- Group apps into three different revenue categories. Place your benchmark apps into either the high (80th percentile), median (50th percentile) or low (20th percentile) revenue performance category. This will eliminate the ambiguity that average app revenue benchmarks provide. You can also use this to evaluate the performance of your app over time; if it is improving or getting worse.
There is a huge chance that apps in several categories appear to perform better than they do. And this has to do with how general averages are used as benchmarks. So in order to really know where your app stands in terms of revenue, a targeted approach is necessary.
