Edit: Sorry! My math was off a bit. Here is a calculator:
I am about to press go and publish an app, so I did a quick economics check and the situation is not good. I will still publish as an MVP and figure out a long-term plan, but here’s the basic financial model I am facing with my app.
The model uses an action count of 3,000, 5,000, and 7,000 per user per month. I don’t know if that’s normal, but it’s a starting point.
The price of the app is €1.99, of which 30% goes to Apple as a commission. So, the revenue per user is (1.99 * (1-0.30)) = €1.39.
After deducting Apples’ App Store fees, taxes of 43% are applied on the remaining amount. So, the net revenue per user after taxes is (1.39 * (1-0.43)) = €0.79. (This is considering worst case German taxation, yours varies.)
€1.99 app price net base = €0.79
The monthly of actions is:
- For 3,000 actions per user: (250/1,000,000)*3,000 = €0.75
- For 5,000 actions per user: (250/1,000,000)*5,000 = €1.25
- For 7,000 actions per user: (250/1,000,000)*7,000 = €1.75
Subtracting the action costs from the app price net base, we get the net profit per user:
- For 3,000 actions per user: (0.79 - 0.75) = €0.04
- For 5,000 actions per user: (0.79 - 1.25) = -€0.46 (negative net profit)
- For 7,000 actions per user: (0.79 - 1.75) = -€0.96 (negative net profit)
Assuming the above numbers of actions per month, the maximum number of paid users per month at the €1.99 price, that can be supported with the 1,000,000 actions available per month is:
- For 3,000 actions per user: 1,000,000 / 3,000 = 333
- For 5,000 actions per user: 1,000,000 / 5,000 = 200
- For 7,000 actions per user: 1,000,000 / 7,000 = 142
However, since the breakeven point for 5,000 and 7,000 actions per user is negative, the maximum number of paid users that can be supported while remaining profitable is 333 for 3,000 actions per user.
The net profit per user is €0.04, as calculated earlier. With 333 users and 3000 actions per month per user, then the maximum net profit per month would be:
- Net profit per user * Number of users = €0.04 * 333 = €13.32
Wish I had done this check on the first day of signing up.