ROI or Return on Investment is the percentage of your net return on investment over your costs. Companies estimate ROI while making any investment to determine whether or not it will be a profitable move. Application development is no exception to this. It is quite an expensive investment nowadays for companies to make their services accessible online to customers. While it certainly brings them positive results like an increased customer base, more sales, and online brand presence, how do you know if it’s also boosting your profits? Measuring the ROI of Android or iOS app development will help you know.
Assuming you’re one of them, confused about how to figure out the ROI of your app investment, here are the key ways to do it.
Control all the objectives of your application
This is the first and most important step. You must be clear about what you want to achieve with your application, that is, the objectives. All aspects of development including coding, UI design, its features/functions, calls to action required depend on the goals of the application. Some expected results that help measure whether aspects have been implemented correctly are user acquisitions, active sessions, and retention rate.
Costs to develop the application.
Calculate the costs involved in each step of the application development to keep the total costs limited to the decided budget. Mention your affordable budget to the app developer team when you assign them work, and it’s their job to keep costs from exceeding it. The best way to measure development costs is to segregate them into different categories that include prototyping, implementation, software and user interface, support, and integration costs.
Decide the KPIs of your app
KPIs or key performance indicators are the main aspects to see if your application is capable of generating enough ROI. But, how to measure the particular KPIs of your app? They differ with the types of applications or their goals. So, find out the KPIs of your app by analyzing your objective well. Some of the common metrics for most apps are the number of downloads, daily/monthly active users, users who stay more than 3 months, retention rate, churn rate, daily sessions, and average revenue per user.
Determine costs against each KPI
Once you have the KPIs for your application, the next or last step is to find out if the KPIs can recover your costs. In case the KPIs exceed your development costs, you should reconsider cost optimization. While measuring costs is easy, the hard part is comparing KPIs to those costs. App experts say that once you know the expected lifespan of your app, it’s easy to get a KPI value over the period.
With companies taking big steps towards digitalization, mobile app development is still one of the main steps! However, many small or medium-sized businesses are still confused about whether to invest because they are not sure how to generate enough return on investment. If you are one of them, following these steps will allow you to discover the potential ROI of your application.
