Chris Farm
In my last post I talked about the importance of time to profitability (TTP). In this post I use two discrete scenarios that illustrate how TTP affects total user growth in your app over a period of time.
Let’s say that you have a starting budget of $1,000 with the average CPI for acquiring a user set at $1.00 and user churn at 0% (for simplicity). In scenario A we have a 1-day TTP and in scenario B we have a 2-day TTP.
Assuming both scenarios start off with the same starting budget ($1000), CPI ($1), and user churn (0%), let’s figure out how the amount of acquired users differs by scenario over 30 days.
In scenario A, the app recoups the invested money on day 1, allowing the developer to reinvest that recouped money on day 2. As a result, you’ll acquire 1000 users ($1000 / $1 CPI = 1000 users) on day 1, and day 2 you’ll acquire another 1000 users for a total of 2000 users by the end of the 2nd day. This will go on for 30 days, effectively acquiring a total of 30,000 users.
In scenario B, the app recoups the invested money on day 2. The developer can only acquire a new 1000 users every other day. As a result, after 30 days, the app only has a total of 15,000 users.
Below is a graph that illustrates this difference in 1-day TTP and 2-day TTP.
By the end of 30 days, an app campaign with 1-day TTP is able to acquire 2x more users than an app campaign with 2-day TTP.
Moral of the story: KNOW YOUR TIME TO PROFITABILITY! It can dramatically affect how many users you can acquire in a defined period of time.
