Mobile applications are an option that allows you to successfully develop your own business. However, it is important to understand how much it will cost to acquire new customers. Nowadays, website production is especially popular. It is worth considering the main features of CAC (customer acquisition costs) to understand all the nuances of the issue.
What is CAC?
This is the total financial amount that a company spends on attracting a new customer. CAC includes all expenses related to advertising and marketing. It is important to emphasize that these are not one-time expenses, but ongoing costs. A company faces them every time it buys a new customer.
It is no secret that the mobile application business depends on attracting users, since this is how income increases. If you understand CAC, you can understand how much income each person will bring. The information can be used to optimize the budget and marketing strategy, to forecast profits. Usually, mobile app acquisition costs pay off in a short time.
Rules for calculating CAC for mobile applications
You need to take into account some important indicators in order not to make a mistake. Among them:
- Cost per installation. This is the cost of acquiring a new user who installs the utility on their device. To calculate the indicator, divide the total cost of user acquisition by the number of new installations. For example, the CPI will be $1 if you bought a user for $1,000 and acquired 1,000 new customers.
- Cost per acquisition. This indicator reflects the cost of attracting a new user who will perform certain actions in the application. To calculate it, you need to divide the cost of user acquisition by the number of people performing the desired functions. Your CPA will be $10 if you spend $1,000 to attract a person, and only 100 customers make a purchase.
- Lifetime value. The estimated value of a user during the time they use the application. To calculate the indicator, you need to multiply the average revenue per customer by the average duration of their use of the utility.
- Customer churn rate. This is the percentage of those users who stop using the application in a specific period of time. You need to divide the number of clients who do not use the utility by the total number of people (for a specific period of time).
Now you know more about CAC, so using a mobile application will become more comfortable. In our time, agile web development will help you achieve the desired results!
