What is Value of Your Mobile App: Tips To Uncover True Value of App

You have an app up and running in the market with pretty good fanfare, consistent traffic flow and regular earnings. Now considering the mounting competition posed every other day by new app products across platforms, you need to safeguard your success by taking preventive measures well in advance. This is when you need to evaluate your app first.

If you need a 360-degree evaluation of your app, where to start? Which are the critical aspects that, as an app development agency, you should evaluate and measure for the app? Here we provide the answers.

User Acquisition

User acquisition denotes the number of app users who installed the app and found it through peer suggestions, organic web search, paid campaigns, social platforms or media ads. Now, this user acquisition is subjected to several metrics such as app installs, bounce rate, etc. By analysing the figures of these metrics, you can understand where more efforts are needed, or strategic changes are required to push user acquisition.

User Retention

User retention refers to the frequency of returning to the app after the install and first visit. There are various user retention metrics such as DAU, MAU, Session length, etc. These metrics allow you to know how valuable your app appears to the users. 

Baseline revenue

Now you also need to evaluate the app based on its earnings or revenue. There are two different ways to establish the baseline revenue of an app, such as SDE and EBITDA.

SDE or Seller’s Discretionary Earnings: As per this method, the salary and personal expenses are added back to the total earning to determine the actual revenue potential of an app business.

EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortisation: It is another widely popular formula that considers several earnings garnered through without the layers like taxes and depreciation. In large business apps, this method helps determine the actual app performance.

App code & documentation

Since apps are built with code and a specific architecture, it is essential to evaluate their flaws from time to time. It would help if you documented all the findings and flaws while evaluating the code and architecture.

Utility

After using an app for the first time, he may continue to use the app if he finds it useful. He can delete the app or stop using it altogether. An app will be retained and continue to be used if found useful and relevant by the users. So, evaluating the utility of the app is essential.

Searchability

Your app allows users to carry out a search while using the app, a significant building block of UX evaluation. Ease of using the search function to get instant results through predictive text, autocomplete, location features, etc., needs to be considered.

Browsability

This element corresponding to app UX plays a decisive role in understanding the ease of browsing an app and moving around an app. Consider simplicity, ease of use and effortlessness for finding things and using app features.

Abandonment rate

Since many users, after using the app for the first time, never returns to the app again, this leads to a significant loss of resources for an app project. How much app abandonment your app needs to suffer should be evaluated. After knowing the abandonment rate, you can comprehend the means to reduce this to a minimum level.

Clear documentation

Clear documentation with all the processes, features and functionalities, user flow and design elements explained clearly is very useful to add value to an app over time. This is why evaluating the app documentation and improving it is essential. 

Financials

There can be hardly any doubt that you need to have complete and verifiable financial records under your command to value an app. Despite this fact, many owners neglect to follow accounting best practices, especially in the early stages. For such evaluation, you can use accounting tools like Quickbooks.

Growth

An app is often valued by potential buyers by its growth prospects. For this, clear documentation showcasing the growth of your app revenue and the user base is essential. It needs to use growth measurement tools such as Google Analytics. 

App management

Another crucial aspect of evaluation is how much time the app owners give to the app continuously and how the app management strives to create more value for the app project. Typically app buyers or investors like app projects having solid management behind them.

Age of the app

However great an app is in terms of revenue, user experience and growth potential, with just a few months of presence in the market, it cannot compete with an age-old app. As a business, the app needs to remain in the middle, at least for some months. Your app’s age also refers to how much competition and market challenges you could withstand over time.

Traffic

How many visits does your app get every day? How many potential users visit your app page in the stores? A robust analytics tool is likely to give you a fair idea of all the traffic you get along with documentation for traffic from each channel. This is a crucial consideration for evaluating the app.

Conclusion

Mobile app evaluation is still not very popular as a strategic move. But as competition continues to increase, making the app market more ruthless and erratic, apps will be finding this helpful in the years to come. From the perspectives of investors and app buyers, evaluating an app is a prerequisite and not an option. 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.