App Downloads: Break-Even Calculation

This article was written by our expert who is surveying the industry and constantly updating the business plan for a mobile app.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the mobile app market.

What does it cost to acquire a single app user through each marketing channel?

The cost to acquire a mobile app user varies dramatically by marketing channel, ranging from under $3 for organic referrals to $50+ for finance and dating apps through paid channels.

Social media advertising through Facebook and Instagram typically costs between $15 and $25 per acquired user, making it one of the more expensive but highly targeted channels. Google Ads and search marketing fall in a similar range at $12 to $30 per user, with costs varying based on keyword competition and targeting precision.

Influencer marketing shows the highest variability, often costing $20 to $40 per user, but this depends heavily on the influencer's audience quality, engagement rates, and niche relevance. Gaming apps benefit from lower acquisition costs, sometimes achieving $1 to $3 per user through network effects and viral mechanics, while finance and dating apps face the steepest costs at $20 to $50 per user due to high competition and regulatory requirements.

Organic and referral channels deliver the lowest direct acquisition costs, potentially under $3 per user when product virality is strong and app store optimization is well-executed. The key is building features that encourage users to naturally share your app, reducing dependency on paid channels over time.

You'll find detailed market insights on channel performance in our mobile app business plan, updated every quarter.

How much revenue does each user generate on average monthly, quarterly, and annually?

Average revenue per user in 2025 shows a clear divide between iOS and Android platforms, with iOS users generating $138 annually compared to Android's $72 per year.

Breaking this down by time period, iOS users contribute approximately $11.50 per month or $34.50 per quarter, while Android users generate about $6 per month or $18 per quarter. These figures represent global averages across all monetization models including subscriptions, in-app purchases, and advertising revenue.

The average in-app purchase transaction value stands at $12.77, while subscription-based apps charge an average monthly fee of $10.20 in 2025. Premium positioning and strong onboarding processes can push these numbers significantly higher, particularly in categories like productivity, health and fitness, or specialized utilities.

Geographic location also impacts ARPU substantially, with North American and Western European users typically generating 2-3x the revenue of users in emerging markets. Your actual ARPU will depend heavily on your monetization model, with subscription apps generally achieving higher and more predictable revenue than ad-supported or one-time purchase models.

What percentage of users convert from free downloads to paying customers?

Conversion rates from download to paying customer vary significantly based on your app's monetization strategy, with freemium apps averaging 2.18% and hard paywall apps achieving 12.1% median conversion.

What is the expected lifetime value of a paying customer based on retention and churn data?

Lifetime value for paying mobile app users typically ranges from $150 to $250 for iOS users with above-average retention, calculated by multiplying ARPU by expected customer lifetime minus churn and discounts.

For iOS apps with $138 annual ARPU and industry-standard retention rates, LTV calculations must factor in that most revenue comes from a small percentage of highly engaged users. If your month-1 retention is 8% (industry average) versus 15% (best-in-class), this dramatically impacts how long users generate revenue and therefore their total lifetime value.

Android apps face lower LTV expectations due to the $72 annual ARPU baseline, meaning you need either higher conversion rates or significantly better retention to achieve profitability. The LTV-to-CAC ratio is the critical metric here—sustainable apps maintain at minimum a 3:1 ratio, meaning if your LTV is $150, your customer acquisition cost cannot exceed $50 while maintaining healthy margins.

Premium apps with strong retention can achieve LTVs exceeding $300-$400 by reducing churn through continuous feature updates, personalized experiences, and community building. The key is extending the average customer lifetime from 12-18 months to 24-36 months through strategic retention initiatives.

This is one of the strategies we break down in detail in the mobile app business plan.

What are the fixed costs for developing, maintaining, and updating a mobile app?

Fixed costs for mobile app development start with an MVP build ranging from $40,000 to $150,000+ for both iOS and Android platforms, followed by ongoing maintenance costs of $3,000 to $10,000 per month.

The initial development investment covers core functionality, user interface design, backend infrastructure, and testing across devices. This upfront cost is highly variable depending on complexity—a simple utility app may cost $40,000-$60,000, while a feature-rich social platform or fintech app can easily exceed $150,000 before launch.

Monthly maintenance costs include bug fixes, platform updates to accommodate new iOS and Android releases, security patches, and minor feature improvements. These ongoing expenses scale with app complexity and user base size, with more sophisticated apps requiring larger development teams and therefore higher monthly fixed costs.

Additional fixed costs include design resources, legal and compliance expenses (particularly for apps handling financial transactions or health data), app store fees ($99/year for Apple Developer Program, $25 one-time for Google Play), and any third-party service subscriptions for analytics, push notifications, or backend services. Total fixed costs in the first year typically run $75,000-$250,000 for a properly resourced mobile app startup.

What are the variable costs per active user for servers, support, and payment processing?

Variable costs per active user for mobile apps typically total $1.20 to $5.50 per month, combining server hosting, customer support, and payment processing fees.

What are the retention rates at day 1, week 1, month 1, and beyond?

Mobile app retention rates in 2025 show day-1 retention of 25-35%, dropping to 10-15% by week 1, and settling at 4-8% by month 1 for average apps.

Day-1 retention represents the percentage of users who return to your app the day after first opening it, and this 25-35% benchmark indicates that roughly two-thirds of new users never return after their initial session. This dramatic drop-off highlights the critical importance of first-time user experience and immediate value delivery.

By week 1, retention falls to 10-15% as users decide whether your app solves a meaningful problem or provides ongoing value. The steepest drop happens between day 1 and day 7, making this week the most critical period for establishing user habits through onboarding, push notifications, and demonstrating core functionality.

Month-1 retention of 4-8% represents your core engaged user base, though best-in-class apps achieve 10-20%+ at this milestone through exceptional onboarding and frequent use case design. Apps with strong month-1 retention tend to maintain more stable cohorts over time, as users who stay for 30 days are significantly more likely to become long-term, paying customers. Improving retention by even 2-3 percentage points at each interval can double your effective LTV and cut your break-even timeline in half.

What is the expected user growth timeline and how quickly can downloads scale?

Mobile app download growth typically starts slowly with 100-1,000 downloads in the first 1-3 months, then scales to 10,000+ monthly downloads within 6-18 months for well-funded apps using multiple acquisition channels.

The initial growth phase is deliberately slow as you test product-market fit, refine onboarding, and identify which marketing channels deliver quality users at acceptable costs. During months 1-3, most downloads come from personal networks, early press coverage, and initial paid acquisition testing with small budgets.

Months 4-12 represent the scaling phase where proven acquisition channels receive increased budget, app store optimization improves visibility, and referral mechanics begin driving organic growth. Well-executed apps can reach 5,000-15,000 monthly downloads during this period by balancing paid social ads, search campaigns, and influencer partnerships with improving organic discovery.

After the first year, monthly download rates can accelerate to 20,000-50,000+ for apps that achieve product-market fit and scale their user acquisition effectively. Viral or mass-market apps may grow faster through network effects, while niche apps might plateau earlier but compensate with higher ARPU and conversion rates. The realistic scaling speed depends heavily on available capital, market size, competitive intensity, and how quickly you can optimize your acquisition cost and retention metrics.

How many total downloads are needed to break even on fixed and variable costs?

The break-even point for mobile app downloads depends on your specific CAC, ARPU, conversion rate, and total costs, but a typical example shows 1,300-1,500 paying conversions needed when CAC is $20, ARPU is $120/year, and fixed startup costs are $100,000.

To calculate your break-even point, start by determining total downloads needed to generate sufficient paying conversions. If your conversion rate is 10% and you need 1,500 paying users, you'll need 15,000 total downloads. With a $20 CAC, acquiring 15,000 users costs $300,000, which must be compared against the revenue those users generate.

Those 1,500 paying users at $120 ARPU generate $180,000 in first-year revenue. However, you must subtract variable costs (server, support, payment processing) which typically run $1.20-$5.50 per active user monthly. Assuming $3/month in variable costs for paying users, that's $54,000 annually, leaving $126,000 in gross profit—not yet enough to cover the $300,000 in acquisition costs plus $100,000 in fixed development costs.

This example illustrates why LTV matters more than first-year revenue. If those 1,500 paying users remain for an average of 24-36 months, their total LTV reaches $240,000-$360,000, which does cover the combined $400,000 in total costs. The actual break-even timeline spans 18-30 months rather than occurring immediately, which is why runway and capital requirements are critical for mobile app startups.

We cover this exact calculation methodology in the mobile app business plan.

What industry benchmarks should be used to validate acquisition cost, retention, and lifetime value assumptions?

Industry benchmarks for 2025 provide validation checkpoints: CAC of $10-30 per user, ARPU of $72 (Android) to $138 (iOS) annually, paid conversion of 2-12%, and retention of 25-35% day-1, 10-15% week-1, and 4-8% month-1.

Customer acquisition cost benchmarks vary by vertical—if your finance or dating app shows CAC below $20, scrutinize whether you're measuring accurately or targeting the right users, as the industry average is $20-50. Conversely, gaming apps with CAC above $5 may indicate inefficient channel selection or poor creative performance.

ARPU benchmarks should be platform-adjusted, with iOS users generating nearly double Android revenue annually. If your iOS ARPU falls significantly below $138, investigate whether your monetization strategy, pricing, or value proposition needs strengthening. Geographic mix also impacts this metric—North American users typically generate 2-3x the ARPU of emerging market users.

Retention benchmarks are the most predictive of long-term success. If your day-1 retention falls below 25%, your onboarding experience likely needs immediate attention. Month-1 retention below 4% indicates fundamental product-market fit issues, while exceeding 10% suggests strong engagement worthy of increased acquisition investment. Use these benchmarks to identify which metrics are underperforming and prioritize improvements that have the greatest impact on your break-even timeline.

How does your monetization model impact average revenue per user?

Subscription monetization now dominates mobile apps, delivering higher ARPU, better revenue predictability, and improved retention compared to advertising or one-time in-app purchases.

Subscription-based apps benefit from recurring revenue that compounds over time, with the average monthly subscription fee of $10.20 in 2025 translating to $122.40 annually when factoring in typical churn rates. This model excels at building predictable cash flow and higher lifetime value, as subscribers who remain for 12+ months generate substantially more revenue than users who make occasional in-app purchases.

In-app purchase monetization works best for gaming and specific utility apps, with an average transaction value of $12.77 but requiring multiple purchases per user to match subscription ARPU. This model concentrates revenue among "whale" users (typically 1-5% of the base) who spend significantly more than average, making it less predictable but potentially higher-ceiling for viral or deeply engaging apps.

Advertising-based monetization generates the lowest ARPU, typically $2-$10 per user annually depending on engagement frequency and ad load. This model requires massive scale—millions of active users—to generate meaningful revenue, but offers the advantage of zero barrier to entry for users. Hybrid models combining subscriptions with light advertising or in-app purchases can optimize ARPU by monetizing both paying and non-paying users effectively.

It's a key part of what we outline in the mobile app business plan.

What scenarios should be tested through sensitivity analysis for best, worst, and most likely outcomes?

Sensitivity analysis for mobile app break-even calculations must test best-case, base-case, and worst-case scenarios across CAC, ARPU, conversion rate, and retention to understand the range of possible financial outcomes.

• Best-case scenario: Models high retention (15-20% month-1), low CAC ($8-12 through viral growth or efficient channels), and strong ARPU ($150-200 through premium positioning). This scenario typically shows break-even within 8-12 months and rapid profitability, occurring when product-market fit is exceptional and marketing execution is highly efficient.
• Base-case scenario: Uses mean industry benchmarks—CAC $20, ARPU $120 (iOS) or $72 (Android), 5% conversion rate, 8% month-1 retention. This represents realistic expectations for a well-executed app with solid but not exceptional performance, typically reaching break-even in 18-24 months with adequate capital reserves.
• Worst-case scenario: Models higher CAC ($30-40 due to channel fatigue or increased competition), lower conversion (2-3%), poor retention (4% month-1 or below), and reduced ARPU ($80-90 due to pricing pressure). This scenario may show break-even extending beyond 36 months or becoming unachievable without significant product or strategy pivots.
• CAC sensitivity test: Model 20-30% increases and decreases in acquisition cost to understand how channel performance changes or competitive pressure impacts profitability. A 30% CAC increase from $20 to $26 can extend break-even timelines by 6-12 months if ARPU remains constant.
• Retention sensitivity test: Test how 2-3 percentage point improvements in month-1 retention (from 8% to 10% or 11%) dramatically improves LTV and accelerates break-even. Small retention gains often provide better ROI than acquisition cost reductions because they compound over customer lifetime.
• Conversion rate scenarios: Model conversion rates ranging from 2% (weak freemium) to 12% (strong paywall) to understand how monetization strategy changes total downloads needed. Doubling conversion from 5% to 10% cuts required downloads in half, potentially saving hundreds of thousands in acquisition costs.
• Growth rate variations: Test slow growth (5,000 downloads/month), moderate growth (15,000/month), and rapid growth (40,000+/month) scenarios to understand capital requirements and runway needs for different scaling trajectories. Faster growth requires more capital but reaches break-even in fewer months if unit economics are sound.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Dedicated Developers - Mobile App User Acquisition Cost 2025
2. This Is Glance - What's the Typical Customer Acquisition Cost for Apps
3. Coinlaw - App Revenue Statistics
4. RevenueCat - State of Subscription Apps 2025
5. AdPushup - App Monetization Statistics
6. App Samurai - Mobile User Acquisition Strategy
7. Mapendo - App User Acquisition Cost 2025
8. Survicate - App User Acquisition Cost