LTV > CPI
LifeTime Value is larger than Cost Per Install. That’s the golden formula for making money. When you have that, you can spend $3 on advertising to get an install, then wait for the player to spend $4, pocket $1, and spend the remaining $3 to buy another customer. In short, you have a loop that prints money. To prove that you do have that, you will need a minimum of $100,000. Here’s why:
Let’s start with the LTV part. Measuring your life time value is a not trivial. Here’s a short overview of how you can do it: https://deltadna.com/blog/3-ways-calculate-ltv/
The challenge for an indie developer is that you need a significant amount of traffic to be able to measure that number reliably. Say you want a 1 000 paying players to have a good sample. Say you have 3% paying customers among your players (which should be considered quite good). To get a sample of 1 000 payers, you will need 33 thousand downloads for your app (1 000 / 0.03).
The other part of the equation is the cost per install, CPI. This varies according to type of game, and which country you are advertising in. To get good paying customers, you will need to choose a developed country to run your test in. Western Europe, Canada, or Australia might be good candidates, and those countries are expensive. A typical CPI at this point might be $3.
Now we are ready to sum up: 33 thousand downloads at $3 per download will cost you $100,000. And that’s for a single measurement of LTV with a decent accuracy. Unless you are a F2P monetisation divinity (or very lucky), you will need to do this a few times to get everything optimised.
This is where an indie developer needs a good publisher or a VC investment.