Net vs gross revenue: the mobile app metrics mistake that might cost a lot

Most important financial app metrics

While fixing your revenue reporting is our ultimate goal today, diagnosing the problem is impossible without fully understanding the data in front of you. Before we dive into the technicalities of net and gross earnings, let’s demystify the core financial metrics you actually need to monitor to keep your app’s revenue generation process running smoothly:

• DAU MAU WAU (which stands for Daily, Weekly, and Monthly Active Users) are metrics that are like a pulse to your app. They tell you exactly how many unique users are logging in and interacting with your product over specific timeframes. By monitoring the ratios between these three metrics, you can clearly evaluate how user engagement within your app has evolved over the past month. To give you an example, a DAU to MAU ratio of 100% means that every single active user from the last 30 days also interacted with your app on the specific day you are analyzing. We encourage you to read more in our article about user stickiness on the Bidlogic blog;
• ARPU and ARPPU – once you understand your active user base, it’s time to look at their financial footprint. ARPU (Average Revenue Per User) shows you the average income generated by every single person using your app, over a specific time, regardless of whether they click an ad, make a purchase, or just browse for free. On the other hand, ARPPU (Average Revenue Per Paying User) zooms in strictly on the users who actually open their wallets for in-app purchases or subscriptions. Tracking both metrics side-by-side gives you a clear picture of how much your general audience is worth compared to your premium buyers, helping you balance your ad density and IAP offers effectively;
• LTV, not all users contribute the same value over time, which is why tracking Lifetime Value (LTV) is so important. LTV estimates the total value a user generates over their relationship with the app. Depending on the business, this may be measured as revenue or profit;
• ROAS (Return On Ad Spend) measures how much revenue is generated for every dollar spent on advertising. It helps evaluate the efficiency of advertising campaigns, but it does not account for other business costs or indicate overall profitability;
• ROI, which stands for Return on Investment, measures the profitability of an investment by comparing the net return generated to the investment’s total cost. Unlike ROAS, ROI considers all relevant costs, not just advertising spend.

IAA earnings and IAP earnings, net vs gross revenue

Many app creators make money by using both ads, so In-App Advertising (IAA) and In-App Purchases (IAP). That’s usually a very profitable mobile app monetization strategy. However, a major problem occurs when they measure ad revenue earnings differently from IAP earnings. Sometimes, in-app ad revenue is counted as net, therefore, after fees are deducted. However, in-app purchase revenue is sometimes reported on a gross basis. This inconsistency can make the app appear more profitable than it actually is or lead to inaccurate comparisons between monetization channels. Because of this confusion, companies might waste their budgets on poor marketing decisions. To fix this, all teams must always calculate their total earnings after all fees and taxes are paid. By using this accurate number, businesses can plan better and grow their apps successfully.

Whether you’re a big team or a solo indie: review your data

For larger publishers, it is crucial to hold periodic syncs to ensure revenue reporting practices are accurate and fully aligned across the board. By fostering open communication between your finance, product, monetization, and marketing departments, you can easily maintain data consistency and eliminate the risk of costly misinterpretations. However, if you are an indie developer, you are likely wearing all of those hats yourself! In this case, it is just as important to schedule regular check-ins with your own data. Treat your solo operation with the same rigorous financial standards as a top-tier global publisher by consistently setting aside time to review your combined metrics.

If you want to take those numbers to the next level, optAd360 is here to help mobile app publishers earn more with ads. Explore how optAd360 and Bidlogic can optimize your monetization strategy!