your app is free to download. revenue comes from in-app purchases (unlock features, buy credits, etc). you post about it on HN, reddit, blog. thousands download, but only some pay.
the question: which channels bring users who actually convert and pay?
more complex than paid or subscription: you need to track the full funnel.
the conversion funnel:
freemium has multiple steps: download → open app → activate → purchase.
each step loses people. 1,000 downloads, 700 open app (30% never open), 400 activate (use core feature), 40 purchase (10% of activated users). final conversion: 4% from download to paying customer.
LTV calculation:
two ways to think about it. LTV per download: 1,000 downloads, 40 paying customers (4% conversion), average purchase $10, revenue after Apple cut 40 × $10 × 85% = $340, LTV per download $0.34.
LTV per paying customer: average purchase $10 × 85% = $8.50, if they buy twice on average that's $17.
you care about both: LTV per download (overall profitability) and LTV per paying customer (for those who convert).
conversion rates differ by channel:
different channels bring users with different conversion rates. example photo editing app ($5 IAP to unlock pro features):
HN: 800 downloads, 480 activated, 58 paid, 12% conversion, $0.62 LTV/download. blog: 400 downloads, 280 activated, 42 paid, 15% conversion, $0.89 LTV/download. reddit: 1,200 downloads, 600 activated, 36 paid, 6% conversion, $0.26 LTV/download. twitter: 600 downloads, 180 activated, 6 paid, 3% conversion, $0.09 LTV/download.
insights: blog brings best conversion (searching for solution), HN brings good conversion (high-intent users), reddit brings okay conversion (casual interest), twitter brings poor conversion (just trying it).
why conversion differs:
intent and fit. blog/SEO users searched "photo editor pro features," actively solving problem, willing to pay → high conversion. twitter users saw random mention, downloaded to try, not really needing it → low conversion.
calculating profitability:
scenario: productivity app, $10 IAP.
HN Show HN takes 1 hour effort, gets 1,000 downloads, 600 activated (60%), 72 purchases (12% of activated), revenue 72 × $8.50 = $612, ROI $612/hr.
blog post takes 3 hours to write, gets 500 downloads (over time from SEO), 350 activated (70% - high intent), 63 purchases (18% of activated), revenue 63 × $8.50 = $536, ROI $179/hr (but compounds).
reddit post takes 20 min effort, gets 600 downloads, 300 activated (50%), 18 purchases (6% of activated), revenue 18 × $8.50 = $153, ROI $459/hr.
twitter takes 30 min effort, gets 300 downloads, 90 activated (30% - low engagement), 3 purchases (3% of activated), revenue 3 × $8.50 = $26, ROI $52/hr.
focus on HN and reddit for quick wins, blog for long-term.
is your app profitable?
depends on conversion rate. high conversion (10%+): channels work well, can build sustainable business, organic acquisition profitable. medium conversion (5-10%): selective channels work, need high-intent sources (HN, blog/SEO), marginal on casual sources. low conversion (<5%): struggling, only very cheap/free channels work, might need to rethink model.
example comparison: app A has 2,000 downloads at 10% conversion = 200 paying customers. app B has 2,000 downloads at 3% conversion = 60 paying customers. same effort, 3.3× different revenue. conversion rate is everything for freemium.
improving profitability:
increase conversion rate (most impactful): 5% → 10% conversion = 2× revenue from same downloads. how: better onboarding (show value faster), clearer IAP value proposition, right paywall timing (not too early), pricing (test $5 vs $10 vs $15).
example: current is download → 60% activate → 8% convert = 4.8% overall. improved is download → 75% activate → 12% convert = 9% overall. that's 88% more revenue from same downloads.
focus on high-conversion channels: shift effort from twitter (3% conversion) to blog (15% conversion), same time investment but 5× better conversion, 5× more paying customers.
increase IAP value: single $5 IAP → multiple IAPs or higher price. options: basic $5 with pro $15 (some pay more), consumables (buy credits repeatedly), subscription instead (recurring revenue).
volume vs conversion quality:
reddit brings 1,200 downloads at 3% conversion = 36 paying customers. HN brings 500 downloads at 12% conversion = 60 paying customers. HN wins despite 2.4× fewer downloads. don't optimize for downloads, optimize for paying customers.
real example: note-taking app:
free app, $10 IAP for pro features.
month 1-3 (no attribution tracking): 4,000 downloads total, 240 paying customers (6% conversion), $2,040 revenue, no idea which channels worked.
month 4-6 (with ppid tracking): HN brought 1,000 downloads, 120 paid (12% conversion), $1,020 revenue. reddit brought 1,500 downloads, 75 paid (5% conversion), $638 revenue. blog brought 800 downloads, 104 paid (13% conversion), $884 revenue. twitter brought 700 downloads, 21 paid (3% conversion), $179 revenue.
insights: blog and HN have excellent conversion (high-intent), reddit has okay conversion (interest varies by subreddit), twitter has poor conversion (low intent).
changes made: focused on writing SEO content (high conversion, compounds), posted on HN every 2 months with feature updates, posted on reddit weekly in relevant subreddits, reduced twitter effort.
result: more downloads from high-conversion channels, overall conversion improved from 6% to 8.5%, revenue per month up 60%.
when multiple IAP tiers:
basic $5 (60% of buyers choose this), pro $15 (30% of buyers), premium $30 (10% of buyers).
average revenue per paying customer: $5 × 60% = $3, $15 × 30% = $4.50, $30 × 10% = $3, total $10.50 × 85% = $8.93.
vs single $10 IAP: $8.50. tiered pricing captures more value (some pay $30, some pay $5).
when consumable IAP:
example: photo editor with credit system. user buys credits at $5 for 100 credits, average user buys 2.5 times over lifetime, LTV is $5 × 2.5 × 85% = $10.63.
vs one-time $10 IAP: $8.50. consumables can have higher LTV if you provide ongoing value.
getting the data:
App Store Connect shows sales and trends → IAP revenue, analytics → downloads by ppid. but can't see conversion rate by source directly.
in-app analytics: track yourself. downloads (App Store Connect ppid), app opens (your analytics), activations (core feature use), IAP purchases (App Store Connect sales). calculate download → activation rate, activation → purchase rate, overall conversion.
by source: use ppid for downloads per channel. estimate conversion by channel based on patterns: high-intent (HN, SEO) ~10-15%, medium-intent (reddit) ~5-8%, low-intent (social) ~2-4%. then verify with actual data over time.
common mistakes:
optimizing downloads instead of revenue: 2,000 downloads at 3% conversion = 60 paying = $510. 800 downloads at 12% conversion = 96 paying = $816. focus on conversion quality, not download volume.
too early paywall: showing IAP on first open scares users away. let them see value first (use app, see benefits), then ask to pay.
unclear IAP value: "buy pro" - what do I get? be specific: "unlock unlimited exports, remove watermarks, 50+ templates".
wrong pricing: $1 IAP too cheap, need 10× conversion to match $10 IAP. $50 IAP too expensive for casual app, kills conversion. sweet spot for most apps: $5-15.
ignoring activation rate: download → open → activate → purchase. if activation is 30% (70% never use app), that's the problem. fix: better onboarding, show value faster.
when freemium works:
need decent conversion (5%+) or ability to get very cheap downloads. works well for: utilities with clear pro features, productivity apps (power users pay), content apps (unlock levels/features), creative apps (pro tools).
doesn't work well for: unclear value proposition (hard to explain IAP benefit), very niche (hard to get downloads), competitive category (hard to differentiate).
if conversion <2%, consider: paid upfront ($5-10 one-time), subscription ($5/month), different monetization.
when to care about this:
don't obsess if: <500 downloads (not enough data), first month (patterns unclear), not posting in multiple channels.
start tracking when: 500+ downloads (conversion patterns emerge), posting regularly in different places, want to optimize channel mix, considering pricing/onboarding changes.
tools you need:
App Store Connect (free) for downloads by ppid, IAP revenue, sales data. in-app analytics (free) to track activations, track IAP conversions, calculate funnel. ppid tracking (5 min setup) for downloads by source (attribution guide).
tools you don't need:
analytics platforms ($200+/month) are overkill for small freemium app, build basic analytics yourself. attribution tools (Branch, AppsFlyer) are too expensive for freemium, ppid is free and sufficient.
next steps:
set up ppid tracking → App Store attribution, track conversion funnel (download → activate → purchase), calculate conversion rate by source (estimate at first), focus on high-conversion channels, test IAP pricing and positioning, improve onboarding to increase activation rate.
the goal: understand which channels bring users who convert, not just which brings most downloads.
see also: App Store attribution, subscription app economics, paid app economics