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The Rise Of User-Based Valuation

Updated: May 15, 2019

User Price of Mobile App is averagely from $50 to $90, growing much more than in 2008 with $8 and continues to increase in the future. We will walk through 3 case studies and dive into the reason why User Base is the new valuation and this value of User Price is really making sense.

1. MINDBODY - $50 Per User

MINDBODY: 35.000.000 Users

1 User = $1.75 Bill/$35 Mill = $50

The 2 attached images below show the phrase that Google used to detect User Price of a famous app MINDBODY. We can Google this way to know the User Price of all companies are on the US Market that lives and work rely on their App.

These two pictures show that the MINDBODY (an App introduction about Gym and Fitness) with User Price is about $50. There are times that the market value of this company was up to 1.9 billion and their User Price reached $63.

The price that Google indicates above is from the stock market valuation. When buying/ selling a business, strategic investors often buy higher than the significant market price for a big share. It’s mean that an investor can accept User Price at $100 to value the business.

The recent world billions dollar M&A deals also proves that User Base is the tie-up knot. The User Price of the business, therefore, is used to determine the value of the existing business before buying or selling. This is featured by the case of Facebook-Whatsapp and Microsoft-LinkedIn:

2. WHATSAPP - $42 Per User

WHATSAPP: 450.000.000 Users

1 User = $19 Bill/$450 Mill = $42

In a play to dominate messaging on phones and the Web, Facebook has acquired WhatsApp for $19 billion. WhatsApp has over 450 million monthly users, 70% of whom are active on a given day. They are adding more than 1 million new registered users per day. The $19 billion valuation means Facebook believes WhatsApp is worth over $42 per user.

3. LINKEDIN - $60 per user

LINKEDIN: 430.000.000 USERS

1 USER = $26.2 BILL/$430 MILL = $60

The software giant Microsoft has acquired LinkedIn in a $26.2 billion cash deal. The acquisition, by far the largest in Microsoft’s history, unites two companies in different businesses: one a big maker of software tools, the other the largest business-oriented social networking site. LinkedIn has 430 million members globally, which means the deal values each member at more than $60.

Notices that, the User Base has to be real and need a long time to accumulate. If you don't do it before you want to buy/ sell your business, you will have nothing to show or offer to investors. For the FMCG industry, it’s necessary to develop a clear strategy to build the User Base as soon as you could.

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Discuss the core components of a sound user acquisition strategy:

  • App store optimization, including targeted keywords to help boost your app in the top of search queries

  • Conversion, to increase user downloads through app store assets, like your icon, description, and screenshots

  • Paid channels, to enhance the discoverability and placement of your apps

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