Understanding The Calculator
We are greatly indebted to David Skok and our friends at For Entrepreneurs for creating the original equation. If you are a math geek and would look to look behind the numbers a bit more, you can find a full explanation here. Or just check out the full derivation of the equation.
We just wanted to give a little extra explanation about the results. While this is a great way to gauge the power of Facebook virality, there are a number of limitations to the model.
- Retention: This model assumes that you keep all of the users that you gain. This isn’t realistic. Over time, you will lose users which affects the growth model.
- Invitations: It’s hard to predict the extent to which your users will invite their friends. Luckily, with a Facebook app, there are a number of ways that users can invite others–even if it’s “indirectly” (e.g. by posting a status update).
- CTRs: Not all apps are created equally. Your click-through-rates will differ dramatically based on the type of users you have acquired, location of the ads, and how relevant/targeted the ads appear to your audience. We’ve given you the standard revenue-per-click model in this calculator, but don’t forget there are other (more profitable) ways to monetize your facebook app.