interesting article on freemium model for mobile app development

He and his company decided that an app was a trade with customers — customers would pay money to have the company fill out their free time. And that’s how the company attached itself to the concept of DAUs.

DAUs, explained Young, are “daily active uniques” — all of the people who log into an app to play with it daily, the number of unique users per given day. The company is also interested in dollars (actually cents) per DAU, or the average number of cents earned per daily user. 250,000 users may play your free app every day, but only 2% may actually pay for it using in-app purchases. If that money total equals $5000, Young said that's like 2,000 users (the average number of downloads for the top list of paid apps at the time) buying your app for $2.50. In short, you don’t need to have a paid app at all — you just need to monetize usage for that 2%.

via GDC 2010: Ngmoco’s Neil Young on how freemium will change the App Store world.