How Do I Know If I'm Spending Too Much on User Acquisition?

Looking at your app marketing dashboard can feel a bit like watching money disappear into thin air. You're spending thousands—sometimes tens of thousands—on Facebook ads, Google campaigns, and influencer partnerships, and sure, the downloads are coming in. But here's what keeps most app founders up at night (and honestly, it kept me awake plenty when I first started out): you have no idea if you're paying way too much or if this is just what it costs now. The truth is, user acquisition costs have climbed so high in recent years that what seemed expensive five years ago would actually be considered a bargain today.

I've watched clients burn through £50,000 in their first quarter thinking they were doing everything right, only to discover their competitor was getting the same quality users for half the price. And I've also seen the opposite—founders panicking because they're spending £8 per install when that's actually perfectly reasonable for their industry. The mobile app space has become incredibly competitive; there are millions of apps fighting for attention on the same platforms, bidding on the same keywords, targeting the same audiences. This means acquisition costs can vary wildly depending on your category, target demographic, and even the time of year you're running campaigns.

The difference between a profitable app and one that bleeds money often comes down to understanding whether your acquisition costs align with what you can actually earn from each user over time.

What makes this harder is that there's no universal standard. A gaming app might happily pay £15 per install because their in-app purchase model supports it, whilst an e-commerce app in the same market might only be able to justify £3. Your costs need to make sense for your specific business model, not just match some industry average you found online.

What User Acquisition Actually Costs (And Why It Varies So Much)

The simple answer? It depends—and I know thats frustrating to hear. But its the truth. I've worked on healthcare apps where we paid £15 per install because we needed verified medical professionals, and I've built e-commerce apps where we got installs for under £1 through clever content marketing. The difference wasn't luck; it was understanding what drives costs in your specific situation.

Your industry is probably the biggest factor. Financial apps cost more to acquire users than, say, a casual gaming app. Why? Because banks and fintech companies are competing for the same audience with massive budgets, and the approval process for financial advertising is tougher. When I built a investment tracking app, our cost per install sat around £8-12, whilst a recipe app we developed was getting installs for £2-3. Same platforms, same ad quality—completely different competition levels.

What Actually Moves the Needle on Costs

Target audience matters more than people think. If you're after 18-24 year olds, you'll pay less than if you need wealthy retirees who don't spend much time on social media. Geographic location changes everything too; acquiring a user in London costs roughly 3x what it does in Manchester, and thats before you even think about international markets where costs can be pennies or pounds depending on the country.

Your app category plays into this heavily. Gaming and entertainment apps benefit from impulse downloads—people see an ad, think "that looks fun," and install immediately. Business apps or productivity tools? Those need multiple touchpoints before someone commits. I've seen B2B apps require 7-10 interactions before conversion, which obviously drives up the total acquisition cost because you're paying to reach the same person repeatedly.

Platform Differences You Need to Know

Here's something that surprises people: iOS users typically cost 20-30% more to acquire than Android users, but—and this is important—they usually spend more in-app and have better retention rates. I've run campaigns where iOS installs cost £4.50 whilst Android came in at £2.80, but the iOS users generated nearly double the lifetime value. You cant just look at the upfront cost. These platform differences extend beyond just acquisition costs and affect everything from development to user behavior patterns.

Seasonality affects costs too. Running user acquisition campaigns in December? Expect to pay premium rates because you're competing with every retailer's holiday push. I learned this the hard way when a client insisted on launching their fitness app in January (everyone's New Year resolution season)—our costs jumped 40% compared to what we'd budgeted based on autumn testing.

The ad creative itself matters more than most people realise. I've seen identical campaigns with different video ads produce cost variations of 60-70%. A well-optimized ad that clearly shows your app's value can cut your costs dramatically, whilst a generic "download now" approach will burn through budget quickly. Testing creative is not optional anymore—its the difference between sustainable growth and financial disaster.

• Competition in your app category (saturated markets = higher costs)
• Quality of your app store listing (better conversion = lower effective costs)
• Your targeting precision (broader audiences often cost less but convert worse)
• Campaign objective settings (optimising for installs vs. optimising for events)
• Your app's organic ranking (better visibility = cheaper paid acquisition works)

One thing people don't talk about enough: your app's performance affects acquisition costs over time. If your app crashes frequently or has poor reviews, the platforms (especially Facebook and Google) will show your ads less often or charge you more. I've seen apps where fixing technical issues dropped acquisition costs by 25% without changing anything else about the campaigns. The platforms want to show ads for quality apps because it keeps their users happy.

The Metrics That Actually Matter When Calculating Your CAC

Most people think calculating customer acquisition cost is simple—just divide your marketing spend by the number of new users. But that's only half the story, and honestly it's the half that can lead you completely astray if you're not careful. I've seen app teams celebrate a low CAC only to realize months later they were measuring the wrong thing entirely, and by then they'd burned through their marketing budget on users who never stuck around.

The truth is, you need to track several metrics together to understand whats actually happening with your acquisition spend. First, there's your blended CAC (total marketing spend divided by all new users) versus your paid CAC (only counting paid channel spend and the users from those channels). These two numbers tell very different stories; if your blended CAC is £3 but your paid CAC is £8, you're getting significant organic lift that might disappear if you cut paid spending. Setting up proper progress tracking and metrics from the beginning helps you avoid these blind spots.

Then you need to look at the quality metrics—things like D1, D7, and D30 retention rates for each acquisition channel. I worked on a fitness app where Facebook ads brought users in at £2.50 each whilst Apple Search Ads cost £6.80, and the marketing team wanted to kill the Apple budget. But when we dug into the data? Those expensive Apple users had 47% D30 retention compared to 12% from Facebook. Suddenly that higher CAC made perfect sense.

The Numbers You Actually Need to Track

Here's what I measure for every app project, and what I tell clients they need to monitor weekly (not monthly, weekly):

• Blended CAC across all channels combined
• Channel-specific CAC for each paid source
• Cost per engaged user (someone who completes your core action)
• Retention rates at D1, D7, and D30 by channel
• Time to first meaningful action by acquisition source
• Cost per registration (if your app has sign-ups)

That last one is tricky because not every download becomes a registration. For a healthcare app we built, the download-to-registration rate was only 31%, which meant our actual cost per registered user was more than three times our cost per install. And since unregistered users almost never came back, that was the number that actually mattered for business planning.

Don't just track your overall CAC—break it down by platform (iOS vs Android) because I consistently see 20-40% differences between them. iOS users typically cost more to acquire but often show higher engagement and spending, which changes how you should think about those acquisition costs.

The Hidden Costs Nobody Tells You About

Your marketing spend isn't the only thing that factors into real acquisition costs. You've got creative production (those ad designs don't make themselves), landing page development and testing, attribution platform fees, and the time your team spends managing campaigns. For one e-commerce app, we calculated that these "hidden" costs added 28% to their CAC when everything was properly accounted for. That's the difference between a sustainable business model and one that's slowly bleeding money without realising it.

Industry Benchmarks: What Other Apps Are Really Spending

Look, I'll be honest with you—benchmarks can be a bit misleading because they lump together apps at completely different stages with different business models. But they're still useful for getting a sense of where you stand. From what I see across our projects and industry data, gaming apps typically spend anywhere from £1.50 to £5 per install depending on the game type and target audience. Casual games sit at the lower end whilst strategy or RPG games that attract high-value players can push well above that.

Fintech apps? They're spending significantly more—usually between £15 and £40 per install, sometimes even higher. I worked on a banking app where the client was comfortable spending £35 per user because their lifetime value was north of £400. That's not unusual in this space. The choice of revenue model affects not just fundability but also what you can afford to spend on acquisition. Healthcare and fitness apps generally fall somewhere in the middle, around £3 to £12 per install, though it varies wildly based on whether its a free workout app or a subscription-based mental health platform.

E-commerce and Retail

E-commerce apps usually spend between £2 and £8 per install, but here's where it gets interesting—those numbers mean nothing without knowing the average order value. An app selling £200 trainers can afford much higher acquisition costs than one selling £15 phone cases. I've seen retail clients panic about £5 acquisition costs when their AOV is £80 and repeat purchase rate is strong. The maths worked perfectly fine; they just didn't realise it yet.

B2B and Enterprise

B2B apps are playing a completely different game. When I work with enterprise software clients, their cost per qualified user can easily hit £50 to £150 because each customer represents thousands in contract value. Sure, the volume is lower, but the unit economics make sense. What matters isnt matching some industry average—its understanding whether your specific numbers work for your specific business model and customer value.

How to Know If Your Numbers Are Off

Your numbers are probably off if you're spending more than £5 to acquire a user who never opens your app past the first session. Sounds obvious, right? But I've seen this happen more times than I'd like to admit, especially with apps that have a beautiful install campaign but a terrible onboarding experience. The first red flag is when your Day 1 retention drops below 25%—that tells me something broke between the promise you made in your ad and what users actually found when they opened your app.

Here's what I look at when auditing a client's acquisition spend: if your cost per install is climbing month over month but your conversion rate stays flat (or worse, drops), you've got a problem. I worked with an e-commerce app that was spending £8 per install, which seemed reasonable for their category, until we discovered that 60% of users were uninstalling within 48 hours. Their acquisition costs weren't technically high—their product-market fit was just rubbish. The maths doesn't lie; if you're paying £10 to acquire someone and they generate £3 in lifetime value, you don't need a fancy dashboard to tell you that's unsustainable.

The easiest way to spot overspending is when your finance team starts asking questions before your marketing team does

Another warning sign? When your CAC keeps increasing but you cant explain why. Maybe iOS 14.5 changed your targeting capabilities, or perhaps your creative fatigue is higher than you thought. I always tell clients to plot their CAC against their conversion rates weekly—if those lines start diverging, you need to stop and figure out whats changed. And honestly, if you're spending more than 3x your average order value to acquire a customer in e-commerce, or more than 40% of your first-year revenue per user in subscription apps, somethings definitely off and needs immediate attention.

The Relationship Between CAC and Lifetime Value

Getting your user acquisition cost down is nice, but its only half the story. What really matters is how that CAC compares to your lifetime value (LTV). I mean, you could be spending £10 per install and still making a healthy profit if each user generates £50 over their lifetime with your app. Or you could be spending £2 per install and losing money hand over fist if those users delete the app after two days.

The LTV to CAC ratio is what keeps me sane when reviewing acquisition campaigns. Here's the thing—most successful apps aim for at least a 3:1 ratio, meaning every pound spent on acquisition should generate three pounds in return. But I've worked with subscription apps that can sustain much tighter ratios (sometimes even 1.5:1) because they've got predictable recurring revenue and low churn. An e-commerce app we built needed closer to 4:1 because of inventory costs and seasonal fluctuations in purchasing behaviour.

Key Components That Impact Your Ratio

• Average revenue per user—this includes subscriptions, in-app purchases, and ad revenue if you've got it
• Retention rate—honestly this is the biggest factor; an app that keeps users for 12 months versus 2 months changes everything
• Monetisation timing—when do users actually start paying? Day one or month three?
• Referral rate—users who bring in other users effectively lower your blended CAC
• Support costs—yeah, these eat into your LTV and people forget to account for them

What catches people out is calculating LTV too optimistically. You need real data, not projections. Wait at least 90 days before making big acquisition decisions based on LTV estimates—I've seen too many apps scale spending based on hopeful math only to discover their actual retention was half what they'd assumed. Its painful to watch.

Free vs Paid Channels: Where Your Money Goes Further

Look, I'll be honest—every founder I work with asks me this question eventually: "Can we just rely on organic growth?" And the answer is... well, it depends on how much time you've got. Free channels like App Store Optimisation can absolutely work, but they're slow. Really slow. I've seen beautifully designed apps with proper ASO sit at 50-100 organic downloads per day for months before they start gaining traction. That's fine if you're bootstrapped and playing the long game, but if you've got investors breathing down your neck or a limited runway, you'll need paid channels to accelerate things.

The thing is, "free" channels aren't really free—they just cost time instead of money. Getting your ASO right means keyword research, A/B testing your screenshots and creating compelling app preview videos, constantly tweaking your description... it adds up. Same with content marketing or building a social media presence. I worked with an e-commerce app that spent six months creating TikTok content before they saw meaningful installs from it. But here's what made it worthwhile: those organic users had a 40% higher retention rate than users from paid ads. They'd found the app themselves, so they were already more invested in what it did.

The Real Breakdown of Channel Performance

From what I've seen across dozens of projects, here's roughly how different channels perform for cost and quality:

What I've learned is that the best strategy isn't choosing between free and paid—its using both strategically. I usually tell clients to start with paid channels to validate their messaging and get initial traction, whilst simultaneously building their organic presence. Once you've got your paid channels working efficiently (meaning you know your CAC and its profitable), you can reinvest some of those earnings into content creation, ASO improvements, and community building. If your app has poor search visibility, you might want to focus on quick wins to boost your ranking before scaling paid acquisition.

When "Free" Actually Costs More

Here's something that catches people out: relying solely on free channels when you're in a competitive market can actually cost you more in the long run. I worked with a fintech startup that spent eight months trying to grow organically whilst their competitor launched with a proper paid acquisition strategy. By the time my client was ready to invest in ads, their competitor had captured most of the market and driven up ad costs for everyone. The competitor was already retargeting warm audiences and had built brand recognition. My client ended up paying 2-3x more per install than they would have if they'd started earlier.

The sweet spot I've found? Allocate about 70% of your budget to paid channels that you can measure and scale, and 30% to organic initiatives that build long-term value. That ratio shifts over time—as your organic channels mature, they'll start carrying more of the load and you can dial back paid spend. But in the early days, you need that paid boost to get momentum. Some founders also explore working with influencers as a middle ground between paid ads and purely organic growth.

Run small tests on 3-4 paid channels with £500-1000 each before committing to a major spend—what works for other apps might not work for yours, and you'll save thousands by finding your best-performing channel early.

When High Acquisition Costs Are Actually Fine

Here's something that might throw you—sometimes spending £15 or even £25 per user install is completely acceptable, and I've seen it work brilliantly for the right types of apps. It sounds mad when you first look at the numbers, but the context matters more than the figure itself. I worked on a fintech app where we were paying £18 per install, which made the client nervous at first, but each user was worth over £200 in their first year. The maths made perfect sense.

High acquisition costs aren't a problem when your user lifetime value justifies them. Its really that simple. If you're spending £20 to acquire a user who'll generate £100 in profit over their lifetime, you've got a sustainable business model. The issue only becomes a problem when you don't know what that lifetime value actually is—and honestly, too many app developers skip this calculation entirely. I've seen e-commerce apps spend £8 per install where the average order value was only £12. That doesn't work unless you've got incredible repeat purchase rates.

When Premium Pricing Supports Higher CAC

Some business models are built to support higher acquisition costs from day one. Healthcare apps with subscription models, premium productivity tools, and B2B applications can all afford to spend more because their revenue per user is substantially higher. I worked with a health and wellness app that charged £9.99 monthly—they could comfortably spend £30 acquiring users because the six-month retention rate was around 40%. That's £240 in revenue from those retained users, minus the platform fees and operating costs.

Categories Where High CAC Makes Sense

• Subscription apps with strong retention (over 30% at six months)
• Financial services apps where average transaction values are high
• B2B applications with enterprise pricing models
• Apps with network effects that increase in value as more users join
• Premium tools targeting professional users with high disposable income

The real question isn't whether your CAC is high—it's whether the unit economics work. You need to understand your payback period too. If it takes 18 months to recoup your acquisition costs but most users churn after 12, you've got a problem. But if users stick around for years? That changes everything. I mean, look at dating apps—they spend heavily on acquisition because they know engaged users will pay monthly for premium features over extended periods.

Conclusion: Building a Sustainable User Acquisition Strategy

After nearly a decade of watching apps succeed and fail based on their acquisition approach, I can tell you that sustainability matters more than speed. I've seen too many apps blow through six-figure budgets in a few months chasing downloads that never converted into paying users—it's a painful lesson that doesn't need repeating. The apps that stick around are the ones that treat user acquisition like a marathon, not a sprint; they test channels methodically, they know their numbers inside out, and they're honest about what's working and what isnt.

Your sustainable strategy starts with knowing your LTV to CAC ratio—if you're spending £30 to acquire a user who'll only ever give you £25 in value, that's not marketing, that's just slowly going bankrupt. I typically advise clients to aim for at least a 3:1 ratio as a baseline, though some of our fintech projects have pushed for 5:1 or higher because their retention models are so strong. The key is setting up proper attribution tracking from day one so you actually know which channels are delivering quality users, not just cheap installs.

Start small with your paid spend and scale what works—I've built acquisition strategies for healthcare apps that began with just £500 monthly budgets focused entirely on Instagram ads targeting specific health communities. Once we proved those users had strong 30-day retention, we scaled to £5k per month across multiple channels. That's how you build something that lasts. And remember, your organic efforts (ASO, content, referral programmes) should always run parallel to paid because relying solely on paid acquisition is like renting your user base instead of building it. Mix your channels, watch your ratios, and adjust based on real data rather than hope—that's what separates sustainable growth from expensive mistakes.