タラ・マイヤー
In a recent episode of Tenjin 101, we sat down with Michal Tomčány, a Slovakian game designer with over a decade of experience crafting free-to-play games. He helped us demystify one of the most critical yet often misunderstood concepts in mobile gaming: unit economics.
Michal brings a refreshing approach to mobile game economics. Despite holding a degree in architecture, he’s spent his career mastering the math behind successful F2P games. His philosophy: nevermind the jargon. He wants to make knowledge accessible to creators, so they can build profitable games.
Michal walks through real examples and shares the exact frameworks he uses, even some tools. By the end of this article, you’ll understand the basics of:
- What is unit economics?
- What is F2P in games?
- How to distinguish between hobby game dev and a sustainable F2P business
- How to forecast revenue using LTV calculator
- How to calculate pricing and purchasing frequency your game requires
- Product-market fit and troubleshooting
What Is Unit Economics?
In general, unit economics is a business framework that measures the profitability of acquiring and monetizing individual customers. From his decade of experience designing F2P games, Michal shares:
“Unit economics is a business model. If you do game dev as a business, or if you want your game to generate revenue, and you want to make a living…you have to treat it as a business.”
So, what is unit economics specifically for free-to-play games? It’s also a framework, but instead of customers, it’s used to measure the profitability of user acquisition, or new players. In essence, it’s a model of how much each user or player generates versus how much it costs to acquire them. By looking at either side of the equation, hobbyist game developers can determine if their game can transform into a sustainable business.
F2P Meaning: What Does F2P Mean in Games?
Before diving into equations and calculations, let’s make sure everyone understands the F2P meaning. F2P stands for “free-to-play,” a business model where games are free to download and play, with revenue generated through in-app purchases (IAPs) and/or in-app advertising (IAA).
In 2025, free-to-play models dominated mobile gaming, accounting for over 70% of mobile game revenues by allowing players to enhance their gaming experience through optional IAP, instead of upfront costs.
Main Differences Between Hobby vs. Professional Frameworks
These days, the entry into creating apps is lower. As Michal points out:
“Anyone can make games…Game developers can be happy just by doing games and creating games. Sometimes they will just say, ‘Look, I’m turning it free now.’ That could be very easily defined as a hobby rather than a business.”
| Hobbyist Game Dev | F2P Business Model |
| Making games for personal enjoyment, fun | Revenue-focused design |
| Publishing without revenue modeling | Data-driven monetization strategy |
| Hoping for the best – revenue approach | Scalable user acquisition |
| No structured business plan | Predictive metrics and forecasting |
How to Forecast Revenue: The Power of Predictive Analytics
Predictive analysis is essential for modeling your F2P game’s potential. The process involves making informed assumptions about key metrics, then refining them with real data as your game launches and grows.
Essential Metrics for F2P Unit Economics
To understand how to forecast revenue for your free-to-play game, you need to track these predictive metrics:
- Retention Rates – Percentage of players returning after 1, 7, and 30 days
- ARPDAU (Average Revenue Per Daily Active User) – How much revenue each daily player generates
- CPI (Cost Per Install) – How much you spend to acquire each player
- コンバージョン率（CVR） – Percentage of players who become payers
- ARPPU (Average Revenue Per Paying User) – How much each paying player spends
- LTV (Lifetime Value) – Total revenue expected from a player over their lifetime
Building Your Unit Economics Model: A Step-by-Step Framework
Step 1: Start With Your Revenue Goal
Rather than building a game and hoping for revenue, start by defining your target. Michal recommends beginning with a clear revenue objective:
“Revenue was the first where I was like, look, I’m going to model this, but just tell me what do you want to get out of it? As a developer, you’ll say, ‘Well, I want to make a game that generates a million dollars.’ Okay. So that would be our goal.”
Step 2: Use an LTV Calculator for Predictive Metrics
Revenue forecasts require calculations that account for player behavior over time. A LTV calculator helps you model:
- How retention rates affect long-term revenue
- Break-even points for user acquisition
- ROAS (Return on Ad Spend) projections
- Profit margins based on different scenarios
You can also take a look at Tenjin’s predicted LTV (pLTV) metric that forecasts LTV with 98% accuracy.
Example Modeling:
“This is a very aggressive, very hopeful model,” Michal notes. “Everything that we assume might be 100% wrong and we’re just going to dial it down, optimize it and change it so that we arrive at a model that is functional.”
Retention Assumptions:
- D1 Retention: 45%
- D7 Retention: 20%
- D30 Retention: 7%
Monetization:
- ARPDAU: $2.00
Conversion Rate: 5%
LTV (45 days): $12.60
User Acquisition Spend:
- Marketing Budget: $500,000
- Predicted Revenue: $1,200,000
- Predicted Profit: $759,000
45-Day ROAS: 251%
Step 3: Calculate What Payers Must Spend
Once you know your target revenue and conversion rate, work backwards to determine pricing. For example, a $1.2M annual revenue target with 5% conversion:
- Total payers needed: 5,000 (from 100,000 acquired players)
- ARPPU needed: $251/year
- Weekly spending per payer: $39
- Monthly purchases required: ~17 purchases
- Average purchase price: $9.99
“Those 5,000 people are going to have to generate all that revenue,” Michal explains. “This is how we plug the numbers. And the model tells us now, ‘Go into a game and set it up so that these purchases occur exactly how this model says.'”
Product-Market Fit: When Models Meet Reality
Understanding product-market fit is crucial for unit economics success. Your model might be mathematically sound, but if it doesn’t align with user and player behavior or market realities, it won’t work. In this section, we’ll cover some of the most common issues in free-to-play games.
Common Misalignments in F2P Games
- Pricing Mismatch
Michal analyzed a real shoot-’em-up game that offered ad removal for $3.99. The problem? Their model required:
- $12.60 LTV per player
- Only 5% conversion rate
- $9.99 average purchase price
“If everybody removes the ads at $3.99, we’re still down. We’re still not generating the money,” he explains. “That’s a clear indication where the model is informing you that you’re not going to be able to hit the goal that you want because your pricing is out of sync with the model.”
- Misalignment Between Teams
Make sure that the UA team is acquiring the right audience in a cost-effective way. That includes going more granular and sifting through data, and performing creative-level testing for qualified traffic.
On the other hand, the product team covers a different set of responsibilities. Their focus is creating user experience that monetizes according to the acquired players. This also includes matching prices according to their model requirements. The third major responsibility is creating content that hooks in players, driving up retention rates.
“What your UA team does and what your product team does needs to be synchronous,” Michal emphasizes. “That’s what distinguishes success versus not success. UA team and product team working towards the same goal.”
Troubleshooting: When Your Model Doesn’t Work
- If ARPDAU Is Too Low:
- Change monetization strategy – Add more purchase opportunities
- Adjust pricing – Increase IAP prices to match model requirements
- Improve conversion – Better offers, timing, and messaging
- If CPI Is Too High:
- Refine UA strategy – Target more qualified audiences
- Improve creatives – Better ad creative performance
- Change the game – Adjust gameplay to appeal to cheaper-to-acquire audiences
- If Retention Is Too Low:
- Fix unfit traffic – UA team may be acquiring wrong players
- Redesign core loops – Gameplay, content, or progression issues
- Adjust difficulty curves – Better onboarding and pacing
“If your retention is very low, that’s the trickiest part,” Michal warns. “Two ways to fix retention. You [could] have unfit traffic… or it is what it is…and [you] have to adjust the game.”
When Should You Build Your Unit Economics Model?
When it comes to timing, the right answer depends on your situation. Are you doing this professionally? Are you a hobby game developer who is curious about pivoting?
If you are thinking about, or already pursuing game development professionally, you should always start with your model beforehand. Start with defining your revenue targets. Then, move on to different methods of monetization or revenue streams that can be integrated into core gameplay. This helps avoid expensive and time consuming redesigns later on. It also ensures that anyone on your team (and beyond) is aligned from day one.
“If you’re in a position where you have to do this as a profession, then there’s no question—you begin with this,” Michal advises. “You don’t start a game and then shoehorn the game into this model.”
For those who are hobbyists, planning can be optional. If you’re a game designer for “fun” you can start with analyzing current or existing metrics. The next step is to identify gaps between your current and future/needed performance. You’re able to retrofit monetization and revenue carefully, but sometimes there could be significant changes involved.
Key Principles for F2P Unit Economics Success
1. Start High, Adjust Down
Don’t underprice your IAPs out of fear nobody will pay.
“A lot of issues that I see are developers—especially in free-to-play and casual and mobile games and the early indies—they price so low because they just do not believe there’s somebody who’s going to spend high,” Michal observes. “You should start high because later on you’re not going to be able to increase the prices.”
2. Remove Assumptions With Data
“The power of forecasting is that you’re a god that can assume everything,” Michal says. “But if we have things already existing—so for example we have a game—we’re going to measure some things. Then we’re going to plug those things already existing or data that we already have.”
3. Know When You’re Running a Business vs. Hobby
“This entire exercise tells you a lot about stuff that you need to know in order to turn the game into a business,” Michal concludes. “If you see this stuff and you’re like, ‘I don’t want to be doing this,’ then you’re probably in the wrong business.”
Pivoting From a Hobbyist Game Developer to a F2P Business
Understanding what unit economics is can transform your approach to free-to-play game development. Whether you’re a hobbyist, pro, or beginner just learning what F2P means in games, taking the time to model your unit economics is the difference between gambling and building better business.
“Make a lot of assumptions and remove those assumptions and you have a successful game.”
The framework is simple. The execution requires diligence. It all comes down to the effort of treating something as fun, then turning it into a business.
So, start with your revenue goals and model your metrics. Before you know it, you’ll be on the path to a profitable F2P business.
Want to dive deeper? Watch the video here.
