Referral App Business

How Profitable Is A Referral App Business? (Updated for 2024)

Pat Walls

•

Updated: October 6th, 2024

How Profitable Is A Referral App Business? (Updated for 2024)

So you want to start a referral app business?

And the first question that came to your mind was, “well, are referral app businesses actually profitable?”

With a market size of $4.03B - there’s plenty of business to go around.

Especially considering:

Based on our data, referral app businesses generate an average of $1.68M per year
You could see gross margins as high as 90% with referral app businesses

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a referral app business.

Let’s dive in!

Is a referral app business profitable?

Yes, a referral app business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $1.68M per year with an estimated gross margin of 83%, you could expect to recover your investment within 10 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your referral app business.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your referral app business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a referral app business worth it?

If you’re wondering if a referral app business is worth it, the answer is a big YES. With referral app businesses, you have the potential to earn $1.68M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $4.03B, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a referral app business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful referral app businesses case studies.

Examples Of Profitable Referral App Businesses

Here are a few examples of profitable referral app businesses, and a few more details about them:

1. Referral Rock ($840K/year)

Back in 2013, the founder was at a car dealership and overheard a conversation about a referral. He noticed the salesperson’s momentary confusion before switching to sales mode, which sparked curiosity about how traditional businesses manage referrals. This observation led to research, which confirmed that existing referral programs were primarily for e-commerce, unveiling an untapped market for non-e-commerce businesses.

Seeking validation, the founder surveyed small businesses they had connections with, such as real estate agents and local contractors. The feedback was lukewarm, but conversations with consumers participating in referral programs highlighted significant pain points, compelling the founder to move forward despite the initial skepticism. They constructed a minimal viable product (MVP) using simple tools, bypassing a full database to test the waters quickly and cost-effectively.

The founder's approach was hands-on and iterative. They continuously tweaked the product based on user feedback, even conducting manual updates from user inputs gathered through form tools. A pivotal moment was realizing, through direct customer interactions, that the product could indeed charge fees, which validated the business potential and guided strategic decisions thereafter. Despite early challenges, including the struggle to charge customers and manage product scope, the founder’s persistence, driven by customer insights and a pragmatic approach to development, proved crucial in refining the idea and setting Referral Rock on a path to success.

Is it profitable? Yes
How much money it makes: $840K/year

How One Founder Built Referral Rock to $70K/Month Revenue Without Funding

Read this case study

Read by 10 founders

2. ScoreApp ($3M/year)

Basically it was just a really good marketing Innovation that that worked really well for us. So by 2018, 2019 a ton of people had noticed and said hey can I build one of those like a lot of our clients so we built about a dozen of them — Daniel Priestly (Source)

In 2015, Daniel and his team launched the Key Person of Influence scorecard, an online tool where users completed a scorecard and received a PDF report.

This innovation led to 90,000 participants and £15 million in business, which was a significant achievement for his business. Daniel's team realized the tool’s effectiveness in generating high-quality leads.

By 2018, after numerous clients requested similar tools, they identified a business opportunity and settled on building ScoreApp, a scalable platform for creating online assessments.

In summary, the ScoreApp business idea originated from Daniel's team addressing their own needs. Their success and the demand for a similar app validated the business idea.

Is it profitable? Yes
What's the gross margin? 90%
How much money it makes: $3M/year

Daniel Priestley On Building ScoreApp to $3M ARR in 3.5 Years

ScoreApp, founded by Daniel Priestley, is a lead generation tool that helped generate £15 million in business with 90,000 participants, leading to the creation of the scalable platform for online assessments.

Read this case study

Read by 459 founders

3. GrowSurf ($1.2M/year)

Kevin Yun, co-founder of referral software company GrowSurf, came up with the idea for the business after realizing that there was a lack of suitable referral software available on the market. After years of waiting for someone else to build the ideal solution, Kevin and his co-founder decided to create it themselves, with the vision of making it as streamlined as possible to integrate a referral program into any product. Since launch, GrowSurf has achieved an impressive $25k MRR and is focused on increasing customer retention and reaching $1 million in annual recurring revenue.

Is it profitable? Yes
How much money it makes: $1.2M/year
How much did it cost to start: $0

How We Developed A $25K/Month Referral Software For Tech Startups

Co-founders of B2B SaaS startup GrowSurf, Derek and Kevin, developed a referral software for tech startups that has brought in around $25k MRR with a 6% monthly growth rate, overcoming generic messaging and a compromised product that wasn't a good fit for anyone.

Read this case study

Read by 7,929 founders

Learn more about starting a referral app business:

Where to start?

-> How much does it cost to start a referral app business?
-> Pros and cons of a referral app business

Need inspiration?

-> Other referral app business success stories
-> Marketing ideas for a referral app business

Other resources

How much can you make with a referral app business?

With a referral app business, you can make an average of $1.68M revenue per year (based on data reported by real businesses).

How much does a referral app business make a week?

Based on our data, average weekly revenue for a referral app business ranges around $35K. As such, you could see monthly revenues of $140K.

To know if your referral app business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your referral app business.

How much do referral app businesses owners make?

The income of a referral app business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established referral app business is about $35K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a referral app business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Referral App Business Profit Margins

Generally speaking, a referral app business can expect profit margin of around 83%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a referral app business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, referral app business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, referral app business owners can ensure long-term sustainability and profitability for their business.

Referral app business owner salary

The salary of a referral app business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established referral app business, in a prime position, might see an average weekly salary around the ballpark of $29.1K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a referral app business may be a promising business to start - but the success of your referral app business mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable referral app business.

Part of

Starting A Referral App Business: Everything You Need To Know

‹

›