CPI (Cost Per Installation) is one of transparent and reliable models for those who want to promote mobile apps and games.
CPI = Expenses for advertising / Number of Installations
It means, if you have spent $100 for advertising and only 10 people have downloaded your app, it means that each installation price was 10 bucks.
This model seems to be the most effective for advertisers, as they don’t pay for impressions or clicks like in CPC or CPM approaches, but for real loading on a tablet or smartphone. This metric allows to calculate all payments and make necessary corrections.
Therefore, if approximate advertising budget and benefits from one user are known, a developer or a publisher can easily calculate which amount is acceptable to spent to attract one user.
However, if you use incent traffic to promote your app you will certainly face falling of ARPU in comparison with planned rates. The reason is simple, a lot of people will immediately delete your app after installation. And as a negative effect you will have profit lowering.
CPI model has a lot of reasons for being implemented, but it shouldn’t be treated as panacea. You can try several models one by one or combine them to find which model will be winning for your business.