Do I have this straight? Someone who can't get users is selling a service where he tries to get other people users. There may be a problem here.

Also the sample numbers you provide has the developer losing $11.75 out of pocket for the honor of acquiring 20 new users. Given that the developer is trying to make money, this doesn't seem like a great deal. (Even worse, with the quoted figures you could buy 20 copies of the app for yourself, and walk away $4.95 richer. All of the mindshare etc benefits the developer is hoping for wouldn't apply in that case.)