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Only a tiny percentage of under 4% of apps offer subscriptions, according to Statista. Yet that tiny fraction of subscription apps take in almost 55% of all mobile revenue. Clearly, subscription apps are doing something right.
Of course, this stat doesn’t mean all this revenue is coming from subscriptions. Many of these apps will still make massive bank on IAPs and ads. But subscriptions are a big part of it, which is 1 of the reasons why so many apps are investing heavily in building, enhancing, and marketing their subscription offerings.
Probably the best source of data on subscription apps is RevenueCat’s annual report.
Here’s what I found most interesting in that massive 262-page report …
AI & innovation
1. AI is the hot category today.
AI apps are making $0.63 per install after 2 months … double the media return and equalling Health & Fitness apps.
Time to start some AI subscription apps? Well, there’s a lot out there now. The good news is that wrapper apps that essentially use OpenAI or Perplexity to deliver their insights in a specific vertical still have a chance of success.
What’s a publisher to do?
Make an AI productivity app like a smart writing assistant … you’ll probably out-earn a traditional to-do list app purely through higher perceived value.
Retention in subscription apps
2. Retention is hard but lucrative
Keeping users subscribed long-term is increasingly difficult. You knew that already. But, it’s incredibly rewarding if done right. And yeah, you knew that too.
Here’s the insight: don’t over-reach with pricing. Most apps with cheap annual plans retain 36% of users after a year vs. 6.7% for high-priced monthly plans. A $5/month meditation app retains more users than a $15/month version.
Do the math to decide which way to go for you.
(Note: see #12 below for additional context.)
4. A third cancel in the first month
30% of annual subscriptions cancel in the very first month. They’re here for the trial, out for the long haul.
Early retention is critical. If your language learning app doesn’t engage users in week 1, they probably won’t stick around for renewal.
Monetization strategy for subscription apps
5. Diversifying revenue is critical
Diversifying revenue streams is becoming the new normal among apps that make money. 35% of subscription apps now use hybrid monetization: some combination of …
- Subscriptions
- IAPs
- Ads
- Lifetime purchases
For gaming, that percentage is much higher at 61.7%.
“Hybrid models allow apps to monetize different user segments more effectively, reducing churn and improving retention.”
Even so, about ⅔ of all subscription apps across a wide range of categories still only have subscription revenue. 1 reason: advertising takes significant volume to pay off. And if you built to optimize for subscriptions, it may not be easy to add IAPs into the mix.
6. Consumables are hot along with subscriptions
Most categories rely heavily on subscriptions, but in Social & Lifestyle, nearly 20% of apps offer subscriptions + consumables.
For your dating app you might have a monthly subscription but also offer separate “boost” purchases for higher visibility or more matches.
7. Very few subscription apps use in-app offers
Only 13% of apps use in-app offers, like a time-limited discount or an upsell for premium features. Of those that do, Health & Fitness apps lead at 22% while Gaming apps the least at 6.6%.
What to do?
You can test it, but I’ll say this much: my favorite game has effectively taught me never to buy anything that’s not on sale … because it’ll be cheaper eventually. So be advised that when you start discounting … you might not be able to stop.
8. Trials are a now or (almost) never business
80% of trial starts happen on day 1.
If they don’t happen on day 1, they’re extremely unlikely to ever happen (just think how hard it is to get someone back in your app if they’re not active).
So don’t bury the paywall: showing it during onboarding is critical.
Revenue distribution: the gap is growing
9. Even most of the top apps are commercial failures
There’s a widening gap between top performers and average apps in both early and long-term revenue. The top 5% of new subscription apps make just $8,888 after one year. Not very lucky 8s!
Sure, that’s over 400x more than the bottom 25% which make just $19, but it’s not even a hobby business for a single developer. The true hits that move the needle for app publishers are a fraction of the top 1%.
10. North America is tops in revenue, followed by APAC
Not surprisingly, North America has the highest 60-day revenue per install at $0.57. APAC is not far behind at $0.42.
As always, you have to balance RPI with CPI; acquisition with monetization.
11. Hard payways work hard
Subscription apps with hard paywalls have 8x higher RPI than freemium models after 14 days. So going freemium or soft isn’t even in the same ballpark, in terms of revenue.
8X!
12. Higher price points outperform
Often, you’ll see seemingly contradictory data and/or advice.
For example, in #2 above, cheaper apps have higher retention. But also, RevenueCat data shows that apps with higher price points outperform in revenue per install at both day 14 and day 60.
What’s going on?
Cheaper apps can have higher retention, and more expensive apps can make more money per user, depending on the specific numbers. But it also matters when you measure: after a couple of weeks or months, or after an annual renewal.
So … YMMV.
Model different options. Challenge the data. And test.
12. Business apps make bank
Realized LTV after 1 month for top Business apps reaches over $52 per payer. There’s a big difference between top apps and bottom ones though: less successful Business apps make under $15 per user.
2 other categories with widely diverging income profiles:
- Education
- Health & Fitness
Conversion for subscription apps
13. Even the best apps struggle to convert
Even the best subscription apps struggle to get people to start a trial subscription. The trial start rate for the top 10% of apps is just 20.3%.
The really bad news?
That’s more than 3x better than the median subscriptions apps, which convert just 6.2% of users to trials.
14. Pricier apps convert more trials than cheaper
Apps with high-priced subscriptions have higher trial conversion rates at almost 10% than low-priced ones at just 4.3%.
Possible explanation: people may be more serious about converting when downloading a $19/month AI design tool than a $1/month meditation app. Also possible: higher price is a signal of higher value.
15. Long trials convert better than short trials
Plenty of things in mobile monetization are counterintuitive. For me this is one: longer trial durations of 2 to 4 weeks yield the best median conversion at 45.7%. Short trials under 4 days are the worst at under 27%.
The long trial clearly works better at getting people in the habit of using the app, while I would have thought it would give people more time to forget about it.
Churn in subscription apps
16. Retention is suffering this year
Understanding when users cancel is key to reducing early drop-offs and improving LTV. Churn hits fastest in the first days of trials, especially 3 to 7-day durations.
Plus, almost 30% of annual subscriptions are canceled in the first month.
More bad news: retention was down across the board:
- Yearly plans: 47.1% to 44.1%
- Monthly plans: 18.8% to 17%
- Weekly plans: 4.2% to 3.4%
Clearly, yearly plans are where it’s at: “Despite this drop, annual subscribers still outperform other plan durations by a wide margin.”
Trial strategy
17. Pure trials are the most rare trials
Whether you offer a trial, and how long it lasts, heavily influences conversion outcomes. Subscription apps can offer pure trials (everything is in the trial) to no trial (buy now or drop out) or mixed trials (some features available, others behind a trial gate).
Gaming apps skew toward pure trial strategy, while Health & Fitness apps favor mixed trial approaches, as do Travel apps.
Subscriptions are getting tougher
Subscriptions are super popular among app publishers for obvious reasons. But hybrid monetization models are key to hit every price segment, monetize all users, and reduce churn.
People are willing to pay for value, but there’s also a push to reduce how much they’re spending on all subscriptions across music, TV, apps, and other categories.
Only the winners will survive.
