Should you Charge a Subscription for Your App?
A subscription-based model is one of the revenue strategies that has become an increasingly popular way of monetizing apps, which sees several users subscribe to join and pay a monthly fee for access to the app and its features. This has proven to be an extremely effective strategy for some of the most beloved apps, including Netflix, Disney+, Spotify, and Tinder. However, apps that offer a subscription model must work hard to retain their consumers by continually evolving or improving their offerings.
So why are subscription-based apps so beneficial?
Subscription-based apps see great revenue
Subscription-based apps tend to accumulate higher revenue per user than apps with other business models. A report from Sensor Tower showed that in 2020, global subscription app revenue from the top 100 subscription apps climbed 34% Y-o-Y to $13bn, a $3.3bn increase from 2019.
Apple prefers them and offers a big plus
In 2016, Apple introduced a change within the App Store, which rewarded any app subscription models over others by offering these developers a 85:15 revenue split for subscriptions that lasted over a year, as opposed to the usual 70:30 split. In short, Apple introduced this as a way of rewarding developers who were able to retain customers for an extended period of time.
Not only do subscription-based models offer a greater opportunity for your app to increase revenue, but they also provide reliable income. Businesses utilizing this strategy can predict the revenue that will be generated on a month-to-month basis and use it to improve cash flow. As new users are acquired or dropped off, businesses can adapt their cash flow accordingly. This trust in cash allows businesses to feel more confident in their marketing efforts and in planning any future features or upgrades without fear of collapse.
Maintaining engagement is a huge challenge for several apps, but tends to be much easier for subscription-based mobile apps due to users’ constant activity in making sure they get as much out of their app as they possibly can. When investing small or large, it is likely that users have done enough research in an effort to ensure the app meets their requirements.
Recurring subscriptions in exchange for new content is a tried-and-tested business strategy that has been successful for years, with newspapers and magazines being the most common example. This works for digital content as well, whether it be for music, news articles, or video content. The “service app” category covers a wide variety of apps, from social scheduling, productivity, to digital storage. Productivity apps such as Todoist, LastPass, and Evernote are examples of service apps that run on a subscription-based model.
The App Bros
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