State of Subscription Apps 2023

Introduction

Key Insights

Top quartile apps perform 3-14x better than the bottom quartile of apps 

There is a massive difference between top and bottom quartiles of apps when looking at conversion and retention metrics. Both the app world and consumer behavior are highly variable and complex, and therefore, so is app performance. 

For apps with trials, 3.7% of app downloads start a trial and 38% of those trials convert to paid subscribers

The first step in turning a user into a subscriber is also the single biggest point of drop-off throughout the journey. The story gets better, though, with top-performing apps converting two out of every three trials into paying users.

Less than 2% of app downloads convert to paid subscribers 

Getting customers who download your app to convert to paid subscribers is hard. But there’s a lot to gain by going from middling to best-in-class, as top performers see a staggering 14x as many paying users per download.

If you can get users past the first renewal period, they’re more likely to stick around for the long haul

Renewal rates increase over time for weekly, monthly, and annual subscriptions. For weekly and monthly subscriptions, renewal rates jump by more than 10% by the 3rd renewal. For annual subscriptions, that figure doubles between the 1st and 2nd renewal.

Retention rates aren’t about the subscription duration, but the quality of your app

Over the first year, the median retention rate of an annual subscription is 8x higher than a weekly subscription. However, subscription duration doesn’t drive retention; it’s about providing enough value within the given duration to justify a renewal.

Methodology & Data

The dataset

Since RevenueCat was founded in 2017, we’ve tracked over $4 billion in subscription app revenue across the Apple App Store and Google Play Store. The 22,000 apps using RevenueCat’s in-app subscription SDK span everything from niche indie apps to some of the top 100 subscription apps.

The anonymized benchmark data in this report is from all of those apps.

Trials

More than 60% of the apps in our data set offered some form of trial, but they didn’t favor any one particular trial strategy:

We define these trial strategies as:

• No trial strategy – apps that have never offered a trial for any products
• Pure trial strategy – apps that have always offered a trial for all products
• Mixed trial strategy – apps that have sometimes but not always offered a trial for all products and/or apps that have offered a trial for some but not all products 

Across our tracked apps, there is a clear preference for shorter trial periods, which we suspect is indicative of the broader market.

Subscriptions

Price points

Medians and quartiles

Throughout this report, we share the median, upper, and lower quartile for most metrics.

We do this because the in-app subscription market is skewed heavily towards a handful of massive apps that generate most of the revenue, and with an equally long tail of hundreds of thousands of apps that generate smaller amounts of revenue. Though the medians lead to interesting — and often surprising — results, they don’t necessarily tell you where your metrics should be.

We suggest you focus on the upper quartile to see where you can be and the lower quartile to know where you definitely don’t want to be.

Subscription App Benchmarks

Activation: getting customers to try

96.3% of downloads don’t start a trial

In 2022, two-thirds of RevenueCat subscription apps offered some form of trial. While this is — in most cases — the first step in turning a user into a subscriber, it’s also the biggest single point of drop-off throughout the journey. We saw that only 3.7% of users make it to the trial within 7 days after downloading an app.

It’s not all bad news, though. The difference between high-performing apps and low-performing apps is massive: the upper quartile of apps with a pure trial strategy has nearly 9x the conversion rate of the lower quartile of apps with a mixed strategy.

The reasons for these differences in performance can be complex, but in a recent episode of the Sub Club podcast, running app None to Run explained how they achieved their chart-topping 20% download to trial start rate.They focus on community building, leveraging email lists, a popular blog, and other non-paid advertising channels. For None to Run, this translates into higher intent users, who come into the app knowing what to expect and willing to try things out, which leads to a great trial start rate.

Paid Conversion: getting customers to pay

For top apps, 60%+ of trials convert to paid subscribers

With over 60% of apps on RevenueCat using trials as a way to attract new subscribers, trial conversion rate is a critical metric to understand and improve your subscription business’ performance. For the majority of apps, our data shows that on average, 38% of users who start a trial end up subscribing. The top quartile of apps with a trial period longer than 4 days see a little over 60% convert to a paid plan. 

We see that trials longer than 4 days have higher conversion rates, highlighting that ensuring your trial is long enough for customers to experience real value is key. At the same time, the high variance between the lower and upper quartiles suggests trial periods aren’t the main driver of conversion rates.

In an episode of the Sub Club podcast, Blinkist talked about how they increased their trial conversion rates through communication and transparency. Blinkist added a prompt to their trial sign-up flow asking customers if they’d like to opt in to a notification to remind them when their trial was about to expire. 

The result? Blinkist’s trial start rates increased by 23%, and their trial cancellation rates decreased by 4%. Additionally, the added transparency increased customer trust and led to a 55% decrease in customer complaints.Clearly communicating with your customers before, during, and after a trial is key to maximizing conversion rates.

Less than 2% of subscription app downloads result in a new payer

Regardless of whether or not an app offers a trial, we see similar download-to-paid conversion rates of less than 2% for most apps and around 4% among the best-performing apps.

We see a high level of variance between lower and upper quartiles, with lower lows for those that offer trials, as well as a slightly higher upper quartile conversion rate, than we find in those without a trial strategy. Especially when offering a trial, there’s a lot to gain by going from middling to best in class, as top performers see a staggering 14x as many paying users per download.

For companies that don’t offer trials, there are other ways to allow users to engage with your product and drive conversion. Rovio, the video game developer behind Angry Birds, leveraged brand awareness and freemium strategies to drive user acquisition despite a relatively small budget. As was the norm a few years back, they concentrated their ad spend on launches, which gave them higher click-through, download, and conversion rates because of their strong brand. Listen to the whole story on a 2022 episode of the Sub Club podcast.

Millions of downloads, however, only brings in revenue if you can activate users after they’ve downloaded your app. If you offer a trial, be sure to clearly communicate the value of your app and allow users to try out features that drive this value. If you’re not offering a trial, consider other ways to drive usage and conversion, such as freemium offerings and hard paywalls. 

Renewal & Retention: getting customers to stay

Renewal rates jump 12% by the 3rd renewal for weekly subscriptions

As you continue through this section of the report, you’ll notice that both monthly and annual renewal rates steadily increase, while weekly renewal rates look a bit different. The first renewal rate varies significantly, most likely because of the low time and cost commitment — which motivates both high-intent and low-intent users to subscribe initially.

The upper quartile is the most notable, in that the renewal rate actually drops at the second renewal. This could be because weekly subscribers may only be interested in using the service for a short period of time.

Renewal rates will tell you if users don’t renew their subscription, but not why they decided that the service wasn’t worth the price. Churn could be due to high pricing, app performance issues, a poor onboarding experience, failed payment, or a combination of these factors.

Weekly subscribers are a great customer group for testing ways to improve retention rates because they let you make quick experimental changes and see results almost immediately.

Monthly renewal rates steadily increase by at least 5%

Monthly subscriptions have a median first renewal rate of 56%, which increases over time. This means customers who aren’t getting enough value from an app will likely churn in the first subscription period. If customers choose to renew their subscription after the first term, they are likely to continue renewing their subscription again in the future.

That being said, we find ourselves asking what can be done to improve that first renewal rate and keep users around for the long haul. By cohorting groups of customers based on purchase behavior and other attributes, you can identify churn risks in the customer journey and develop churn prevention campaigns.

SoundCloud increased its month-one retention by 5% by creating a real-time notification system focused on reach, relevance, and frequency. Hear more about their story in our interview with Andy Carvell. Proactively preventing churn, rather than waiting for the churn event to happen and asking the customer to reconsider, helps increase that crucial first renewal rate.

Renewal rates double in year two for annual subscriptions

Annual subscriptions have the lowest renewal rates, but it’s important to remember that the first renewal is at the year mark, rather than at the first week or month. The good news is that if users make it past year one, they’re twice as likely to renew again in the future.

Annual subscriptions give developers predictable revenue and a longer guaranteed customer lifetime. It’s more difficult to test strategies that may increase retention, since the results are delayed, but the impact of increasing your annual renewal rate is worth the effort.

It’s important to keep users engaged throughout the year so that they don’t turn off auto-renew before their subscription ends — offering high-quality services and personalized recommendations can help increase renewal intent.

Fasting app Zero uses renewal rates as a signal of the overall quality of their product. Increasing paid renewal rates means they’re also improving user engagement and retention rates for their free users, who spread the word about Zero and may eventually convert to paid users. By focusing on improving their monthly and annual renewal rates, Zero is able to drive both upstream and downstream effects on conversion and monetization. 

“For the same revenue earned, would you rather have a small user base and a really, really high conversion rate? Or would we rather have a really small conversion rate, but a huge user base?” – Vu Pham, Product Lead at fasting app Zero.

So, how many subscribers stick around for a year?

Renewal rates are strong indicators of customer satisfaction and loyalty, but they don’t let you compare how many subscribers will stick around over the same period of time. That’s where retention rates come in.

We normalized the retention rates of weekly, monthly, and annual subscriptions over a year to answer the question: “If you had 100 users subscribe at the start of a year, how many should you expect to have at the end of the year?”

At first glance, you might think that an annual plan is the best way to retain users and maximize revenue, since the median retention rate of an annual subscription is 8x higher than a weekly subscription. However, a shorter subscription length might be a better fit for your app, depending on the product or service you provide.

In a recent case study, Pixery, the company behind popular photo and video editing apps like Funimate and Impresso, discussed how they tested different subscription durations to improve conversion and retention rates.

Pixery planned to move away from short-term offerings and offer only longer-term subscriptions, but after experimenting with RevenueCat event data, they discovered that shorter-term commitments were necessary to retain customers.

Renewal & Retention Rates Summary

It may be a bit discouraging to see retention rates for a customer cohort drop over time for weekly, monthly, and annual subscriptions. 

However, the retention curve tends to flatten over time, so you might find that your retention rates look more favorable as customers age. Customers who get enough value from your app to stay subscribed for the first year are more likely to stick around for the long haul.

We interviewed Alex Ross, founder of the plant app Greg, to discuss this. After 12 months, Greg’s retention rate for its monthly subscription is 21%. But its churn rate slows significantly after 12 months, and by month 21, 18% of customers are still subscribed. In other words, Greg loses 79% of their monthly subscribers in the first year, but only loses another 3% in the subsequent 10 months. 

So if you see what looks like low renewal and retention rates, don’t despair. Over time, as your low-intent users drop off and your biggest fans stick, your retention rates will look better and better. And remember, there are plenty of ways to build a phenomenal app business.

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