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Challenges for Mobile App Developers Regarding Subscription Revenue
Recent statistics from RevenueCat suggest that mobile app developers will need to be more assertive in promoting subscriptions in the upcoming year. The report illustrates a common issue faced by developers, where a significant majority struggle to achieve a monthly revenue of up to $1,000.
Study Details
RevenueCat, an organization specializing in subscription toolkit for mobile apps, recently released a 120-page study. This analysis involved examining over 30,000 apps that implemented in-app subscription SDKs. Notable customers mentioned in the report include Reuters, Buffer, Goodnotes, PhotoRoom, and Notion. According to RevenueCat’s findings, roughly 90 percent of apps that have an in-app subscription platform use their services.
Revenue Analysis
The study claims to have uncovered a staggering $6.7 billion in subscription revenue influencing over 18,000 developers and 290 million subscribers on both the Apple App Store and Google Play Store. Among the apps analyzed, only about 17 percent manage to make a minimum of $1,000 in monthly revenue. The percentage is even lower for apps with higher monthly revenue.
Upon reaching the $1,000 monthly revenue threshold, apps are found to be more likely to surpass $2,500 in monthly revenue, with a reported 59 percent of apps achieving this, and even touch $5,000 in monthly revenue, as 60 percent of apps attaining $2,500 monthly did.
Revenue Discrepancy
Notably, the study points out a significant imbalance in revenue distribution among mobile subscription apps. After 12 months post-launch, the top 5 percent of apps are generating over 200 times the revenue of the bottom quartile. For new apps, the median monthly revenue after one year is slightly below $50.
The analysis further reveals that the top 5 percent of performers exhibit a rapid surge in revenue figures, from $223 to $971 to $2,352 monthly, in the upper quartile, Q90, and Q95, respectively.
Subscription Trends
Despite challenges in the mobile app subscription sector, recurring revenue models are expected to remain a crucial strategy for developers. With declining advertising spending and a need for continual revenue to support app maintenance, subscriptions continue to be the go-to approach. In 2023, over 59,000 new subscription-based apps were rolled out.
However, issues such as subscription fatigue present challenges in ensuring sustained revenue. Retaining monthly subscribers after one year demonstrated a 14 percent decline, affecting both top and bottom performers. Maintaining the subscriber base beyond the initial renewal also poses challenges, with only 36 percent sustained by the third renewal.
Consumer Perspectives and Pricing
Consumer fatigue with subscriptions has been on the rise, with a significant portion feeling overwhelmed by multiple subscriptions. Nonetheless, experts argue that mobile apps present an ideal scenario for recurring payments due to their nature. Higher subscription rates are anticipated in the coming year, with an average monthly rate already showing a 14 percent increase. The industry may also explore alternative revenue streams, such as in-app purchases and affiliate marketing, to adapt to changing market conditions.
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