08 January 2019, Hessen, Rüsselsheim: ILLUSTRATION - The App Store (M) logo can be seen on the screen of an iPhone. Photo: Silas Stein/dpa (Photo by Silas Stein/picture alliance via Getty Images)
It is expected that next year mobile app developers will be more aggressive in promoting subscription-based usage. Figures from RevenueCat, which analyzed more than 30,000 apps, show that most of them are trying to reach $1,000 per month in revenue.
RevenueCat develops tools for mobile app subscriptions, reports ArsTechnica. The company’s clients include Reuters, Buffer, Goodnotes, PhotoRoom, and Notion. It is claimed that 90% of apps with an in-app subscription platform use RevenueCat. Therefore, it is worth taking into account that the company benefits from this form of monetization.
Only about 17% of the surveyed apps earn at least $1000 per month. The percentage of apps that generate more monthly revenue is even lower.
RevenueCat notes that once an app reaches $1,000 per month in revenue, it is more likely to earn $2,500 per month (59% of apps that hit the $1,000 mark have reached this milestone) or even $5,000 per month (60% of apps that hit $2500 per month have reached this milestone).
RevenueCat’s data points to a significant imbalance in the distribution of revenue among subscription-based mobile apps: the report found that 12 months after launch, the top 5% of apps generate 200 times more revenue than the bottom quartile. For new apps, the average monthly revenue after a year is «just under $50».
However, as advertising costs continue to fall and developers look for a way to generate recurring revenue to support, maintain, and improve apps, subscriptions are expected to continue to be the primary strategy for developers.
The challenges with mobile app subscriptions include not only convincing people to pay for an app, but also convincing them to do so repeatedly. RevenueCat notes that compared to the 2023 report, the share of monthly subscriptions that persist after one year has decreased by 14%, which «affected both the best and worst performers». Among other findings, — monthly subscriptions have an average first-renewal rate of over 60%, but retain only 36% of their original number of subscribers when it comes time for the third renewal.
Developers hoping for recurring revenue are reaching out to users who are increasingly scared off by subscription fatigue. According to a 2022 report by consulting firm Kearney, 42% of «consumers believe they have too many» subscriptions. But while more and more industries are focusing on subscriptions, mobile apps are, according to some, a use case where recurring payments make more sense than in other businesses like print shops.
Mobile app subscription prices are expected to increase over the next year. In the year since the publication of RevenueCat’s 2023 report, the average monthly rate has increased by 14%, from $7.05 to $8.01. Factors such as rising customer acquisition costs, interest in looking like a premium app, and AI may pose an economic challenge to developers and affect pricing.
But RevenueCat also expects developers to experiment more with other revenue streams, such as in-app purchases and affiliate marketing, over the next year.