All About Apps: Subscription-Based Revenue Model

When it comes to creating a profitable app, there are certain decisions that need to be made regarding how to charge for the use of the app. Depending on the type of app and the audience, a subscription plan may be the best model for your business - and your users.

Given the popularity of the App Store, it’s a safe bet that you want your app to be successful in their store. Apple is making a big push for subscription-based apps to increase overall revenues. For example, Apple takes 30% of every transaction run through in-app purchase system. However, when a subscriber renews, they only take 15% of renewing subscriptions. This is Apple’s way of rewarding these quality apps that maintain recurring business.

In addition to being favored by Apple, subscription-based apps have a higher overall potential for recurring revenue. Many subscription-based apps will see an uptick of subscription renewals during certain popular times, or perhaps when the app first launched and one year later it’s time for all of those apps to renew. This type of revenue-generating model helps predict future revenue. Additionally, the impact of all marketing efforts will echo into the future instead of being a one-time effort.

When deciding if a subscription-based revenue model is right for your app, it’s important to consider if your app’s service or content justifies supports auto-renewing subscriptions. Users paying a subscription fee to use a mobile app  expect to receive updates and features to justify the recurring cost. Additionally, many users will not be willing to commit to an app purchase by simply seeing screenshots and reviews in the App Store. They will want to take the app for a test drive before committing to a purchase. Offering a limited-time free trial may be necessary to entice users with that initial download. The goal is that they will see the benefits of the app and sign up for a paid subscription.

As with any app, subscription based apps need a strong developer/client relationship to achieve long-term ROI. The team at Atmosphere Apps has experience with many mobile app types, including subscription-based revenue models. Let’s talk.