# The 2025 State of Subscription Apps Report: Sub Club Podcast

Channel: Sub Club by RevenueCat
Video: https://www.youtube.com/watch?v=NWT7wIxDkLY
Duration: 48 min
Language: English
Words: 10511
Transcript page: https://viewrankai.com/tools/youtube-transcript/NWT7wIxDkLY

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[0:00] hello I'm your host David Barnard and with me today Revenue cat CEO Jacob biding on the podcast we discuss how AI is changing both what apps do and how they're built the relationship between price and retention and why react native apps monetize better than native hi Jacob hi David it's your favorite time of the year where we get to go on an audio podcast and talk about charts so 2025 status subscription apps report I will call out page numbers during the podcast so might be good to go ahead and download the report and listen to this in front of the report I think the most interesting and and probably the best

[0:38] place to start is AI I mean that's no I'm pretty sure that was our stick last year so it was kind of like there's something going on in artificial intelligence well now it has gone on yeah I I'm writing my intro for this this afternoon but I now it's there's something going on in artificial intelligence prob going to be my tldr so looking at the numbers and these are on pages 143 189 and 58 you have to kind of pull a few different charts together to look at it we didn't do a slide kind of comparing directly but I think the most interesting thing about our AI app

[1:12] breakdown is that the conversion rates actually aren't that much different AI apps aren't specially placed to drive better conversions but what they do really well is monetize the revenue per user at the end of a year at the end of a month is significantly higher on AI than it is the rest of the app industry this may be a little bit of a rising tide floats all boats kind of situation where people are starting to get a little used to paying $20 a month for something on their little pocket computer you know may spill over a little bit and continue to get people comfortable paying for subscriptions I

[1:48] mean I just think they're better as like I it doesn't surprise me that the conversion rate cuz like to some degree the number of people who have the like flexible income and willingness to spend you know there's not that many marginal people will buy an app but you know one app but not another it's probably single digit percentages regardless of the content of that app but if the apps are significantly better and just do something more capital V valuable people will pay more and they'll stay retained longer you know I think this has been too this related but the debate has been where is the value going to crew in Ai

[2:21] and I think something that's changed my thinking from what last year to now so last year I kind of thought well B2B tends to be the big winner in a lot of things right it's like they very sticky you have apis it's whatever I thought the consumer would be important but I didn't really realize and it seems to be this complete opposite is that the Enterprise side to some degree or the API side the dev tool side is very easily swapped in and out and it's the consumer layer it's the app layer you know it's the brand that seems to be where the differentiation is and the

[2:49] modes are which is awesome that's great for app developers right because that's what you can bring everybody has access to Cloud 3.7 but like you can bring something unique in terms of like brand and translation and things like that and that's what's going to drive people to convert and retain more than anything else I've been thinking about this a lot and I do think that the differentiation piece is key though because if you just Vibe code another like chat GPT rapper everybody can Vibe code a chat GPT wrapper yeah what have you done in that case right you've not you've not enhanced anything yeah you've not

[3:20] created much value I think where we're going to see certain apps really take off is differentiation in that value created so are you doing something like unique and hard that's not able to just be Vibe coded you know do you have some like technological differentiation but then secondarily it just kind of goes back to distribution as differentiation it's you know okay you Vibe coded a chat TPT at but why should anybody care how are you going to get attention for that and then how are you going to stay differentiated and retain those users over time like what value are you really driving that nobody else can drive and

[3:53] that's kind of been true forever right it's like there's a million apps on the App Store like building the app has never been like the hardest part is like getting attention sustainably building a community building up a user base that's where the rubber really meets the road there's always been a million apps like now we're going to say there been 10 million apps I think that's why maybe it may not seem like the entire the individual experience of an app may not change that much because even if the economy of app spend is growing the number of people rushing into the App Store is also growing because the

[4:22] barriers to build apps has gone down and continues to go down which I think has been the surprising thing to me is like we're seeing new tools for one shotting simple stuff which again simple stuff is not probably going to make you any money but like all complex and interesting things start as simple things right and so as we see these tools continue to improve I think we'll see more competition but I actually am not convinced that that's going to cuz a single vertical like some let's say rock identification apps I don't know you come pick some tiny like little niche I think probably what will happen is we'll

[4:54] just see actually more niches they're not going to see 10 times the number of rock identification apps we're going to see 10 times new things that to a rock identification app that we haven't even thought about yet because like the people that build that have not been able to build apps yet and the barriers have been too high and so this is probably moot at this point in in March 2025 but like I I think it's a very exciting time to be building apps that are AI first that are doing novel things and that's always been the case of Technology like you make money by building novel things that you know

[5:21] nobody else does and sometimes that's differentiated on the application of technology sometimes that's on brand or other things right but like people will pay for something that they can't get someplace else it's not a commodity or Community as well like if you can one shot a straa competitor which probably going to be a while before you can even if you could it's like they're so differentiated on community and leaderboards and like what do actually people actually care about but that's where there's probably opportunity to create this sha for some Niche that's not actually served well by straa and you can create your own Community is it

[5:52] going to be a billion dollar company like or multi-billion dollar company like sha probably not but can you make good money building the the straa for a smaller Niche there's only one Strava before there's probably going to be one straa after you know what I mean I wouldn't let that stop you because you can do 10 times more than the straa team could I mean not the specifically but like what it took to build that level cruel of velocity 10 years ago is much lower now and so I think the winnings have not dropped down as much because people yeah they're willing to spend more for Absa do more so yeah it's a

[6:24] good times the distribution as as differentiation I think is going to continue to be super important it's like are you doing something so unique that it can get attention on its own or is that distribution as differentiation or differentiation as distribution I would say differentiation as distribution right like it's your differentiation is your distribution maybe it means the same thing well that that was kind of where I was going though is that you can differentiate on distribution like we're seeing a lot of apps get really good at Tik Tok and other channels I would say that's a distribution as differentiation I would argue there's also differentiation as

[6:58] distribution where just being so unique and strange like distribution just kind of takes care of itself because you're the one app that can do the thing right ideally you have both though is so you have some like unique lever to get attention for your app and then it does something unique that you can I was just thinking about the Tik Tok example on the hook right it's like if you make an app that is like the the dump bunch at gbt rappers again whatever you could do that again it's like oh it's just somebody asking an AI a question like that's so 2023 nobody cares anymore but

[7:26] if you have something magic and cool that for a community on like like Tik Tok can go viral now yes the distribution is like unique there but making the Tik Tok is not the hard part necessarily it's coming up with something that's like a unique value prop that's going to like create something that like an influencer can talk about or even just goes viral on its own that's really like thinking about some sort sort differentiating product feature that'll drive growth one of the things I do think is different in 2025 though is that as you were talking about we're going to have a 10 million apps in the next few years instead of a

[7:54] million it does seem like there's a whole new crowd of folks who are just watching ing any app that goes viral any app that crosses 10K in Revenue a month you know they're watching sensor Tower app figures to watch for the apps that are making any money and so as soon as you start making any money like there's going to be a rush of clones and then that gets back to the point it's like are you doing something that is reasonably differentiated can you differentiate fast enough or can you gain market share enough fast enough to where they're not really a threat or can you continue to get attention for it

[8:26] through paid through social through whatever that's going to keep you ahead of the curve when that flood of CopyCat apps comes I mean I think this is why it's still good to be really good at software so like even if you're like Vibe coding everything like if you're really good at product and software you'll still have an advantage over somebody who has because everybody has the same tools so whatever differentiating skill set you have or knowledge you have is going to I still think matter going forward some of that is also just like better understanding those communities so like if there's a community that you really understand in

[8:57] a unique way literally knowing people right like humans right which AI has yet to really do or have a following in the community you know we have seen a rise in influencer Le apps where the influencer has a following in a specific area like macera is a really good example they're a food logging app and it's actually I think a collection of multiple influencers who worked on that app and so they just have that kind of built-in community that they can market to I mean you see this in product like physical products as well like everybody's launching with like you know an influencer co-brand thing right as a

[9:32] supplement yeah yeah exactly it's like it's like a how do we take an undifferentiated commodity essentially and like you know create some sort of margin while we attach put Mr BEAST's face on it or whatever he owns all his stuff first party but yeah and then most of those do tap out because you tap out your audience fairly quickly but then you still then have to like once you hit that Plateau then you got to figure out like what's that next step product differentiation distribution differentiation you got to start paying for ads you got to start like figuring things out all right well I think that's

[10:01] that's probably enough on AI the next thing I wanted to talk about was App Store visous Play Store so we do have some interesting data this year that I think further puts into charts what we kind of all knew is that iOS just Far and Away makes way more Revenue than Play Store the interesting thing I saw in our data though is that when you look at the realized LTV chart the people who do pay on Android do seem to actually pay relatively similarly and so it does seem like based on the data we're sharing in the report that it really is just a bigger problem of there are more

[10:40] payers on iOS than it is like the Android users are that price sensitive the question is like do they meet this like whatever ability to spend money on Tiny software apps or whatever and that's like sort of invariant to what kind of phone they have but if they are that kind of person is very correlated with what kind of phone they have which has kind of always been known I don't know anecdotally I feel like I've been seeing more people speaking well about Android and some monetization stuff I don't know if we have any data support that but I've seen more people seem optimistic but like all the big apps we

[11:13] know are still investing in Android the popularity of flutter react native like all these crossplatform things I still think make the building for Android easier and potentially worthwhile but I still think that like you should never invest any incremental effort into building for that platform until you're of other higher leverage ideas or you think it's like going to create some Network effect to have it on both platforms I think where folks are starting to find better monetization on Android is diversifying into hybrid monetization and some other slides we'll talk about in a minute but I do wonder if the realized LTV being similar across IOS and Android and there being more

[11:48] pairs might actually be an artifact of too many apps just copying and pasting their iOS strategy and that maybe next year we'll see the realized LTV for Android users drop as folks experiment with those lower prices with adjusting Regional pricing and things like that the people that I'm hearing find more success on Android are doing those kind of experiments like I talked to Tammy from Google on one of the minisodes leading up to the release of the report and they've been sharing a lot of data which is really fascinating and some of the data they shared was that they see way better monetization on Android with

[12:27] hybrid monetization it's like give people their option to pay for one feature or if you're a Content app like let him just buy that piece of content yeah more monetizing that like if you have one single price point basically everybody who doesn't hit that price point is thrown away so they generate Zero versus like have some price discrimination some products on the way down so that like you can monetize and if that area under that curve is big enough it can be substantial I think also one thing we don't capture in our data is like ads monetization which you know if you have a lot of people who

[12:56] don't have a lower prival to pay like advertising or monetizing eyeballs is a good way to do it but which we don't necessar have data on but that might be you know I I've certainly heard of and seen more cases of that like to improve your like total LTB is like to be running ads which is like essentially what you're saying it's like a hybrid monetization but not just I AP hybrid but like adding other things to generate Revenue unfortunately on Android the cpms are really low as well but I I was talking to Demitri again another minisode that we did leading out to this report and one of the things he shared

[13:27] was that because ad rates are so low in some of these developing nations and on Android specifically that by adjusting their price significantly lower maybe even lower than you would expect in some of these Regions they're actually seeing good return on ad span because ads are so cheap it's cheap on both sides so you can afford to drop your price on Android Andor in some of these developing nations so the example he gave was Brazil it's like the way they finally cracked ad spend in Brazil was just by dramatically dropping their prices in Brazil because the ads are so cheap that they could afford to monetize it's a

[14:05] good lesson in just like how much optimization that work there is in these kind of businesses right if you want to keep driving and I think it's somewhat unique in that sense in terms of like different industries that that there are so many consumers in so many different locals and it goes to show too like it's not one single variable right it's like okay you got to think of the whole ecosystem it's not just the like conversion part it's the acquisition part you want to be testing those things jointly if you possibly can yeah super interesting stuff I did promise to share page numbers so that's like Pages 113

[14:33] 116 hopefully the page numbers will say the same it's going I was going to ask if that's the case we'll just say is in that area yeah if we end up adding or removing a page might shift one by one in the oneish the next section that I found super interesting was the hybrid versus native and this is on page 125 is is that react native performs really well can't stop it well not the first hybrid framework but you know maybe the first biggest one or whatever but uh yeah it's still very popular I'm going to do a podcast with the uh the founder of Expo

[15:11] not too long from now I almost did it as a minone I thought it'd be fun to actually do a full episode on it but Expo works with react native it's kind of a you can explain it better clci kind of yeah Expo just like it makes react hosting and deploying react native apps much much easier so I thought it was super super interesting because all of us snoody Indie developers are like native or GTFO customers don't care they can't tell like you're a connoisseur of apps David but like I do think for we'll use flighty as an example I think if you're like heading into a crowded market and

[15:44] you product is differentiation and distribution having it being finally crafted and perfectly tuned is your product then like I probably wouldn't use react native but like if that's not what your differentiation is like it's a great option and they're going to have a moment I think they already are Expo included which is like most of these like models are really good at speaking in JavaScript and typescript for building these things I just played with a service yesterday where it like one shot I have been working on this like stargazing side project for the longest time and I never got anywhere I'm my brain scattered and it just never came

[16:18] together you're a CEO of a company you don't have time to be running a side projects no I I I have the time I don't have the talent is the problem I don't know how to write Swift anymore but yeah it almost one shot it like pretty dang close like it had some other stuff but like got like a lot of it and did it with react native because yeah I guess the models see a lot of react as well so they they're good at it but anyway the thing that react native and we're talking about you know flutter as well like there's those of these but what

[16:43] they've always been good at is like the person that doesn't necessarily know how to write Swift Swift's a compiled language like you got to have a Mac which like most people do but like not everybody and like it's not you know there's a lot of advantages to like the person who's not like a Mac or iOS person maybe don't seem all that important and so I think the AI tools are going to continue to drive these things give a second win like for the longest time flutter was gaining on react native I think like also Google's kind of maybe pulled back on their Investments some flutter they also have

[17:12] cotton multiplatform which we didn't break out in the report but that's gaining steam as well which is just like as a Meta Meta Meta we're still investing in tooling for apps which is great he's I guess it's my job to jump up and be like the Mobile's not over but like it's clearly not because like we're still investing in multiple different ways to do things and re natives advancing and flutters being worked on every day and I I mean flutter people are obsessed too like God bless them but like people who use flutter are really fanatic about it but yeah it's good and I used to like you David I used to I

[17:42] think be a little more snoody about it but now I'm like hey like if your differentiation is not the things that native is better at which is like you know fit and finish down to the pixel there's a lot of advantages to doing these and like I think it's worth considering CU you can always like if it does come to the point where you need a native rewrite and you're at scale you can afford to do that it's it's usually not the end of the world I was talking to a friend recently who's like super super bullish on building apps with AI one these he told me that actually makes

[18:10] a ton of sense once you think about it is that one of the benefits of using reactor flutter but specifically react with something like cursor is that it can actually run the app and like screenshot it and iterate on the UI and test for bugs without having to run the simulator and like all this crap that's the thing I was using yesterday it's like in a browser and like to run a native IOS app in a it' be impossible like that would just be like really really difficult but yeah just works basically with some shimming and things like that so yeah it's kind of interesting it's like these Technologies

[18:44] you know Expo has been around a long time expo's been around since at least 2016 is when I first like started using it and you know just chugging along and then suddenly a general purpose technology appears and their their whole like landscape changes which is really cool take away from this section I think we've already had quite a few but if you are just getting started or you're like building a new app and trying to explore new avenues and react is a great place to build right now because makes it way easier and then as we show in the report it doesn't mean you're going to monetize

[19:12] more poorly so if your differentiation is community if your differentiation is distribution like you have some unique angle you're serving a niche and you want to be on both platforms especially but even if you just want to be on iOS like it's probably a really good place to start today day it can reduce time to Market and like iteration time depending on what talent you have on your team as well like if you don't have the skill set if you're not a swift developer but you can do JavaScript like do it this way it'll be worth it be worth the tradeoffs all right now on to some bad

[19:42] news page 70ish in the report is we did look at retention this year compared to last year and last year we compared to 2023 2023 to 2022 and what we looked at is year one retention compared 2024 compared to 2021 and it's trending downward and it was trending downward in our last report and I think it was even trending downward from our very first report I think that's just to be expected more apps more people spending money there's more competition every year right like it gets and the numbers aren't like drastic you know it's still in the 40s or 30s to 40s through that period but like yeah it makes sense like

[20:22] we talked a bunch about the barriers to building apps is going down people are becoming more Discerning with what apps they choose and it doesn't mean you can't build good long retaining cohorts cuz there are people who still fall in love with your app it just probably there's some folks on the margins who are going to get stolen away by more competitors and more options and things like that so yeah things get harder over time I think this is also maybe an artifact of the fact that more people are spending more money on apps as well and so when you have so many more people willing to pay so many more apps

[20:52] launching and people getting better at monetization if you're driving more of those incremental users who don't have as high of intent and you're monetizing them better then you are probably going to turn more of those users and so as the techniques for monetizing have improved I think that's maybe part of it as well it's like apps are monetizing better than ever which then kind of converting better than ever which then leads to higher turn yeah there is always anytime you push on one part of the funnel you're going to just going to pop out on another part yeah exactly the heavier you push you know onboarding and really optimizing that

[21:31] early funnel you should expect a drop off in the late funnel in renewals and I think our data just shows that so the next one is monthly Revenue one year after launch so this is page 63 is I thought this was really interesting you know we at Revenue cat are kind of an index of the entire app industry all the way from chat gbt being a customer down to like my side projects the headline here is that just 5% of apps are making over 9,000 a month a year after launch or around 9,000 a month let me rephrase that David 5% of apps are making $99,000 a month or

[22:10] more I think it's it could be looked at either way but yeah that's true but you know as we hit a 10 million apps like what is that going to look like yeah how's that going to change but it means like 10x right by the way 1 to 10 million I don't know if that number is right but it's going to go up like it's going to increase one out of 20 apps makes enough within its first year to sustain at least one person which is pretty cool I mean you know that's a lottery ticket like would you go buy a lottery ticket if you knew like

[22:34] one in 20 chance this would become like a sustaining annuity like you know like that's pretty dang good I'd probably buy a lot of those I mean obviously they're expensive to build an app and try it we've always known this it's like fairly cheap to like make a basic and and like I wish we could like survey customers when they fill out their app like are you serious about this like take off the people who are just building stuff for fun they kind of like see and then like but the fun thing about this industry is that there's not really a solid line between those things right like things

[23:01] start off as side projects and they bubble and they get big and like most of the times they don't and that's what kind of makes this fun a fun company to work at or like industry to work in but yeah I mean I don't know do you read that David and it feels demoralizing a little bit or well you're right that it's both demoralizing and encouraging if you're building a brand new app and you're not funded you don't have a ton of money to spend on acquisition and kind of getting that early funnel going you should recognize this it's still just hard like for all the like tweets

[23:29] about how easy it is to build an app and make it go around on Tik Tok it's hard it's easier to write a thread about it that's for sure exactly but yeah I guess I guess this is the same version of my last question I'd love to know like relative the inputs though like how much did those people actually try besides like building app did they actually go market did they actually like try to build like a little bit of a growth Loop or have some sort of sense of how to grow it and like how many of these were apps that like ever in a million years

[23:53] could do that right like oh I made a you know tracking app for people who knit sweaters for dogs I don't which maybe is a a big Market but like there are sometimes apps that are so Niche it's like they'll never make money not cuz they're bad apps just cuz like the market is not there cuz yeah it would be interesting to qualify it a bit more but yeah there's money to be made and then as the effort goes down too I mean for folks who've got a a job you know making 500 bucks a month that's like a car payment you know that's a nice side

[24:19] hustle I had like a windows that made $1,000 a month for years was like the best thing very low maintenance and so yeah even even absent of it becoming a full-time thing it's like it's a worthwhile investment for a lot of creators and makers and stuff like this so but you were saying earlier like the longer we've worked at Revenue C like I'm closing on 6 years you're at like 8 years I was telling somebody yesterday I was looking back at some of my earliest office hours so when I joined in 2019 one of the first things I did was like to set up an open Thursday where anybody

[24:46] could book time on my calendar and it is crazy to look back at some of those early office hours calls and like those apps are huge now like I talked to Monarch money now they're a funded company and everything like that but I talked to them like in October of 2019 and they're like a 100% company now doing really well I mean you know they caught a break right and I think the commonality is they tried like they took it there's probably like a real highly selective thing there to somebody who takes an office hours with Revenue cat maybe more so than like their necessary idea or particular tactics but they were

[25:19] just putting the energy in I would have expected more customers to die not physically but like they've proven a lot of longevity right I mean even if they're not hyper Growers and like they're not on their way to become the next straa or whatever then yet they grow like you know you figure out a little bit year-over year and then depending on if you raise you know that's where you get can get gummed up is if you raise money or not but if you're building an app that you care about that you're passionate about that's you think is solving a problem or whatever whatever motivates you these

[25:46] businesses can be pretty sticky and durable and yeah you might not be a set up to return ADV Venture investor 100x their money but just don't take their money and like you're good I know I feel like I've been talking to more and more Indies who are like ah I'm like so close to quitting my day job and then you know we've had multiple people on the podcast where things started off as a side project and then year over year you know just that compounding growth I mean slopes is maybe a good example they're not a customer but like their company continues to grow in scale and started

[26:12] off kind of as a little project one person project a manual at card pointers who we've featured a lot in our from our marketing and stuff this kind of a one onean show with some help but like continues to like do a lot with a little and grow and grow you know they all have in common that they've built something great of course all right then next section to cover is monetization BS I thought this was another really interesting slide page 44 is it just shows that lots of apps are starting to finally experiment with hybrid monetization so we kind of break down subscriptions only versus subscriptions

[26:44] with consumables subscriptions plus Lifetime and then subscription consumables and Lifetime and that last one's fairly minimal and we've had a ton of talks I'm still pretty bearish on Lifetime like I was going to bring this up on the last slide is that the magic of subscriptions is that if you do build something valuable you are creating a new nity it's like if people are using it day in and day out they could be using it for a decade and that's what an app like slopes and some of these other apps that have built year over year over year part of that build is delivering value and then people continuing to pay

[27:19] year after year so you're not having to reacquire your users all over again like we did back in the paid up front days and so time we could have a whole another talk on I don't think for most apps it's a great choice except for maybe early on where you know you do just kind of pull some Revenue forward but you know we're seeing more and more apps mixing consumables as well in our data gaming of course is the largest category that is experimenting with subscriptions plus consumables no surprise but you see it across all categories now I mean from business and education to Social and lifestyle photo

[27:55] and video 133% I think that's maybe could be related to credits like that's probably driving that as well a lot more apps of selling AI credits or like Photo credits to like cover their cost on the back them and that's actually a great example too of where I think consumables make a ton of sense for AI is that you know you're going to have a small number of users who are going to create outsize costs yeah and like trying to fully estimate what you need to charge and your subscription might be not worth the effort right versus like just tracking and giving away for people to buy more

[28:27] credits it's a little more work but like it's totally doable I've an again anecdotally heard more and more of this like people cuz I think we are in some ways we're late stage subscriptions right like kind of people know the basic tricks it's like you get trials and do an annual if you can and then you get this the web stuff set up and then you get the like retention campaigns like so people are pushing into like okay what's the next like incremental thing we can add and there's a lot of apps out there that the way they're structured there's opportunities to charge on some sort of

[28:55] consumable basis it's a good way to to you know make sure your people who want to spend more can it's kind of annoying to build like a consumables like in credits tracking and currencies or whatever but we're working on some tooling and some apis to make it much much easier to like have consumables and then track a ledger of currencies and things like that that I think actually will potentially allow people to again experiment because it's like it might work it might not it's a big buildout so if we can let you try it for like a you know an order of magnitude cheaper I think more people can probably find some

[29:26] gains there yeah really just makes a ton of sense what I have been seeing in in some of these AI apps is that you pay a subscription and you get a certain number of credits and if you run out of credits you can buy more credits and that's like a super kind of natural thing the one thing I will say I saw one app that was doing this and it was getting slammed in the reviews because the subscription was actually fairly expensive but it included so few credits that people felt kind of rug pulled it was like wait I can only like create three images and now now I got to start

[29:58] paying for credits you still have to like deliver that value and it has to be kind of a fair exchange for people so if you're charging 20 bucks a month it's like people got to feel like they're getting their $20 of value before you can charge those consumables on top and you use that money because you know the people who don't use as many calls you have to use their unused credits to pay for other people's right and you have to kind of understand that risk you take some risk there but yeah I I expect this to get more I think we're not I think we're early days on this in a lot of

[30:27] apps so all right the next section I wanted to cover is time to trial and so this is Page 13ish very early in the report you we've kind of talked about this a lot over the last few years and I don't think we compared last year to this year maybe we didn't even share this data in last year's report but it does seem like more and more apps are pushing to start that free trial very early putting that pay wall in the onboarding and so what we see across all of the ABS and revenue cat is over 80% of trial starts happen that first day they open the app which is just crazy

[31:00] and you would hope too that the whole idea with premium like get people using the product and then eventually they're going to convert yeah you get the last 20% on every day after that but yeah so such as the nature you get one shot people are going to make their buying decision trialing decision and just like that's where the most people are but I think most people have they have how they think the world works and then there's how the world works and like this is a good example of that certainly this is the only conversion point you should be thinking about out as you start your monetization you know and

[31:30] that's why like even people just not like not having the pay wall in the onboarding is like such an L such an own goal right it's like and everybody's like I don't want to it's like no I think this is an opinion I don't hear as much anymore I think everybody's kind of gotten it and I think our numbers show that yeah yeah yeah but that's why you just got to show it you know people might not convert it's fine but like you got to put it up there cuz like it might be your only chance and if you're not convinced yet to put your uh pay in

[31:58] onboarding go look at this chart and look at just how I mean it's hard to communicate on an audio podcast just how dramatic this chart looks 80% of all trial starts happen in that first day the chart's just crazy similar to that the next page I want to look at is Page 92 the cancellation timeline and this is the first time we've shared this in the report and another one was kind of unexpected to me just how much of churn happens immediately like as soon as that first charge hits their bank account the month one churn shopping is the highest and it's over 40% so maybe just to

[32:41] explain this a little better the way we kind of created the stat is for an annual plan when does somebody go turn off auto renew and ultimately turn so people can turn it on and off back and forth and we don't track that when do they turn it off the last time so like when is the kind of like final turn decision and when you look at this chart it's like most of that turn decision most of that turning off auto renew happens the first month I always expected and we had pulled these numbers internally and I think Eric Crowley from GP bullhound he actually shared a

[33:11] version of this chart in his report last fall I expected the last month to be like a huge Spike and it is a spike but people are turning off auto renew that first month and then it kind of like slows down where like yes every month people are checking the App Store turning it off it's a relatively small Spike most of the categories that we broke out it's just around 10% maybe 10 12% some below 10% 27% or something like that of customers will cancel in that first month the next most common month is the last month which kind of makes sense it's to and like there are

[33:46] distinct events but by far it's that first month right which I guess you know makes sense but I always thought it it's like that's when Apple sends the email like that's when the next charge is going to come I think a lot of consumers are just and I do this like if it's an app I know I'm probably I don't intend to build a lifelong relationship with I'll buy it and I'll just go ahead and cancel right away just so that I I know yes I know I I shouldn't be doing this to all the conversion rates out there but it depends on the app right I think

[34:11] people see the charge in their bank account that's what's really driving this because once you've actually paid and it hits the bank account that's when you're like oh yeah like maybe I don't want to pay next year versus the reminder that it's coming up like you've kind of already made that decision all right the next section I want to cover is Google churn surveys this is really interesting so again a new chart that we've never shared before page 89 is it's super fascinating when you turn on Google Play I don't know exactly if it comes with an app or if it's like something it's sent bya email there's a

[34:45] survey they send and then developers can access that data you know this is something we overlooked for a while but in the past year we've started collecting and surfacing that data so that's why it's in the report for the first time this year yeah and so as you would expect the two biggest ones are cost related so like just don't want to pay and then not enough usage which is the almost the same answer right it's like the value equation does not balance out you it's not worth it it's basically you can combine those two and technical issues found a better app other it's all pretty small the competitive argument

[35:17] maybe isn't all that valid this is like sub 10% of people are switching to a competitor and maybe who knows like how people are answering this but like most people are just they're not falling in love with another app they're falling out of love with your app right or maybe their need has passed which is probably a big chunk of it right like it's worth right thinking about that in terms of like if you want to build something really big you want to build an app that people kind of need all the time or like continuously forever versus like even Fitness or whatever it's like people

[35:42] have an interest in a specific thing for a minute and then they could kind of get off of it the more you can build towards something that can become a lifelong habit and a lifelong practice like you're going to just have better numbers but still if people aren't using it they're not going to keep paying so yeah and if they're not finding enough value and I'll mix this in we can maybe talk about both of these simultaneously because I think they're highly related is that on page 71 we shared a breakdown of retained subscribers after year one by price point and this chart is super fascinating to me and super relevant I

[36:15] think to this price being a barrier is that lower priced apps have way better retention than higher price apps and it just makes sense I think I actually made a mistake in my weather app I was trying to kind of push the boundary a little bit and charge $40 a year for a weather app where most weather apps are more in the like 20 to $25 range and my turns not terrible I think I'm going to end up around 40% this year of retained subscribers so 60% turn which is it's above median like it's fine but I think I would have done way better both on

[36:47] conversion and retention with the lower price point but you might not have made more money so like you have to think that through right like ratios don't matter necessarily you got to like think of what it's scaling against it might be a worthy tradeoff but for weather app I just can't help but think and for tons of apps it's like when it's like oh it's only 20 bucks and yeah I'm still kind of using it here and there it's like it's a way different decision if it's 20 bucks versus 40 versus 60 versus 100 it's like when a $20 thing is going to hit your bank account it's like H yeah I mean

[37:13] this is just a view on elastic demand curves right like the higher price something is like fewer people are going to buy it but like you got to play around with that price curve so yeah I'm not sure I mean I think you're probably right certainly like your renewal rate would go up and your your conversion rate would go up but like if you have the price would both of those more than double definitely not your conversion rate probably or your renewal rate probably wouldn't more than double not more than double right conversion rate would have to go up and then renewal rate goes up again it's like what kind

[37:39] of business are you trying to build and last year my thought was well I'm going to ramp up some ad spend and so having the higher price point is going to make the ad spend easier to make work but then as those users start turning this year like did I really make the right choice and so combining those two charts that a lot of people not enough us combined with cost related is that people are making financially rational decisions how much value is your app really delivering in their life and this is where you as an app developer have to be realistic and kind of like weigh all

[38:10] of these things is like how much value am I really delivering how much are they willing to pay for that value and it's not always like a great AB test either right and you have to wait a whole year to understand TR have you run one David have you experimented with a different price yeah I've done different price experimentation I mean here's the hard thing though unless you're like a really big app and you've got your user acquisition died in it's like a lot of my traffic last year was from press and so that cohort's going to perform really differently than the average cohort and then I knew that that cohort would

[38:41] perform really differently than if I did start ramping up ad span and so you know as much as we talk about AB testing and like finding the right price through data it's like that's not always a great way unless you kind of already have the rest of the picture pretty dialed in where you have a consistent cohort of people coming from a consistent like ad spend or a consistent source of attention and I didn't have that and so again like when you're early it probably is just better to price it lower and then like let those retentive cohorts build up even if you're not price maximizing until you build it to the

[39:15] point where you're really delivering a ton of value that's true like if you were trying to build like a base of happy paying subscribers is maybe it's not a bad idea to let more people in early especially if the cost of service them is low there's some benefit there and definitely worth looking at this I mean definitely worth looking at all the charts but go look at this chart page 71 it's pretty dramatic looking at just how much better lower priced apps retain and correlation is not causation you could have a high price app that retains incredibly well because you're delivering a ton of value but if on

[39:44] average you think about that cost equation and the whole like subscription fatigue thing I mean I could talk an hour about my theories on that consumers just don't want to pay for anything 98% of your customers don't yeah nobody wants to pay so I think a lot of consumer subscription fatigue and the kind of the meta around that is just like the reality of consumers like nobody wants to pay for anything people complain about the price of gas but the higher the more value per dollar you're able to deliver to your customers the better that looks and feels to them like if you're delivering consumer surplus

[40:19] they feel like it's a good deal you're more likely to tell their friends they're more likely to stay subscribed yeah yeah yeah than NPS that promoter score will go up right cuz they'll just be like they want to you want to tell your friends about a good deal right if you're like really pushing the price to the Limit and you've got this really expensive app relative the value you're delivering and this is where like different categories like I brought up ladder a bunch I did a minod with Greg the CEO my wife uses it and it's 30 bucks a month it's one of the more expensive apps generally but is a really

[40:51] good app my wife hates technology she hates ABS it's like she's like the exact opposite of me she complains all the time about tech failing her and like you couldn't pry ladder from her cold dead hands it's the only like Fitness thing she's ever actually enjoyed and so like they're delivering a ton of value they have incredible retention and a really high price so it's not that you can't charge it's just that you just need to really figure out where you sit on that curve and if you're not delivering enough value and in my Niche it's like a billion weather apps out there and a bunch of them are free and there's one

[41:25] right in the the Apple weather is free to anybody on an iPhone and so the relative like value I'm able to deliver probably isn't as high as something like ladder that's able to deliver this really differentiated experience in a category where people are willing to spend more so I think you got to kind of take all of those into account but looking at these two different charts it should help people maybe rethink where they land on that curve and like making sure they are landing on the right spot on that curve and then relatedly the last slide I have to talk about today is 81 active renewal rates this is a

[42:00] fascinating one I kind of argued with our data scientist Rick who kind of headed up the report these last couple of years the way we calculate this is that has a user interacted with the app within the time frame of the renewal so this skews a little bit because if you're on a Weekly subscription did you use it that week if you're on a a monthly subscription did you use it that month if you're on an annual subscription did you use it that year so this does kind of skew the numbers a little bit but it is fascinating to see weekly subscriptions like so few people

[42:34] who renew actually used it within that week but weeks are also very short right so like versus the monthly it's more in the like 60s 50s 40 to 60% of people use it that's kind of natural though right it's like they've probably stopped using it I'm actually surprised it's that high because that's usually for me the signal just unsubscribe from something it's like did I even use it this month like no okay like I should probably unsubscribe so it's kind of surprising me that almost half of it on monthly like they actually did use it in that month but they still decided to not keep it going it does go to the to the fact

[43:06] that you will have a certain number of users who aren't actively using your app who are going to renew and again if you're $20 a year and they're only using it a few times a year like maybe that's a fair exchange of value but if you're $30 a month like ladder and you go a couple of months without using it that hits a little harder so it is is really interesting to look at these numbers on how active people are in that renewal cycle on the annual side it's almost 100% of people use it in that period but prior the whole year but there are a few

[43:39] so there's a couple people who like get charged didn't even use it for the whole damn year before that's pretty rough every year I feel like there's like 10 different charts it's like next year we're going to do this a little different because it would be interesting 400 page SOA report why not you know we can dream big yes it's like 250 this year for those who haven't cracked the p F yet oh I assume everybody listening has looked at every single page so I would hope so at this point but it would be fun to kind of break this down with a little more granularity to kind of understand the

[44:08] usage patterns of those renewal cohorts like a year is a long time kind of like you said like have they used it within that entire year yes but then like how much are they using it when like how what's the recency right yeah I think that'd be really interesting for next year there's probably some interesting ways to cut this that would maybe eliminate a bit more the usage Trend before cancellation yeah you could do a heat map of like usage up to for canceled users or something like this I don't know I can catch something out something tough to approved well those were my I didn't even count I probably

[44:38] should have numbered these it's top 10ish yeah top 10ish on pages 11 14ish through whatever you know it's more about the gist than it is about the accuracy which is kind of true for this report period it's like there's a lot in there it's dare I say dense but it's an honest report the numbers are real we spent a lot of time on them we stand behind them and yeah I think like don't read any one data point and go change your whole strategy but like take it read it give you guys some basis some things to try some new ideas for 2025 and it's always

[45:09] helpful to look at peers and and I think we have like the only data set like this in the world and I'm glad we can share it with everybody so well I think it's a great place to wrap up I mean we could probably talk another 20 minutes on like how to use report and how not to use report we talk about AI again no okay we've covered this on other podcasts a great podcast to listen to in conjunction with this one is the most recent Phil Carter episode where we talked about his subscription value Loop calculator so in that episode we did do a much deeper dive on how to use

[45:41] benchmarks when to use benchmarks when not to use benchmarks and all the ideas and theory behind that and it was a good summary you you gave like the 60-second summary like don't change your business on one number in the St of subscription apps report and that's true but there's also a ton more Nuance around like what decisions should you make based on this data and how do you look at that data and yeah we could go whole another hour but we've already done that so go back and listen to the uh subscription value Loop calculator episode with Phil Carter back in uh December of 2024 as kind of a

[46:13] adjunct to this report but that's about all I had to talk about is this our third one David third Sosa podcast third yeah third report third podcast yeah it's better every year super fun 250 Pages something only a Management Consultant could love I think anybody who works in app love this report David you can take that to the bank I wasn't quite as involved this year as I had been in years past because I was really focusing on the the podcast minisodes which if you haven't listened to those I did 12 short really dense we've been releasing one episode a day leading up to the report and I personally edited

[46:47] each one to make him as dense as possible as much uh kind of time devalue as possible but yeah reading through the port this year I got to read through it almost like a user or like somebody else in the industry versus like working on the numbers day in day out for the last 3 months it was a fun read as fun as a book of charts can be candlesticks are back I thought that was a nice touch you know this is like inside rag or inside Soo with David and Jacob you we just talk inside baseball about it all day but yeah we're proud of it I think you'll find some

[47:16] insight so definitely worth and we've got more contributors than before we actually shared some data from apps flyer and paddle kind of Partners who shared some data we break down AI apps so yeah there's a lot in there and uh you're probably not going to read it very few people in the world will will sit there and read Page by Page all 250 pages keep a copy on your desk under your pillow at the kitchen table four or five copies scattered throughout the house in the restroom just kind of everywhere I think yeah print it out just kill some trees yay you're going to need a

[47:47] thousand pages to get four copies so well if you do doublesided depends what kind of PR you have but anyways it was uh really fun chatting through this with you Jacob and looking forward to next year and go download the report if you haven't already with all these this fun chat for an hour of listening remc.com report right of course and the links in the show notes all those things okay cool see you next year thanks so much for listening if you have a minute please leave a review in your favorite podcast player you can also stop by chat. sub club.com to join our private community

[48:26] [Music]

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