Investors know that most startups fail, but what many may not realize is how few mobile apps actually make money. New analysis of the subscription app economy by mobile subscription toolkit provider RevenueCat shows that the top 5% of apps generate 200 times more revenue than the bottom quartile after the first year, but 12 After a month, the median monthly revenue generated by apps is less than that. 50 USD.
RevenueCat has approximately 30,000 apps using the platform's tools to manage their monetization, so the State of Subscription Apps report provides a bird's-eye view of the subscription app world. Aside from Apple and Google, RevenueCat has become the largest collection of subscription app developers on his one platform.
The report specifically examines data from more than 29,000 apps and 18,000 developers that collectively generate more than $6.7 billion in tracked revenue and have more than 290 million subscribers.
After analyzing the data, the company found that only 17.2% of apps reach even $1,000 in monthly revenue, but once you reach that point, your app is even more likely to grow further. For example, 59% of apps that reach $1,000 reach $2,500, and 60% of apps that reach $2,500 reach $5,000. But what's even more surprising is that only 3.5% of apps reach $10,000 in revenue. An indie developer may need to reach this number to dedicate full-time to app development and his mobile-first startup.
However, narrowing things down to the category level makes some differences in the success of your app.
Health and fitness apps generate even more revenue after one year, performing at least twice as well in both the bottom quartile and top 5% as all other categories combined. Travel and productivity apps are struggling the most, with even the top 5% of apps in this category earning less than $1,000 a month after being on the app store for a year.
Considering the number of apps launched as side projects, it may not be all that surprising that many apps don't make any money, but when you look at the actual monetization numbers, the odds are against you. This may come as a shock to those who think there is.
RevenueCat also found that while the most common monthly subscription price remained unchanged at $10 this year, the average monthly subscription price increased by 14% from $7.05 to $8.01. The weekly price rose less than 2% to $5.55, and the yearly average fell just over 1% from $32.94 to $32.53.
Image credit: RevenueCat
The report also highlights other aspects of the subscription app monetization race, including North America-based apps being monetized four times more than the global average. That means his 14-day RLTV (Realized Lifetime Value, in this case a number that shows how much money an average user generates in the 14 days after installing an app) in North America is $0.35, while the global average is $0.08.
Also, Android is more profitable than iOS in Japan and South Korea, which is usually not the case.
Another big takeaway from this year's report is that the percentage of monthly subscribers retained after 12 months decreased by about 14% last year. This could be a sign that consumers are monitoring their wallets and canceling subscriptions they don't need. However, the industry itself is not shrinking, given that all other metrics are up year over year. For example, his 1.7% of downloads converted into paid members in the first 30 days. This number has increased from last year. (However, the difference between the bottom and top quartiles is noteworthy: 0.6% for the former and 4.2% for the latter).
Additionally, data shows that over 10% resubscribe within 12 months, with some unsubscribed subscribers coming back, with reactivation rates even higher in categories such as media and entertainment. .
“We definitely saw a tightening, and that's not surprising, because a lot of apps were increasing their prices. So any price increase due to inflation would, of course, cause user churn as well. ” said Jacob Eiting, CEO of RevenueCat. “Overall, the whole ecosystem seems to be growing pretty well, but there are some realignments going on,” he noted.
The larger report details useful details for subscription app developers, including details on subscription packages, pricing, trial strategies, conversions, refund rates, retention rates, growth rates, and more.
Image credit: RevenueCat
Image credit: RevenueCat
The company also shared its predictions for the year ahead, saying it expects more apps to adopt no-trial subscription plans and expects subscription prices to rise. We also predict that apps will combine subscription models with other monetization methods such as non-renewable in-app purchases, advertising, partnerships, e-commerce, and affiliate marketing. AI will also be used more extensively in apps to personalize the user experience, and while new regulations may create new options, for now only large-scale apps will be able to use third-party payment processors and apps. You will benefit from using the store.