While we’ve talked about different app monetization schemes in some of our previous articles, one of the most popular schemes recently has been the subscription-based model. Subscription-based apps allow users to pay a monthly fee for access to content. Sometimes you pay to access content in general, and sometimes you pay to access premium content. Whichever it is, this scheme results in the most reliable revenue out of any monetization model, which is probably why you might want to learn about it.
What Makes This Model So Great?
Each app monetization model has its own individual advantages and disadvantages, and each model works best for different kinds of apps, but what makes the subscription model such a successful one?
Reliable Income
As stated, subscription-based apps have the most reliable revenue out of any app revenue scheme. The payment schedule is regular, you know exactly how much people will pay per month, because everyone pays the same. Each new user is more revenue. Some subscription-based apps also allow you to pay less money to pay in bulk, meaning if you pay for a 6-12 month subscription all at once at a discounted price. This allows the app developers to make reliable revenue projections.
When you don’t have to worry about the flow of your revenue, you can focus your efforts and funds on marketing, making sure that you not only keep, but also grow your revenue stream.
Higher Audience Engagement
With many subscription-based apps, users pay monthly for it and do not want to waste their money, so they actually use the app. It also helps that many subscription-based apps are content streaming or service apps, which users are more likely to use or need in their daily life.
In general, users want their money’s worth, so they make sure to engage with your app, which helps you as an app developer because user retention and engagement can sometimes be a daunting task.
Apple Gives Them More Money
Back in 2016, Apple instituted a new revenue split with apps that maintain a subscription with a customer longer than a year. Instead of the standard 70/30 split, apps that fit the criteria would get an 85/15 split, making developers more money from the App Store.
In essence, Apple gives you more money for being able to keep a customer long-term. Which not only brings in more money from the app store, but also is beneficial to your app seeing as you are keeping a customer for a whole year. That’s a whole year of guaranteed income from the user. It’s really a win-win.
Now just because a subscription-based model seems great, that doesn’t mean it’s a perfect one. Just like any other model, it comes with its own challenges too.
Challenges of the Model
What does it take to put out an app that requires a subscription? Well it’s not as easy as it would seem.
Always Need New Content/Features
Unfortunately, that’s the deal. That’s why people pay monthly for access to your app. People pay for continuous access to your app because they expect continuous new content or features or upgrades. People may be willing to pay for access to your app for a little while with nothing new, but if they are spending their hard-earned money monthly on your app, they want to see work come out of that. Which is why you’ll need to constantly plan new content or features or updates to retain your customers.
And this can get exhausting. Many apps have seemingly plateaued because the new content or features they are offering are not that enticing to consumers. Or an update actually makes the UI worse than what it was previously. Constant new content or features mean a lot of work for you.
Free Trials Are Necessary
Sure Disney can release a streaming platform like Disney+ and get away without offering a free trial, but if your app doesn’t have the established customer base and widely known and loved content that Disney has (let’s be honest, it probably doesn’t), you need a free trial.
The thing about free trials is they can be tricky. How long do you let a user try your app for free? You need to find that balance that allows them to explore the app enough to fall in love with it, while also finding that perfect time to end the free trial, seal the deal, and get them to subscribe for more.
Or maybe you offer premium content in your subscription, what premium content do you allow a customer to see for free? What will really hook them? Figuring out the free trial and how to win over a customer can sometimes take some playing around to find the right balance.
Need Good User Support
Since the customer will probably come back to your app multiple times a month, maybe even multiple times a day, if something goes wrong, they want it fixed. And for that your app will need a solid user support department. Customers pay monthly for your app, and they want to get the full use out of it with no interruptions. Without a good support department, you’re likely to lose customers because it’s easier for them to just not spend their money than have to deal with an app that doesn’t seem to be working correctly and non-existent or poor customer service.
A good support department can be expensive, but it can be more costly to your revenue stream to not put any effort or attention into it at all.
Don’t let the challenges intimidate you, every app monetization model has its own unique disadvantages. These can be overcome by having an app that supports this model. So what does it take for an app to succeed in the subscription category?
Top Subscription-based Apps and What We Can Learn From Them
The best way to learn how to succeed at anything is to take a look at those who are already at the top, and learn from them. So let’s take a look at some of the top grossing subscription-based apps and take a look at what they’ve done to reach that point.
If we take a look at this infographic by SensorTower, we can see that music and video streaming apps have the largest presence, with dating apps coming in at a far away second. This is not strange, not many gaming apps can survive off subscriptions, so the apps that do employ this model tend to fall into one category. But let’s take a look at what these apps are doing right to sit at the top.
Streaming Services Dominate
Streaming services lead the pack when it comes to subscription-based apps. And it’s no wonder, there’s almost always new, fresh content. Whether it’s music, movies, tv shows, sports, you name it, it’s content that people certifiably enjoy, and if you can keep pumping that content out, your customers will stay and you’ll even add more.
Streaming services fit in perfectly with the subscription model. Customers are almost always willing to pay for continued access to content they enjoy consuming. The key is to not charge too high of a monthly fee. Which leads to the next point.
Keep the Monthly Fee Low
If your app is too expensive, users will expect a lot out of your app, and you will need to provide. You’ll also be more likely to lose customers if something goes wrong or an update isn’t taken well. Many of the highest grossing services cost less than $20 a month, which is a relatively small price to pay for the amount of content you get when you sign up. This leaves customers feeling like the monthly price is worth what they get out of the service.
Services like Hulu have even periodically lowered their monthly fee in response to a competitor raising theirs. This allows for marketing campaigns as well as is a chance to grab new customers. Besides the actual content you offer, your monthly fee can play a big role in whether or not people pay again the next month.
Original/Unique Content
Several of the streaming services on the list not only offer content not original to them, but also content that they created and you can only find on their platform. This gives them the unique advantage of being the only place that you can access that content. Meaning without paying for a subscription, there’s no way to consume that content.
It’s important to note about the original content, it’s not just any old content, it’s genuinely good content that consumers like and wish to keep seeing. If you can hook consumers with your original content, they’ll be paying customers for years.
User-based Content
Piggy-backing off the last point, what is ‘good’ content? Really, it’s anything your users like. Sure you put your own spin on it, but at the end of the day your content only has to please one group – your users. It pays to know your user base well, their likes and interests, their occupations, their ages, etc. Create a picture of your users and make content for them. When users show interest in a certain type of content or a certain feature, run with it, develop it more. You never know what could make you a leading subscription app.
People Hate Ads
Which is why if your app is free, people understand that ads are a natural part of the service. But apps like YouTube and Hulu have been able to offer ad-free or ad-light experiences through paying a monthly fee. And many people took them up on their offers. People don’t like ads, and are likely to deal with them if they don’t have to pay, and the ads don’t interrupt the user experience too much in the app.
So, if you do have ads, make sure they work seamlessly with your user experience. And consider offering a premium subscription for an ad-free experience. Just make sure the cost of the subscription will sufficiently cover the ad revenue you would have received from that user.
When it comes to success, each app has its own journey, but that doesn’t mean that they don’t all share things in common. The most common theme with the most popular and successful subscription-based apps is that many of them have a ton of content available to paying customers. Not only do you get more content, paying customers also get a better user experience.
If you’re looking to monetize your app, a subscription-based model might be the one for you if you have a wealth of content people want access to or a service people need. This model can be very lucrative if it aligns with the kind of app you have. With the right app and the correct implementation of this model, you too can be on the road to success like the greats that came before you. And to ease and fasten the road, learn more about our performance marketing.
