Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. SubClub is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in-app purchases, manage customers, and grow revenue across iOS, Android, and the web. You can learn more at revenuecat.com.
Let's get into the show. Hello, I'm your host, David Barnard, and with me today, Revenue Cat CEO, Jacob Eiding. 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 year where we get to go in an audio podcast and talk about charts. So 2025 status subscription apps report. I will call out page numbers.
during the podcast. So it 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 probably the best place to start is AI. No, I'm pretty sure that was our shtick last year. So it was kind of like... There's something going on in artificial intelligence. Well, now it has gone on. Yeah, I'm writing my intro for this this afternoon. I know it's, there's something going on in artificial intelligence. This is 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... Interesting thing about our AI app 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 twenty dollars 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 mean, I just think they're better apps. It doesn't surprise me that the conversion rate, because 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 who 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 two is related, but the debate is in where is the value going to accrue in AI? And I think.
something that's changed my thinking from 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're 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, 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 modes are, which is awesome. That's great.
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 rapper yeah what have you done in that case right you've not you've not enhanced anything. Yeah, you've not 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 app 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 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 it's 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 gonna say there's been 10 million apps i think that's why maybe it may not seem like
the entire individual experience of an app filler 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 barriers to build apps has gone down.
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, I'm not convinced that that's going to, because a single vertical, like some, let's say rock identification apps, or I don't know, come pick some tiny, like little niche. I think probably what will happen is we'll just see.
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 akin 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 march 2025 but like 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 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 strava 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 opportunities to create this trauma for some niche. That's not actually.
served well by Strava and you can create your own community. Is it going to be a billion dollar company or multi-billion dollar company like Strava? Probably not. But can you make good money building the Strava for a smaller niche? There's only one Strava before. There's probably going to be one Strava after.
You know what I mean? I wouldn't let that stop you because you can do 10 times more than the Strava team could. I mean, specifically, but like what it took to build that level accrual of a velocity 10 years ago is much lower now. And so I think the winnings have not. drop down as much because people, yeah, they're willing to spend more for apps that do more. So yeah, it's good times.
The distribution 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? Is that distribution as differentiation or differentiation as distribution?
I would say differentiation as distribution, right? Like your differentiation is your distribution. Maybe it means the same thing. Well, 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 TikTok and other.
channels i would say that's uh distribution is differentiation i would argue there's also differentiation is distribution where just your app 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 that you have some like unique lever to get attention for your app.
And then it does something unique that you can sustain. I was just thinking about the TikTok example on the hook, right? It's like if you make an app that is like the dump on chat GPT wrappers again, whatever, you can do that again. It's just like, oh, it's just somebody asking an AI a question. Like that's so 20.
2023 nobody cares anymore but if you have something magic and cool that for a community on like tiktok can go viral now yes the distribution is like unique there but making the tiktok is not the hard part necessarily it's coming up with something that's like a unique
value prop that's going to create something that an influencer can talk about or even just goes viral on its own. That's really thinking about some sort of differentiating product feature that will 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... of 10 million apps in the next few years instead of a million, it does seem like...
There's a whole new crowd of folks who are just watching any app that goes viral, any app that crosses 10K in revenue a month. They're watching Censor 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 is 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?
you to get attention for it 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, cause everybody has the same tools. So whatever differentiating skillset you have or knowledge you have is going to, I still think matter going forward.
of that is also just like better understanding those communities so like if there's a community that you really understand in 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-led apps where the influencer has a following in a specific area like macro factor 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 supplement. Yeah.
Yeah, exactly. It's like, how do we take an undifferentiated commodity, essentially, and create some sort of margin? Well, 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 probably enough.
The next thing I wanted to talk about was App Store basically just 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. 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 pairs on iOS than it is like the Android users are that. It's 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 to support that but i've seen more
people seem optimistic but like all the big apps we know are still investing in android the popularity of flutter react native like all these cross-platform 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 out 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 diversity.
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 pairs might actually be an artifact of too many apps just copy 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 mini-sodes 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 monitors.
monetization on android with hybrid monetization it's like give people the option to pay for one feature or if you're a content app like let them 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 it's a degenerate 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 could be substantial i think also one thing we don't capture in our data
like ads monetization which you know if you have a lot of people who don't have a lower per privity to pay like advertising or monetizing those eyeballs is a good way to do it but which we don't necessarily have data on but that might be you know i've certainly heard of and seen more cases of that I was like
to improve your total LTV is to be running ads, which is essentially what you're saying. It's like a hybrid monetization, but not just IAP hybrid, but adding other things to generate revenue. Unfortunately, on Android, the CPMs are really low as well. I was talking to Demetria, again, another minisode that we did leading up to this report. And one of the things he shared 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 and maybe even lower than you would expect in some of these regions they're actually seeing good return on ad spend because the ads are so cheap it's cheap on both sides so you can afford to drop your price
on Android and or in some of these developing nations. So the example he gave was Brazil. I was like, the way they finally cracked ad spend in Brazil was just by dramatically dropping their prices in Brazil because the ads were so cheap that they could afford.
forward to monetize it's a good lesson in just like how much optimization their 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 there are so many consumers in so many different locales
and it goes to show too like it's not one single variable right it's like okay yeah 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, 116. Hopefully the page numbers will say the same. I was going to ask if that's the case. We'll just say ish in that area. Yeah, if we end up adding or removing a page. might shift one by one in the 110s ish the next section that i found super interesting was the hybrid versus native and this is on page 125 ish 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 yeah, still very popular. I'm going to do a podcast with the founder of Expo not too long from now. I almost did it as a minisode. 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.
a CLCI kind of yeah it's a expo just like it makes react hosting and deploying react native apps much much easier so i thought it was super interesting because all of us snooty 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 your product is differentiation and distribution, having it be 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 because my brain's scattered and it just never came together. You're a CEO of a company. You don't have time to be running exact projects. No, 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 won.
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 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 gotta have a Mac which like most people do but like not everybody and like it's not you know and 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 and give a second wind. 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 on Flutter. They also have cotton multi-platform, 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. I guess it's my job to jump up and be like that mobile is not over, but like it's clearly not because like we're still investing in multiple different ways to do things and React Native is advancing and Flutter is being worked on every day.
I mean, Flutter people are obsessed, too. God bless them. But 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 think, be a little more snooty about it. But now I'm like, hey, if your differentiation is not... the things that native is better at, which it's 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 because 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. When he told me that actually makes 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 it would be impossible like that would just be like really difficult but yeah it just works basically with some shimming and things like that so
Yeah, it's kind of interesting. It's like these technologies, you know, Expo's been around a long time. Expo's been around at least 2016 is when I first started using it. And, you know, just chugging along. And then suddenly a general purpose technology appears and 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 it makes it way easier and then as we show in the report it doesn't mean you're going to monetize 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
It can reduce time to market and iteration time depending on what talent you have on your team as well. If you don't have the skill set, if you're not a Swift developer, but you can do JavaScript, do it this way, it'll be worth it. It should be worth the trade-offs. All right, now on to some bad news. Page 70-ish in the report is we did look at retention this year compared to last year, and last year we compared to 2023.
And what we looked at is a 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? And the numbers aren't like drastic, you know, still in the 40s or 30s to 40s through that period. But like, yeah, it makes sense. Like we talked a bunch about the barriers to building apps is going down.
becoming more discerning with what apps they choose. And it doesn't mean you can't build good long retaining cohorts because there are people who still fall in love with your app it's just probably there's some folks along 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 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 churn 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
better than ever, which then kind of converting better than ever, which then leads to higher churn. Yeah, there's 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 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.
revenue one year after launch so this is page 63 ish i thought this was really interesting you know we at revenue category kind of an index of the entire app industry, all the way from ChatGPT 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 off.
launch or around 9,000 a month. Let me rephrase that, David. 5% of apps are making $9,000 a month or more. I think it could be looked at either way, but yeah. That's true. But as we hit 10 million apps, what is that going to look like? Yeah, how's that going to change? 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 one in 20 chances 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 filled their app like are you serious about this i 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 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?
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 it's still just hard.
for all the like tweets about how easy it is to build an app and make it go viral on TikTok. It's hard. It's easier to write a thread about it. That's for sure. Yeah, exactly. But yeah, I guess it's the same version of my last question. I'd love to know like relative to the inputs though, like how much-
those people actually try besides like building an app do they actually go market do 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 could do that right like oh i made a you know tracking app for people who
sweaters for dogs oh which maybe is a big market but like there are sometimes apps that are so niche it's like they'll never make money not because they're bad apps just because like the market is not there because 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 job, you know, making 500 bucks a month, that's like a car payment. You know, that's a nice side hustle. I had like a Windows app that made $1,000 a month for years. It was like the best thing. Very low maintenance. So yeah, even absent of it becoming a full-time thing, it's a worthwhile investment for a lot of creators and makers and stuff like this.
What you're saying earlier, like the longer we've worked at Revenue Cat, I'm closing in on six years. You're at like eight 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 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 hundred person 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 office hours with revenue.
new cat maybe more so than like their necessary idea or particular tactics but they were 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 strava 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 we
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 you think is solving a problem or whatever, whatever motivates you.
These businesses can be pretty sticky and durable. And yeah, you might not be as set up to return a 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, 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 off kind of as a little project, one person project.
manual at card pointers who we've featured a lot in our marketing itself is kind of a one one man 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 the next section
to cover is monetization banks and i thought this was another really interesting slide page 44 ish it just shows that lots of apps are starting to finally experiment with hybrid monetization so we kind of break down subscription only versus subscriptions 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 in the last slide is that the magic of subscriptions is that if you do build something valuable, you are creating an annuity. 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 year after year so you're not having to reacquire users all over again like we did back in the paid up front days and so lifetime we could have a whole nother 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 But...
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 and video, 13%. I think that's maybe could be related to credits. Like that's probably driving that as well. A lot more apps are selling AI credits or like photo credits to like cover their costs on the backend. 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 outsized 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 credits it's a little more work but like it's totally doable i've anecdotally heard more and more of this like people because 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 into an annual if you can and then you get this the web stuff set up and then you get the like retention campaigns and 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 consumable basis.
it's a good way 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 build out so if we can let you try it for like a you know an order of magnitude cheaper i think more people
could probably find some gains there. Yeah, it really just makes a ton of sense. What I have been seeing 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 I got to start 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 dollars 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 but you take some risk there but yeah I expect this to get more I think we're not I think we're early days on this in a lot of apps so
all right the next section i wanted to cover is time to trial and so this is page 13-ish very early in the report you know 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 report but it does seem like more and more apps are
pushing to start that free trial very early, putting that paywall in the onboarding. And so what we see across all of the apps and revenue cat is over 80% of trial starts happened that first day they opened the app, which is just crazy. And you would. hope too that the whole idea with freemium 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 such is 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.
as you start your monetization you know and that's why like even people just not like not having the paywall in the onboarding is like such an l this is an own goal right it's like And everybody's like, well, 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 gotta show it you know people might not convert it's fine but like you gotta put it up there because like it might be your only chance and if you're not convinced yet to put your uh paywall and onboarding go look at this chart and look at just how i mean it's hard to communicate
audio podcast just how dramatic this chart looks 80 of all trial starts happen in that first day the charts 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 explain this a little better, the way we kind of created this 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 off the last time so like when is the kind of like final churn decision and when you look at this chart it's like most of that churn decision most of that turning off auto renew happens the first month i always expected
And we had pulled those numbers internally. And I think Eric Crowley from GP Bullhound, he actually shared a 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 or turning it off it's a relatively small spike most of the categories that we broke out it's just around 10 percent
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 is to and like there are distinct events. But by far, it's that first month, right, which I guess, you know, makes sense. But I always thought 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 shouldn't be doing this to all the conversion rates out there but it depends on the app right i think 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 a 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-ish. It's super fascinating when you churn on Google Play.
don't know exactly if it comes up in-app or if it's like something gets sent by email. There's a 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 almost the same answer, right? It's like the value equation does not balance out. It's not worth it. It's basically. that you could combine those two.
And technical issues, found a better app, other, it's all pretty small. The competitive argument 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 probably 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 have an interest in a specific thing for a minute and then they 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 a 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 think to this price being a barrier is that lower priced apps have way better retention than higher priced apps 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 churn is not terrible. I think I'm going to end up around 40% this year of retained subscribers. So 60% churn, which is it's above median, like it's fine, but I think I would have done way better.
both on conversion and retention with a 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 trade-off.
But for a 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. and they hit your bank account. It's like, eh. Yeah, I mean, 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 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 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...
price point is going to make the ad spend easier to make work but then as those users start churning this year it's like did i really make the right choice and so combining those two charts that a lot of people not enough usage 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 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 a b test either right and you have to wait a whole year to understand churn
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 dialed 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 perform really differently than if I did start ramping up ad spend. And so, you know, as much as we talk about A-B testing and like finding the right price through data.
And 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. 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 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, 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.
it 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 and you could have a high price app
that retains incredibly well because you're delivering a ton of value. But if on average, you think about that cost equation and the whole 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. your customers, the better that.
looks and feels to them. Like if you're delivering consumer surplus, 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. Then NPS and that promoter score will go up, right? Because they'll just be like, they want. 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 to value you're delivering. And this is where like different categories, like I've brought up ladder a bunch. I did a mini-sode with Greg, the CEO. My wife uses it.
bucks a month it's one of the more expensive apps generally but it's a really good app my wife hates technology she hates apps 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 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 right in the Apple weather app 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 fast. 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 timeframe 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 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 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 percent 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 to unsubscribe from something is 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 it's like
did use it in that month but they still decided to not keep it going it does go to the to the fact 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 twenty dollars 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 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 a period prior. It's a whole year, but there are a few.
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 social report. Why not? You know, we can dream big.
yeah it's like 250 this year for those who haven't cracked the pdf 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
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 was the recency yeah I think that'd be
really interesting for next year. There's probably some interesting ways to cut this that would maybe illuminate 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 sketch something out, something Tufty approved. Well, those were my...
I didn't even count. I probably should have numbered these. It's top 10-ish? Yeah, top 10-ish on pages 114-ish through whatever-ish. 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 helpful to look at peers. 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.
Well, I think it's a great place to wrap up. I mean, we could probably talk another 20 minutes on how to use the report and how not to use the report. We're talking 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 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 gave like the 60 second summary, like don't change your business on one number in the state of subscription apps report. And that's true, but there's also.
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 a whole nother hour but we've already done that so go back and listen to the subscription value loop calculator episode with phil carter back in December of 2024 as kind of an adjunct to this report. But that's about all I had to talk about. So it's our third one, David? Third SOSA podcast? Third, yeah. Third report, third podcast. Yeah. Better every year.
Super fun. 250 pages, something only a management consultant could love. I think anybody who works in Apple will 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 podcast mini-suds, 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.
each one to make them as dense as possible as much kind of time to value 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 three 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 Sosa with David and Jacob. Yeah. We just talk inside baseball about it all day, but yeah, we're proud of it. I think you'll find some insights. So definitely worth, and we've got more contributors than before.
shared some data from apps flyer and paddle kind of partners who shared some data we break down ai app 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 100 250 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. Yeah, print it out. Just kill some trees. Yay. You're going to need a thousand pages to get four copies. Well, if you do double-sided, it depends on what kind of printing you have. Anyways.
It was 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 this fun chat for an hour of listening. Revenuecat.com slash 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.subclub.com to join our private community.