Subscription revenue refers to the income generated from a recurring payment model, where users pay a regular fee, often on a monthly or yearly basis, to access premium features, content, or services within the app.
How to calculate subscription revenue
You can view your subscription revenue in the Analytics section of the Adapty dashboard. This metric takes into account all the money received from both subscriptions and one-time purchases but does not include revenue from refunded subscriptions and purchases. The calculation is done before deducting the store’s fee.
For example, during the chosen financial period, there were:
- 5 monthly subscriptions for $10 each
- 1 yearly subscription for $100
- 10 one-time purchases for $50
The total subscription revenue formula in Adapty looks like this:
Subscription revenue = 5*$10 + 1*$100 + 10*$50 = $650
In addition to the subscription revenue, the Adapty dashboard also displays other key financial metrics such as MRR (Monthly Recurring Revenue), ARR (Annual Recurring Revenue), and ARPPU (Average Revenue Per Paying User). These metrics are complemented by data on the number of active, new, and churned subscriptions, as well as subscription renewals and cancellations over time. By analyzing these metrics, you can gain a better understanding of your app monetization strategy and evaluate its effectiveness in both the short and long term.
How to increase subscription revenue
To boost app revenue, it’s important to identify the right moments when users are willing to pay for enhanced experiences. According to Statista, subscription apps have an average purchase conversion rate of around 5%. By offering free trials, basic or short-term subscriptions, or premium or long-term subscriptions at these hotspots, you can increase the likelihood of converting users into loyal, long-term customers. This is essentially your subscription funnel, which should be tracked to encourage users to transition to the next stage. Common scenarios include onboarding newcomers, offering subscription upgrades when users see additional value in the app, stimulating purchases with special discounts, winning back churned users, and more.
To grow subscription revenue, consider taking the following steps:
- Increase awareness of subscription options for app users through in-app notifications, emails, and other methods.
- Segment the audience into groups based on characteristics, behavior, and engagement levels to find the most converting segment.
- Upgrade current paying users to transfer their high engagement into upgraded revenue. For example, you can offer a 6-month or 12-month subscription to users who have been using a monthly plan consistently to increase their lifetime value. Learn more about different cohorts of users here.
- Test different subscription products, such as various price points, trial periods, and promo offers, using Adapty’s configuration options.
- Test different paywall designs and product configurations using paywall A/B testing.