The 2025 State of Subscription Apps Report

David Barnard:

Hello, I'm your host David Barnard and with me today RevenueCat, CEO, Jacob Eiting. 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.

Jacob Eiting:

Hi David.

David Barnard:

It's your favorite time of year where we get to go on an audio podcast and talk about charts. So 2025 data 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 probably the best place to start is AI.

Jacob Eiting:

No, I'm pretty sure that was our schtick last year, so it was like, "There's something going on in artificial intelligence."

David Barnard:

Well, now it has gone on.

Jacob Eiting:

Yeah, I'm writing my intro for this afternoon, but I know, "There's something going on in artificial intelligence" is going to be my DLDR.

David Barnard:

So looking at the numbers, and these are on pages a 143, 189 and 58, you have to pull a few different charts together to look at it. We didn't do a slide comparing directly, but I think the most 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 the 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 situation where people are starting to get a little used to paying $20 a month for something on their little pocket computer. May spill over a little bit and continue to get people comfortable paying for subscriptions.

Jacob Eiting:

I mean, I just think they're better [inaudible 00:01:52]. It doesn't surprise me that the conversion rate because to some degree the number of people who have the flexible income and willingness to spend. There's not that many marginal people who will buy an app, but one app and 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 B valuable, people will pay more and they'll stay retained longer. I think this has been too is related, but the debate has been where is the value going to accrue in AI.

And I think something that's changed from my thinking from last year to now, last year I 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 [inaudible 00:02:34], and 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, it's the brand that seems to be where the differentiation is, and the [inaudible 00:02:52], which is awesome.

That's great for app developers, right, because what you can bring. Everybody has access to Cloude 3.7, but you can bring something unique terms of brand and translation and things like that. And that's what's going to drive people to convert and retain more than anything else.

David Barnard:

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 ChatGPT wrapper, everybody can vibe code a ChatGPT wrapper.

Jacob Eiting:

Yeah. What have you done in that case, right? You've not enhanced anything.

David Barnard:

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 unique and hard that's not able to just be vibe coded? Do you have some technological differentiation, but then secondarily it just goes back to distribution as differentiation. Okay, you vibe coded a ChatGPT 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? What value are you really driving that nobody else can drive? And that's been true forever, right? It's like, there's a million apps on the app store. Building the app has never been the hardest part. It's getting attention sustainably, building a community, building up a user base. That's where the rubber really meets the road.

Jacob Eiting:

There's always been a million apps. It's like, now we're going to 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 developer 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 and it continues to go down, which I think has been the surprising thing to me is we're seeing new tools for one-shotting simple stuff. Which again, simple stuff is not probably going to make you any money, but 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, because a single vertical, let's say, rock identification apps or I don't know, pick some tiny little niche.

I think probably what will happen is we'll 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 akin to a rock identification app that we haven't even [inaudible 00:05:03] thought about yet because the people that build that have not been able to build apps yet, and the barriers have been too high. And so yeah, this is probably moot at this point in March 2025, but 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, you make money by building novel things that nobody else does. And sometimes that's differentiated on the application of technology, sometimes that's on brand or other things, right? But people will pay for something that they can't get someplace else that's not a commodity.

David Barnard:

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 people actually care about?" But that's where there's probably opportunities to create this Strava 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 or multi-billion dollar company like Strava? Probably not, but can you make good money building the Strava for a smaller niche?

Jacob Eiting:

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. I mean specifically, but what it took to build that level accrual of velocity 10 years ago is much lower now. I think the winnings have not dropped down as much because people, yeah, they're willing to spend more for apps that do more. So yeah, it's good times.

David Barnard:

The distribution as differentiation, I think it's 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...

Jacob Eiting:

Is that distribution as differentiation or differentiation as distribution? I would say, differentiation as distribution, right? Your differentiation is your distribution. Maybe it means the same thing.

David Barnard:

Well, that was 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.

Jacob Eiting:

I would say, that's distribution is differentiation. I would argue there's also differentiation is distribution where just your app being so unique and strange, like distribution just takes care of itself because you're the one app that can do the thing, right?

David Barnard:

Ideally you have both though. So you have some unique lever to get attention for your app, and then it does something unique that you can sustain.

Jacob Eiting:

Yeah. I was just thinking about the TikTok example on the hook, right? It's like, if you make an app that is the dump on ChatGPT 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 2023, nobody cares anymore." But if you have something magic and cool that for a community on TikTok can go viral. Now, yes, the distribution is unique there, but making the TikTok is not the hard part necessarily. It's coming up with something that's 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.

David Barnard:

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 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 Sensor Tower app figures to watch for the apps that are making any money. And so as soon as you start making any money, 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 through paid, through social, through whatever that's going to keep you ahead of the curve when that flood of copycat apps comes?

Jacob Eiting:

Yeah. I mean, I think this is why it's still good to be really good at software. So even if you're vibe coding everything, 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 skillset you have or knowledge you have is going to, I still think matter going forward.

David Barnard:

Some of that is also just better understanding those communities. So if there's a community that you really understand in a unique way-

Jacob Eiting:

It can be literally knowing people, right? Like humans, which AI has yet to really do.

David Barnard:

Or have a following in the community. We have seen a rise in influencer led apps where the influencer has a following in a specific area. Like MacroFactor 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 built-in community that they can market to.

Jacob Eiting:

I mean, you see this in physical products as well. Everybody's launching with an influencer co-brand thing, right?

David Barnard:

Right. A supplement, yeah.

Jacob Eiting:

Yeah, exactly. It's like, how do we take an undifferentiated commodity essentially, and it creates some sort of margin? Well, we put Mr. Beast's face on it or whatever. He owns all his stuff first party. Yeah.

David Barnard:

And then most of those do tap out because you tap out your audience fairly quickly, but then you still then have to... Once you hit that plateau, then you got to figure out what's that next step. Product differentiation, distribution differentiation. You got to start paying for ads, you got to start figuring things out. All right. Well, I think that's probably enough on AI. The next thing I wanted to talk about was App Store versus Play Store. so, we do have some interesting data this year that I think further puts into charts what we 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 payers on iOS than it is like the Android users are that price sensitive.

Jacob Eiting:

The question is, do they meet this, whatever, ability to spend money on tiny software apps or whatever? I mean, that's sort of invariant to what phone they have. But if they are that person is very correlated with what phone they have, which has always been known. I don't know, anecdotally. I mean, this is a data podcast not an anecdote podcast, but 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 seeing optimistic. But all the big apps are still investing in Android. The popularity of Flutter, React Native, all these cross-platform things, I still think make the building for Android easier and potentially worthwhile. But I still think that 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 going to create some network effect to have it on both platforms.

David Barnard:

I think where folks are starting to find better monetization on Android is diversifying into hybrid monetization, as 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 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 experiments. 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 day-to-day shared was that they see way better 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, let them just buy that piece of content.

Jacob Eiting:

Yeah, more monetizing that if you have one single price point, basically everybody who doesn't hit that price point is thrown away. It's like, degenerate zero versus have some price discrimination some products on the way down so that 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 is ads monetization, which if you have a lot of people who don't have a lower [inaudible 00:13:02] to pay like advertising or monetizing those eyeballs is a good way to do it. But in which we don't necessarily have data on, but that might be... I've certainly heard of and seen more cases of that as 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.

David Barnard:

Unfortunately on Android, the CPMs are really low as well. But 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 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 and it's like, the way they finally cracked ad spend in Brazil, which is by dramatically dropping their prices in Brazil because the ads are so cheap that they could afford to monetize.

Jacob Eiting:

It's a good lesson in just how much optimization their work there is in these businesses if you want to keep driving. And I think it's somewhat unique in that sense in terms of 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, you got to think of the whole ecosystem. It's not just the conversion part, it's the acquisition part. You want to be testing those things jointly if you possibly can.

David Barnard:

Yeah, super interesting. So I did promise to share page numbers, so that's pages 113, 116. Hopefully, the page numbers will say the same.

Jacob Eiting:

I was going to ask if that's the case, we'll just say ish in that area. If we end up adding or removing a page, it might shift one by one.

David Barnard:

In the one-tens-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.

Jacob Eiting:

Can't stop it. Well, not the first hybrid framework but maybe the first biggest one or whatever, but yeah, it's still very popular.

David Barnard:

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. You can explain it better, a CLCI kind of...

Jacob Eiting:

Yeah, Expo just makes React hosting and deploying React Native apps much, much easier.

David Barnard:

I thought it was super interesting because all of us snooty indie developers are Native or [inaudible 00:15:40].

Jacob Eiting:

Customers don't care, they can't tell. Like you're a connoisseur of apps, David, but I do think for... We'll use Flighty as an example. I think if you're heading into a crowded market and your product is differentiation and distribution, having it being finely crafted and perfectly tuned is your product, then I probably wouldn't use React Native. But if that's not what your differentiation is, it's a great option, and they're going to have a moment. I think they already are Expo included, which is most of these models are really good at speaking in JavaScript and TypeScript for building these things. I just played with a service yesterday where it one-shot. I have been working on this stargazing side project for the longest time and I never got anywhere because my brain's scattered and it's just never came together.

David Barnard:

You're CEO of a company, you don't have time to be running exact projects.

Jacob Eiting:

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 one-shot it like pretty dang close. It had some other stuff but got a lot of it and did it with React Native because yeah, I guess, the model see a lot of React as well so they're good at it. But anyway, the thing that React Native, and we're talking about Flutter as well, there's those of these. But what they've always been good at is to the person that doesn't necessarily know how to write Swift was a compiled language. You got to have a Mac, which most people do but not everybody. There's a lot of advantages to the person who's not 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.

For the longest time, Flutter was gaining on React Native. I think also Google's maybe pulled back on their investment some Flutter. They also have [inaudible 00:17:18] 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's not over. But it's clearly not because 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. 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 fit and finish now to the pixel, da, da, da, da, da. There's a lot of advantages to doing these, and I think it's worth considering. 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 usually not the end of the world.

David Barnard:

I was talking to a friend recently who's 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 React or Flutter, but specifically React with something like Cursor is that it can actually run the app and screenshot it and iterate on the UI and test for bugs.

Jacob Eiting:

Without having to run the simulator and all this crap. That's the thing I was using yesterday. It's like in a browser and to run a native iOS app in a [inaudible 00:18:41] be impossible, that would just be really, really difficult. But yeah, just works basically with some shimming and things like that. So yeah, it's interesting. Expo has been around a long time. Expo's been around at least 2016 is when I first started using it, and just chugging along, and then suddenly a general purpose technology appears in their whole landscape changes, is just really cool.

David Barnard:

Take away from this section, I think we've already had quite a few, but if you are just getting started or you're 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 you're 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, it's probably a really good place to start today.

Jacob Eiting:

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 skillset, if you're not a Swift developer but you can do JavaScript like do it this way, it'll be worth it. It'll be worth the trade-offs.

David Barnard:

All right. Now, onto 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, 2023 to 2022. 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.

Jacob Eiting:

There's more competition every year, right? And the numbers aren't drastic. It is still in the 40s, or 30s to 40s through that period, but yeah, it makes sense. We talked a bunch about 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 because there are people who still fall in love with your app. It 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.

David Barnard:

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 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 after monetizing better than ever, which then converting better than ever, which then leads to higher churn.

Jacob Eiting:

Yeah, anytime you push on one part of the funnel, that's going to pop out in another part.

David Barnard:

Yeah, exactly. The heavier you push 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 one year after launch. So this is page 63-ish. I thought this was really interesting. We at revenue are an index of the entire app industry all the way from ChatGPT being a customer down to 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.

Jacob Eiting:

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, yeah, yeah.

David Barnard:

That's true. But as we hit 10 million apps, what is that going to look like?

Jacob Eiting:

Yeah, how's that going to change? But it means 10X, right? By the way, 1 to 10 million, I don't know if that number's 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, that's a lottery ticket. Would you go buy a lottery ticket if you knew one in 20 chance this would become a sustaining annuity? 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 fairly cheap to make a basic, and I wish we could survey customers when they fill their app like, "Are you serious about this?" They take off the people who are just building stuff for fun, they see. But the fun thing about this industry is that there's not really a solid line between those things, right? Things start off as side projects and they bubble and they get big, and most of the times they don't and that's what makes this a fun company to work at, or 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...

David Barnard:

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 getting that early funnel going, you should recognize this, it's still just hard. For all the tweets about how easy it is to build an app and make it go viral on TikTok. It's hard.

Jacob Eiting:

It's easier to write a thread about it, that's for sure.

David Barnard:

Yeah, yeah, exactly.

Jacob Eiting:

But yeah, I guess, is the same version of my last question. I'd love to know like, relative to the inputs though, how much did those people actually try besides building an app? Did they actually go market? Did they actually try to build a little bit of a growth loop, or have some sort of sense of how to grow it? And how many of these were apps that ever in a million years could do that, right? Like, "Oh, I made a tracking app for people who knit sweaters for dogs." I don't know, which maybe is a big market. But there are sometimes apps that are so niche it's like, they'll never make money, not because they're bad apps just because 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, there's money to be made.

David Barnard:

And then as the effort goes down too, I mean, for folks who've got a job making 500 bucks a month, that's like a car payment. That's a nice side hustle.

Jacob Eiting:

I had a Windows app that made a thousand dollars a month for years. It was the best thing, very low maintenance. And so, 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.

David Barnard:

But you're saying earlier, the longer we've worked at RevenueCat, I am closing in on six years, you're at 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 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 those apps are huge now. I talked to Monarch Money, now they're a funded company and everything like that, but I talked to them in October of 2019 and they're like a hundred-person company now doing really well. I mean, they caught a break.

Jacob Eiting:

Right. And I think the commonality is they tried, like they took it... There's probably a real highly selective thing there to somebody who takes an office hours with RevenueCat maybe more so than their necessary idea or particular tactics, but they were just putting the energy in. I would've expected more customers to die, not physically, but they've proven a lot of longevity, right? I mean, even if they're not hyper growers and they're not on their way to become the next Strava or whatever, then yet they grow. You figure out a little bit year over year. That's where you can get gummed up is if you raise money or not. But if you're building an app that you care about that, 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 you might not be as set up to return a venture investor a hundred x their money, but just don't take their money and you're good.

David Barnard:

I know, I feel like I've been talking to more and more Indies who are like, "Ah, I'm so close to quitting my day job." And then we've had multiple people on the podcast where things started off as a side project, and then year over year just that compounding growth.

Jacob Eiting:

I mean, Slopes is maybe a good example. They're not a customer, but their company continues to grow in scale and started off as a little project, one person project. Emmanuel at CardPointers who we've featured a lot in [inaudible 00:26:24] from our marketing and stuff is a one-man show with some help, but continues to do a lot with a little and grow and grow. They all have in common that they've built something great, of course.

David Barnard:

All right, the next section to cover is monetization bank. 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 break down subscriptions 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. 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 a annuity. If people are using it day in 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 your users all over again, like we did back in the paid upfront days. And so lifetime 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 do just pull some revenue forward. 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.

Jacob Eiting:

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 of selling AI credits or photo credits to cover their costs on the back end.

David Barnard:

And that's actually a great example too of where I think consumables make a ton of sense for AI is that you're going to have a small number of users who are going to create outsize costs.

Jacob Eiting:

Yeah. And trying to fully estimate what you need to charge, and your subscription might be not worth the effort, right? Versus just tracking and giving away for people to buy more credits. It's a little more work, but it's totally doable. Again, anecdotally heard more and more of this like people... Because I think we are in some ways we're late stage subscriptions, right? People know the basic tricks. It's like, you get trials and do an annual if you can, and then you get the web stuff set up. And then you get the retention campaigns and da, da, da, da.

So people are pushing into, okay, what's the next 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 make sure your people who want to spend more can. It's annoying to build a consumables in credits tracking and currencies or whatever, but we're working on some tooling and some APIs to make it much, much easier to have consumables and then track a ledger of currencies and things like that that I think actually will... Potentially a lot of people do. Again, experiment, because it might work, it might not. It's a big build out. So, if we can let you try it for an order of magnitude cheaper, I think more people can probably find some gains there.

David Barnard:

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 a super 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 rug pulled. It was like, "Wait, I can only create three images, and now I got to start paying for credits." You still have to deliver that value, and it has to be 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.

Jacob Eiting:

And you use that money because 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 understand that risk, but you need take some risk there. But yeah, I expect this to get more. I think we're early days on this in a lot of apps.

David Barnard:

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. We've 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 paywall in the onboarding. And so what we see across all of the apps and RevenueCat is over 80% of trial starts happen that first day they open 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.

Jacob Eiting:

They get the last 20% on every day after that. But yeah, such is the nature you 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, they have how they think the world works and then there's how the world works, and this is a good example of that. Certainly this is the only conversion point you should be thinking about as you start your monetization. And that's why even people just not having the paywall in the onboarding is such an L, it's an own goal, right? 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 gotten it.

David Barnard:

And I think our numbers show that.

Jacob Eiting:

Yeah, yeah, yeah. But that's why you just got to show it. People might not convert. It's fine, but you've got to put it up there because it might be your only chance.

David Barnard:

And if you're not convinced yet to put your paywall in 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 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 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 created this stat is for an annual plan, when does somebody go turn off auto-renew and ultimately churn? 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, when is the 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 a huge spike. And it is a spike, but people are turning off auto-renew that first month and then it slows down where, 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%.

Jacob Eiting:

27% or something like that if customers will cancel in that first month. The next most common month is the last month, which makes sense. It's too in like there are distinct events, but by far it's that first month, which I guess makes sense.

David Barnard:

But I always thought it's like that's when Apple sends the email, that's when the next charge is going to come.

Jacob Eiting:

I think a lot of consumers are just... And I do this, if it's an app I know, 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 too, all the conversion rates out there, but it depends on the app, right?

David Barnard:

I think people see the charge in their bank account, that's what really driving this. Because once you've actually paid and it hits the bank account, that's when you're like, "Oh yeah, maybe I don't want to pay next year." Versus the reminder that it's coming up, like you've already made that decision. All right, the next section I wanted 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.

Jacob Eiting:

When you churn on Google Play, I don't know exactly if it comes up in app or if it's something that's sent via email. There's a survey they send, and then developers can access that data. 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 a report for the first time this year.

David Barnard:

Yeah. And so as you would expect, the two biggest ones are cost related, so just don't want to pay and then not enough usage.

Jacob Eiting:

Which is almost the same answer, right? It's like the value equation does not balance out. It's not worth it. Basically, you could combine this two.

David Barnard:

And technical issues found a better app, other... It's all pretty small.

Jacob Eiting:

The competitive argument maybe isn't all that valid. This is sub 10% of people are switching to a competitor. And maybe who knows how people are answering this, but most people, they're not falling in love with another app. They're falling out of love with your app, or maybe their need has passed, which is probably a big chunk of it, right? It is worth where I think about that in terms of, if you want to build something really big, you want to build an app that people need all the time or continuously forever, versus even fitness or whatever. It's like, people have an interest in a specific thing for a minute and then they get off of it. The more you can build towards something that can become a lifelong habit and a lifelong practice, you're going to just have better numbers. But still, if people aren't using it, they're not going to keep paying.

David Barnard:

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 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 push the boundary a little bit and charge $40 a year for a weather app, where most weather apps are more in the 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 it's above median, like it's fine. But I think I would've done way better both on conversion and retention with a lower price point.

Jacob Eiting:

But you might not have made more money. So you have to think that through, right? Ratios don't matter necessarily. You got to think of what it's scaling against. It might be a worthy trade-off.

David Barnard:

But for a weather app, I just can't help but think. And for tons of apps, when it's like, "Oh, it's only 20 bucks. And yeah, I'm still using it here and there." It's a way different decision. If it's 20 bucks versus 40 versus 60 versus a hundred, it's like when a $20 thing going to hit your bank account, it's like aah...

Jacob Eiting:

Yeah. I mean, this is just a view on elastic demand curves, right? Like the higher price something is fewer people are going to buy it, but you got to play around with that price curve. So yeah, I'm not sure. I mean, I think you're probably right. Certainly, your renewal rate would go up and your conversion rate would go up. But if you have the price, would both of those more than double? Definitely not your conversion rate or your renewal rate probably wouldn't more than double.

David Barnard:

Not more than double, right? Conversion rate would have to go up and then renewal rate goes up. Again, it's like what 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 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 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 a great A/B test either, and you have to wait a whole year to understand churn.

Jacob Eiting:

Have you run one, David? Have you experimented with a different price?

David Barnard:

Yeah, yeah, yeah. I've done different price experimentation. I mean, here's a hard thing though. Unless you're 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, as much as we talk about A/B testing and finding the right price through data, it's like, that's not always a great way unless you already have the rest of the picture pretty dialed in where you have a consistent cohort of people coming from a consistent ad spend or a consistent source of attention. And I didn't have that. And so again, when you're early, it probably is just better to price it lower and then 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.

Jacob Eiting:

That's true. If you were trying to build 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.

David Barnard:

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. 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.

Jacob Eiting:

98% of your customers don't.

David Barnard:

Yeah. Nobody wants to pay. So, I think a lot of consumer subscription fatigue and the meta around that, it's just the reality of consumers. 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. If you're delivering consumer surplus, if they feel like it's a good deal, you're more likely to tell their friends, they're more likely to stay subscribed.

Jacob Eiting:

Yeah, yeah, yeah, that NPS Net Promoter Score will go up, right? Because it's just be like, you want to tell your friends about a good deal, right?

David Barnard:

If you're 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 different categories, like I brought up Ladder a bunch. I did a minisode 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 it's a really good app. My wife hates technology, she hates apps. It's like, she's the exact opposite of me. She complains all the time about tech failing her, and you couldn't pry Ladder from her cold dead hands. It's the only 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 out there. And a bunch of them are free, and there's one right in the Apple weather app is free to anybody own an iPhone.

And so, the relative 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 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 fascinating one. I argued with our data scientist, Rick, who 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 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.

Jacob Eiting:

But weeks are also very short, right? So versus the monthly, it's more in the 60s, 50s, 40 to 60% of people use it. That's natural though, right? 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, I should probably unsubscribe." So it's surprising me that almost half of it on monthly is like they actually did use it in that month, but they still decided to not keep it going.

David Barnard:

It does go 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 $20 a year and they're only using it a few times a year, 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.

Jacob Eiting:

On the annual side, it's almost a hundred percent of people use it in that period. But prior, it's a whole year, but there are a few. So there's a couple of people who get charged, didn't even use it for the whole year before. That's pretty rough.

David Barnard:

Every year I feel like there's 10 different charts. It's like, next year we're going to do this a little different because it would be interesting-

Jacob Eiting:

400 page social report, why not? We can dream big.

David Barnard:

Yeah, it's like 250 this year for those who haven't cracked the PDF yet.

Jacob Eiting:

Oh, I assume everybody listening has looked at every single page, so.

David Barnard:

I would hope so at this point. But it would be fun to break this down with a little more granularity to understand the usage patterns of those renewal cohorts. A year is a long time, like you said, have they used it within that entire year? Yes. But then how much are they using it?

Jacob Eiting:

When, like what's the recency, right?

David Barnard:

Yeah, I think that'd be really interesting for next year.

Jacob Eiting:

This is probably some interesting ways to cut this that would maybe illuminate a bit more the usage trend before a cancellation. Yeah, you could do a heat map of usage up to for canceled users or something like this. I don't know, I can catch something out, something tough to approved, so.

David Barnard:

I didn't even count. I should probably should have numbered these. It's top 10-ish.

Jacob Eiting:

Yeah, top 10-ish on pages 114-ish through whatever [inaudible 00:44:57]. It's more about the gist than it is about the accuracy, which is 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 don't read any one data point and go change your whole strategy, but 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 the only data set like this in the world and I'm glad we can share it with everybody.

David Barnard:

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.

Jacob Eiting:

We talk about AI again, no? Okay.

David Barnard:

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 the 62nd 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 a ton more nuance around 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 an adjunct to this report. But that's about all I had to talk about.

Jacob Eiting:

This is our third one, David, third so-so podcast.

David Barnard:

Third, yeah, third report, third podcast. Yeah.

Jacob Eiting:

It's better every year. Super fun.

David Barnard:

250 pages, something only a management consultant could love.

Jacob Eiting:

I think anybody who works in Apple love this report, David, you can take that to the bank.

David Barnard:

I wasn't quite as involved this year as I have been in years past because I was really focusing on the podcast minisode. 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 time to value as possible. But yeah, reading through the port this year, I got to read through it almost like a user or somebody else in the industry versus working on the numbers day in and day out for the last three months. It was a fun read.

Jacob Eiting:

As fun as a book of charts can be. Candlesticks are back. I thought that was a nice touch. This is inside rack or inside so-so with David and Jacob. Yeah, we just talk inside baseball about it all day, but yeah, we're proud of it.

David Barnard:

I think you'll find some insights. So definitely worth, and we've got more contributors than before. We actually shared some data from AppsFlyer and Paddle partners who shared some data. We break down AI apps. So yeah, there's a lot in there, and you're probably not going to read it. Very few people in the world will sit there and read page by page, all 250 pages.

Jacob Eiting:

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 everywhere I think [inaudible 00:47:55].

David Barnard:

Yeah, print it out. Just kill some trees.

Jacob Eiting:

You're going to need a thousand pages to get four copies. Well, if you do double-sided, it depends on the printing you have, but...

David Barnard:

Anyways, it was a 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.

Jacob Eiting:

Revenuecat.com/report, right?

David Barnard:

Of course. And the links in the show notes, all those things.

Jacob Eiting:

Okay, cool.

David Barnard:

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.