What’s a Good Monthly Renewal Rate?
We analyzed 10,000+ apps to find out
Traci HirokawaAugust 2, 2022
You launched your app three months ago and have amassed thousands of adoring subscribers. You’ve been focused on growth, but it’s time to shift your attention to something even more important: renewal rates.
How many of your customers will renew their subscription? What does a good renewal rate look like? Is it enough to build a sustainable business?
Your renewal rate is one of the most important revenue metrics for your subscription business — it’s the percentage of customers who choose to renew their subscription. It’s an indicator of the long-term value you provide your customers and the lifetime value (LTV) you should expect from those customers. A good renewal rate will make building your app business a lot easier.
Median Renewal Rates for Monthly In-App Subscriptions
We analyzed 10,000+ subscription apps across iOS and Android to understand how renewal rates stack up during the first three renewals.
Monthly subscriptions have a median first renewal rate of 56%, which increases over time. This means customers who aren’t getting enough value from your product will likely churn in the first month. If you can get your customers to renew their subscription after their first month, they are likely to continue renewing their subscription in subsequent months.
Your renewal rates are a good barometer for whether or not customers are getting enough value to justify the cost of renewal. Low renewal rates can tell you if customers aren’t getting enough value from your app for the current price, so you might want to consider adjusting either your price or offering. Make sure to talk to customers as you consider changing the product and/or price point to better understand why customers aren’t seeing enough value to stay subscribed.
When considering your options for optimizing renewal rates, you should also evaluate your competitors’ offerings and pricing, along with recent consumer spending behaviors. This will help you determine if you’re losing customers to more competitive apps.
And don’t forget to analyze the data you have on your current customers. By segmenting your customers based on activity or traits, you may find certain segments with higher renewal rates than others. If you do, you might want to reallocate your time and spend to target and retain that profile of customer. RevenueCat Customer Lists can help you cohort and export groups of customers based on purchase behavior and other attributes.
Identify churn risks in the customer journey and develop churn prevention campaigns.
Once you determine which customers have low renewal rates and are at high risk of churning, you can make decisions about when and how to intervene with discounts, promotions, support, etc. Proactively taking action to prevent churn will increase your revenue and LTV and help you manage costs.
Tracking and analyzing renewal and churn can help you understand the points where your customers tend to churn and help you get ahead of it. For example, if you’re tracking your subscription events and notice that someone opts out of their renewal, you can use that opportunity to send the customer a message or offer. RevenueCat offers pre-built charts for analyzing churn, as well as integrations with tools like OneSignal, Braze, and Iterable that allow you to proactively engage customers that are at risk of churning.
Test the right subscription duration and feature packaging for your app.
Annual subscriptions unlock significant cash flow with immediate payouts and can be a strong barometer for product-market fit, since they force potential customers to pay up front for expected value. Monthly subscriptions provide less cash at a higher frequency but allow customers more flexibility if they’re not ready to commit to an annual subscription.
While a high renewal rate can be a strong indicator that you’ve found the optimal duration and feature packing for your subscription offerings, the “right” subscription offerings will also depend on the nature of your app, your customer affinity, the price, and other factors. It’s important to test your pricing, packaging, and offerings to determine what subscriptions work best for your app. RevenueCat can help you see how many customers have opted out before the renewal date, but you won’t know your renewal rate until the renewal date has passed. RevenueCat offers various charts and other tools that help you monitor and proactively improve your renewal rate.
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