Disappointing Revenue Stats: Pushing Developers Towards Subscriptions

Mobile app developers are expected to push more aggressively for subscription-based usage next year.** Figures from RevenueCat, which analyzed more than 30,000 apps show that most are struggling to reach $1,000 a month in revenue.

RevenueCat is developing a subscription toolkit for mobile apps, ArsTechnica reported.** The company lists Reuters, Buffer, Goodnotes, PhotoRoom and Notion among its customers. It is claimed that 90% of apps with an in-app subscription platform use RevenueCat. Therefore, it is worth considering that the company benefits from this form of monetization.

Only about 17% of the researched apps earn at least $1000 monthly.** The percentage of researched apps generating more monthly revenue is even lower.

Monthly Tracked Revenue (MTR)
RevenueCat notes that once an app reaches $1,000/month in revenue, it is more likely to earn $2,500/month (59% who hit the $1,000 mark achieved this) or even $5,000/month (60% who hit $2,500/month achieved this).

Unbalanced Income
RevenueCat’s data points to a significant imbalance in revenue distribution among subscription mobile apps: the report found that 12 months after launch, the top 5% of apps are generating 200 times more revenue than the bottom quartile. For new apps, the average monthly revenue after a year is “just under $50.”

However, as advertising costs continue to fall and developers look for ways to generate recurring revenue to support, maintain and improve apps, it is expected that subscriptions will continue to be a major strategy for developers.

Subscription Fatigue
The challenges with mobile app subscriptions include not only convincing people to pay for an app, but also convincing them to do so repeatedly. RevenueCat notes that compared to the 2023 report, the percentage of monthly subscriptions that persist after one year dropped 14%, which “impacted both the best and worst performers.” Among other findings, monthly subscriptions have an average first renewal rate of more than 60%, but retain only 36% of the original number of subscribers when it comes time for the third renewal.

Developers hoping for recurring revenue are turning to users who are increasingly discouraged by subscription fatigue. According to a 2022 report by consulting firm Kearney, 42% of consumers “believe they have too many subscriptions.” But while more industries are focusing on subscriptions, mobile apps, some argue, are a use case where recurring payments make more sense than in other businesses such as print shops.

Higher Prices
Mobile app subscription prices are expected to rise over the next year. In the year since RevenueCat published its 2023 report, the average monthly rate has increased 14%, from $7.05 to $8.01. Factors such as rising customer acquisition costs, interest in looking like a premium app, and AI could present an economic challenge for developers and affect pricing.

But RevenueCat also expects developers to experiment more with other revenue sources, such as in-app purchases and affiliate marketing, over the next year.