In 2016, Apple released new rules around subscription models on the App Store, offering developers a bigger cut of the revenue share.
Apple offered developers a 70/30 cut for the first 12 months, then an 85/15 for subscribers who stayed longer than a year, whereas Google’s subscription model offered a flat 85/15 split from the beginning.
A year on from these changes, mobile marketing platform Liftoff has released a huge new report on subscription app models.
The report seeks to lift the lid on engagement trends and activities impacting user acquisition and engagement in the subscription category.
It draws on data from 1st June 2016 to 1st June 2017 that spans over 1bn ad impressions, 14m clicks and 520k app installs.
Below we have collected some highlights from the report.
Overall subscription app costs and conversion rates
The study found that across all categories, it costs an average of $4.40 to acquire a new subscription app user.
The cost to convert that user to finish registration is $30.51, giving an install-to-registration rate of 14.43%.
But what about the cost to convert into a subscriber?
Liftoff’s analysis found that on average, it costs $161.38 to convert a user into a subscriber, giving an install-to-subscription rate of 2.73%.
This is compared to an 8% install-to-purchase cost for gaming apps, and a 5.9% install-to-purchase rate for shopping apps.
But although the subscription app rate is much lower, as Liftoff says: “The lasting loyalty of users so committed to an app that they agree to pay a recurring fee for the privilege to use it and the certainty that comes with a stable and predictable cash cow.
“Connect the dots, and overall app costs and conversion rates may be higher than most, but so are the long-term dividends.”
Subscription apps by price band
A particularly interesting section for dating apps, Liftoff also analysed how conversion rates change depending on how pricey the subscription is.
It grouped subscription apps into three price ranges: low ($0-$7), medium ($7-$20) and high ($20-$50).
Analysis found that apps in the medium price range had the highest conversion rate with 7.16%, and the lowest cost to acquire a subscriber at $106.35.
This conversion rate was almost five times higher than the low cost category, which had a conversion rate of 1.37% and a cost-to-acquire of $234.14.
For high cost, the conversion rate was 0.73%, with a cost-to-acquire of $307.96.
In its analysis of dating subscription apps, Liftoff pitted the category against utility apps.
Its data found that for dating apps, on average it costs $2.26 to acquire a new user, and $12.32 to complete a registration, resulting in an install-to-registration rate of 18.3%.
In terms of subscriptions, Liftoff’s data said it costs an average of $157.99 to convert a user into a subscriber, with an install-to-subscription rate of 1.4%.
This puts dating apps’ install-to-subscription rate at a similar level to the “low cost” subscription app category (1.37%), but below the average rate for all subscription apps (2.73%), and well below games (8%) and shopping apps (5.9%).
As Liftoff says: “A comparison of install-to-registration rates for the two app categories reveals an unusually high drop-out rate for Dating apps (18.34% make it to that event but only 1.43% commit to a monthly subscription), indicating that the registration process is a serious bottleneck.”
In terms of gender, the report found that, in general, the install-to-subscription rate between genders was the same – 2.6%.
The only main difference was that it was slightly easier to get women to register to an app, the percentage sitting at 15.2% compared to 12.2% for men.
When looking at operating system, the cost to acquire an iOS user who installs a subscription app ($5.58) is 54.6% more than to acquire an Android user ($3.61).
Despite this, the gap narrows further down the funnel – the cost to acquire an Android user who continues on to subscribe ($162.07) exceeding that of an iOS user ($160.68) by less than a percentage point.
Other highlights from the report, which was released this week, include that dating app conversation rates hit a peak in May, reaching 2.82%.
Summing up, Liftoff said: “As subscription apps fly or fail based on the perceived value they offer, the data sends a clear signal to marketers that the power to reduce the time frame and increase conversions is in their hands. At one level, they can remove friction that discourages users from moving deeper in the funnel.
“At the other end of the spectrum, they can review their campaigns to ensure they deliver the right message to the right audience at the right time. No matter if a subscription costs single or double digits, marketers can aim to increase conversion rates by making sure they engage appropriately at every consumer touch point and stage of the funnel.”
Check out the full report here.