Looking at Mobile App subscription revenue

subscriptions

The infographic above illustrates that while subscription-based revenue for mobile apps is in the minority, it is better than 2.5x more effective than ad-based revenue models.   Forbes Digital Commerce enables mobile app developers to adopt a subscription-based revenue model for your app and enables in-app catalogs for in-app purchases, upgrades, and more.   Today, I want to focus on why the subscription model can work better for you over most other revenue models.

It can be stated that the subscription model is not always the best, particularly if you know that the lifespan of your app is short – like simple games and event-based apps.   Heavily niche-oriented news and utilities, games with lots of content and strong replay value, are well-suited to the revenue model.

Subscription revenues have numerous benefits:

  1. Lower initial cost to customers - typically correlates to more customers.
  2. Recurring billing  – lifetime value of a subscription can be far greater than an app’s retail cover price.
  3. Subscriber information - build and organize your subscriber base and email list for future promotions.
  4. Subscriber relationship building – each billing cycle provides opportunity to engage customers which can correlate to customer loyalty.
  5. Promotion and Cross promotion opportunities – ability not only to promote your own products, but earn ad revenue or commissions on promotions from other companies, can be a value-added service unto itself.
  6. App trending statistics –  ability to see and evaluate cause of cancelled subscriptions – is it time for a new app?  Are there new apps directly competing in your market? 
  7. Retention potential - when a customer goes to unsubscribe, you might look at offering them a reduced rate to remain subscribed or at least provide them an exit survey so they can tell you why they are unsubscribing.
  8. Predictable income - if you are keeping up with your statistics on new users vs. turnover, you have a pretty good eye into the short-medium term of your future revenues on a per app basis.
  9. Easy record keeping - it’s mostly automated, and if subscriptions go through one platform, that offsets the need to track sales on a per store basis.
  10. Helpful for acquiring credit, loans, etc. - Important especially if you are looking to grow your business; being able to show a steady stream of income is still useful.
  11. AWESOME, TOTALLY AWESOME for your exit strategy - When you get ready to retire an app from your active marketing, but still have subscribers, this is your chance to get a significant lump sum payment based – because you are not just selling the license to your app, you are selling its subscription base, too.  That has immensely greater value than the app as a stand alone offer – especially as in most cases of premium sales, the app developer does not typically sell their end-user licensing information.

A few points worth elaborating upon.

Let’s look at the big MMO’s.  Many of them sell their game outright AND charge a monthly subscription rate.  With previous PC versions, the software itself might sell for $60, but with a $10 or $15 monthly subscription, they are making $120 or $180 more each year – with lifetime value sometimes running several years.   Obviously the price points on the Mobile side need to be lower – and there is heavy competition to go “freemium.”  The subscription model is still worth considering if you are able to create an “overwhelming value proposition.”

Really, I find the MOST CREATIVE efforts at achieving “Overwhelming Value Proposition” in the Crowdfunding niche.  I would strongly recommend reading through what others are offering in their crowdfunding projects to attract revenue for their “project that does not yet exist” that you can apply to your existing apps, products and services.

I’m going to close with this – take a look at Forbes Digital Commerce.  Opera Mobile Store is partnering with them, you can use your apps with FDC’s API in our store.   The subscription revenue model is not to be ignored.  Opera Mobile Store has adopted the same model in conjunction with Mobile Carriers.  The two are different, but the principals are the same.

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Project Manager at the Opera Mobile Store providing Sales-Marketing support. Content development and research.

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Comments ( 1 )

  • Leslie says:

    This is a great tip particularly to those new to the blogosphere.
    Simple but very precise information… Thanks for
    sharing this one. A must read article!

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