How Subscription Duration Impacts Renewal Rates

An analysis of over 10,000 subscription apps on iOS and Android reveals that monthly subscriptions tend to have a higher first renewal rate compared to annual subscriptions, with a median renewal rate of 56% for monthly and 27% for annual subscriptions. However, this does not imply that monthly subscriptions are superior, as understanding customer responses and lifetime value is crucial. Companies often report high blended renewal rates, which can be misleading due to their inclusion of older cohorts with lower churn rates. Focusing on the first renewal rate offers better insights into the impact of marketing and onboarding efforts on new-user retention. To address churn effectively, understanding the reasons behind non-renewals, such as pricing, app performance, or onboarding issues, is essential, and tools like cancellation surveys can provide valuable feedback. Calculating customer lifetime value and expected revenue requires comparing retention rates of different subscription durations over equivalent periods. RevenueCat provides tools and charts to help monitor and enhance renewal rates.