Report: Apps Push for Subscribers as Revenues Prove Elusive
Mobile app developers are fighting an uphill battle as they work to generate revenue.
That’s according to a recent report by RevenueCat, a mobile app subscription tool kit provider, which finds that most apps fail to bring in $1,000 per month in revenue within their first two years. Around 20% get to the $1,000 mark, while 5% reach $10,000.
The obstacles facing mobile apps will likely bring about “more paywalls, upsells, and maybe even some price hikes” across all app categories, Rik Haandrikman, vice president of growth at RevenueCat, told Ars Technica, which first reported on the company’s findings earlier this week.
He added that he expects artificial intelligence (AI)-powered apps to “see many add-on usage-based pricing (credits or pay-per-feature models) instead of relying solely on subscriptions.”
According to the report, some app categories with the smallest percentage of newly launched apps to make $1,000 per month are shopping, travel, and utilities. Photo, video, and gaming apps are the most likely to reach $1,000 per month within two years.
The report also shows a widening gap between the top 5% of apps in terms of revenue and the remaining 95. Last year, the RevenueCat report found that the top 5% of apps in most categories earned 200 times more revenue than the rest. That figure ballooned to 500 times more in this year’s report.
While subscriptions can help drive revenue, the report found that the window in which people are likely to subscribe is small, with 82% of trial starts happening the same day a user installs an app, a figure that’s even higher than last year.
The findings come as the subscription economy continues to evolve, presenting businesses and consumers with both obstacles and opportunities, as PYMNTS wrote last month. And with the global subscription market projected to reach $1.5 trillion this year, per data from DarwinCX, companies are tinkering their strategies to attract and keep customers.
“The subscription industry is witnessing a shift toward more flexible and diverse pricing models,” that report said. “Tiered pricing remains a cornerstone strategy, with companies like Netflix and Spotify offering different levels of access and features to accommodate varying customer needs and budgets. This allows for personalized offerings and maximizes potential revenue.”
In fact, research by PYMNTS Intelligence has found that 46% of consumers are “deal chasers” and will switch services in search of a better deal, while other consumers can be enticed away from being loyal customers with a better price.
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