{"id":30551,"date":"2020-10-29T16:59:29","date_gmt":"2020-10-29T20:59:29","guid":{"rendered":"https:\/\/mjtsai.com\/blog\/?p=30551"},"modified":"2020-10-29T16:59:29","modified_gmt":"2020-10-29T20:59:29","slug":"about-that-85","status":"publish","type":"post","link":"https:\/\/mjtsai.com\/blog\/2020\/10\/29\/about-that-85\/","title":{"rendered":"About That 85%"},"content":{"rendered":"

Jacob Eiting<\/a> (via David Barnard<\/a>):<\/p>\n

Turns out, the 85\/15 split — which Apple is keen to mention anytime developers complain about the App Store rev share — doesn’t have a meaningful impact for most developers. Because churn.<\/p>\n

[…]<\/p>\n

Top mobile apps like Netflix and Spotify report churn rates in the low single digits, but they are the outliers. According to our data, the median churn rate for subscription apps is around 13% for monthly subscriptions and around 50% for annual. Monthly subscription churn is generally a bit higher in the first few months, then it tapers off. But an average churn of 13% leaves just 20% of subscribers crossing that magical 85\/15 threshold.<\/p>\n

[…]<\/p>\n

According to our [RevenueCat] data, just 16% of apps manage to achieve a takehome rate above 75%.<\/p><\/blockquote>\n\n

Michael Love<\/a>:<\/p>\n

\n

To me this is actually an argument against<\/em> offering subscriptions; if 80% of monthly subscribers quit after one year then you’re better off charging them up front, they weren’t going to produce long-term ongoing revenue either way.<\/p>\n<\/blockquote>\n\n

David Barnard<\/a>:<\/p>\n

\n

The magic really starts happening a few years in. Great apps retain more than 20% (especially as a blend of monthly and annual), and many of those will end up retaining for years<\/em>. As those cohorts stack, you can build a really strong business.<\/p>\n<\/blockquote>\n\n

Previously:<\/p>\n