Alejandro Cantarero is the Field CTO of AI at DataStax. Previously, Alejandro was founding CTO of Nami ML. He has built and run data teams at startups and large enterprises. Most recently he was the VP of Data at two large media companies, the Los Angeles Times and Tribune Publishing Company.
Nami is excited to announce the 1.0.0 release of our Flutter SDK for In-App Purchases (IAPs) and subscriptions.
Flutter is a great framework to build apps for iOS and Android with a shared code-base. The Nami® platform brings the same simplicity to selling in-app purchases and subscription cross-platform that Flutter brings to app development.
In our Flutter v1.0.0 release, we bring all our latest features from our iOS and Android SDKs including:
Create paywalls in multiple languages.
Improved support for accessibility features like Apple’s VoiceOver and Google’s TalkBack on Nami® no-code paywalls.
Paywall Smart Text feature that enables custom text on purchase buttons or including Product SKU information like price, subscription, and free trial duration in all text fields on your paywalls.
Support for one-time purchases on iOS and Android
In addition to these great new features, we have included a number of internal improvements in this release.
Enhancements to ensure purchases on Android get acknowledged if the initial attempt fails
Updated to the Google Play Billing 4.0.0 library
Improvements to our Java interface to make it easier to use
Added support for development on M1 Apple computers
We are very excited to make flutter in-app purchases and subscriptions as easy as cross-platform app development. Get started today in just a few minutes with our flutter quick start guide.
Reader revenue is the most reliable way to build a successful and sustainable content business. Digital subscriptions and membership models have proved highly successful for news brands including the New York Times and Washington Post, as well as local news like the Boston Globe and Minneapolis Star Tribune.
How can mobile apps help drive that success for your reader revenue company? See 3 key areas where apps can really shine below.
1. Mobile audiences are app users
According to eMarketer, mobile users spend 90% of their time in mobile apps versus only 10% on the mobile web.
Reader revenue companies can more deeply engage with their audiences through mobile apps. Increasing returning visitors and driving up time spent are great reasons to adopt a mobile app strategy.
“Another learning is that more than 50 percent of subscribers are coming from the apps, so the apps are crucial to our subscription success. And only 30 percent of the subscriptions are coming directly from the paywall,” – Sophie Gourmelen, Le Parisien
2. News consumers engage with push
Many apps use push for marketing and sales use cases. Content apps are strongly positioned to use push to engage their app consumers with more content that they love. Using content rather than marketing for push notifications is a great opportunity to build loyalty and engagement.
A recent study by App Annie and LeanPlum showed a 7x increase in customer retention when using personalized push.
Push is even more effective in reader revenue apps when editorial is involved in crafting the message. Clifford Levy, a digital editor for the New York Times discussed their evolving push strategy with Recode back in 2016.
“A year or so ago the push notifications from the New York Times were simply headlines. They were written with a particular voice that was almost like the voice of the print front page. Sam and I and some of our other very, very talented colleagues in the newsroom said, "You know what? That's not how the lock screen on a phone works. The lock screen is where you get texts, the lock screen is where you have very personal communications. We need to evolve a new voice for push notifications.”
Mobile app spending in 2021 was up 20% over 2020 to $133B USD according to Sensor Tower. And that’s not all. Sensor Tower is predicting that by 2025 mobile app spending will reach $270B USD.
Reader revenue products can tap into this growing digital spend by adding mobile apps to their product suite.
Build and Grow Reader Revenue with Nami
Once you’ve built a great app experience to engage your readers and build loyalty, Nami has all the tools you need to build and grow reader revenue.
Integrate recurring revenue with our No-Code paywalls and 5-minute integration to sell and grant access to your premium content. Manage your customers with our CRM. Understand opportunities to grow revenue with our analytics and insights, and build campaigns to execute on those insights. We’ve got you covered.
Apple’s subscription Offer Codes announced at WWDC 20 are now available. In this article, we discuss what exactly Offer Codes are and how you should think about using them.
What are Offer Codes?
Offer Codes are one of the simplest ways to provide promotional pricing to your customers. They are a great tool to add to your ongoing acquisition, retention and win-back programs. While Offer Codes have some limitations, they are quick and easy to use so they offer your marketing team
They are unique one-time codes you generate in App Store Connect and provide to your customers. In fact, Offer Codes are incredibly easy for the user to redeem in the App Store like a gift card or also in-app via a redemption sheet.
Who is Eligible to Redeem Offer Codes?
When you create Offer Codes, you select which cohort of your customers are eligible to redeem the offer.
Choose customer eligibility when you create Offer Codes
Your choices are:
New Subscribers
Existing Subscribers
Expired Subscribers
Let's dig into some of the use cases for each target customer group.
New Subscribers
These Offer Codes target users who have never purchased the subscription product. Here are a couple ways you might want to use this type of offer:
Use as an acquisition tool to bring new users into your app's funnel
Use as an acquisition tool to convert users who have already downloaded/used your app into your subscription
Existing Subscribers
These Offer Codes target users who are current subscribers of the subscription product with auto-renew turned on. Here are some ways you might want to use this type of offer:
Use as a loyalty-building tool to reward your best subscribers with discounted pricing for a period of time
Use as a customer service tool to for user(s) who encountered a negative experience with your app or brand
Use as a retention tool with existing subscribers who are showing the early warnings signs for churn
Expired Subscribers
These Offer Codes target users who are a former subscriber of your subscription product. Here are some ways you might want to use this type of offer
Use as a win-back tool to encourage former subscribers to re-subscriber to your subscription product
What Promotions are Possible with Offer Codes?
In addition to targeting specific eligible customer cohorts, Offer Codes support three offer types:
Pay as you go
Pay up front
Free
Let's look at each of these in more detail:
Pay as you go
Pay as you go offers give you the ability to set a price for eligible customers to pay weekly for between 1 and 12 weeks. Even for a monthly or annual subscription product, this gives you the power to charge a customers a small amount more often.
Pay up front
Pay up front offers let eligible customers pay one flat price for a certain duration. For example, even for a monthly subscription product you may find that a promotional offer of one price for the first 3 months is the best way to keep the subscriber from churning out 30 days.
Free
Free offers give you the ability to offer between 3 days and 1 year free. This type might be used in customer service situations or as part of your acquisitions efforts.
Offer Code Limitations
Only available on auto-renewable subscriptions type in-app purchases
Generated on a by product SKU basis
Generated for one of three potential eligible customer types: new, existing, and expired (former) subscribers.
Customers can only redeem one code per offer
Customers may redeem multiple different offers, even if they are for the same subscription product
Offers can be redeemed in-app or on the App Store with a URL
Offer Codes expire on a specific date, maximum 6 months from the time they were created
You can have a maximum of 10 active offers per subscription and 150,000 codes per app per quarter
They only work with devices on iOS 14 and iPadOS 14 and later
How are Offer Codes Different from Introductory Offer & Promotional Offers?
While Introductory Offers can have time bounds, these are best used for your "business as usual" offers. For example, use Introductory Offers for your standard Free Trials for a subscription product. Introductory Offers apply to anyone buying the product, so there is no redemption event that needs to take place.
Tip: Please note depending how you setup your Offer Codes, they can combine with Introductory Offers so keep that in mind when you are considering what you want to offer.
Promotional Offers can be used to deliver some of the same strategies as Offer Codes for Existing and Former Subscribers. When you find an Offer Code strategy that works well for those customer types, you can use Promotional Offers to operationalize the strategy inside your subscription business logic. While more complex to adopt, Promotional Offers have the benefit of delivering the same business impact, but without requiring Offer Code distribution and redemption.
Final Thoughts
Use Offer Codes as a useful for marketing and customer service purposes.
For marketing, they are a great tool for acquisition, retention, and win back campaigns. They are easy to setup, so they are a great way to experiment with different subscription marketing strategies in meaningful numbers. Once you find a strategy that works, use Promotional Offers to operationalize at scale.
For customer support, they can be utilized on a case-by-case basis to help resolve customer service issues.
For end users, while some frictions exists to redeem, it's not any more so than an App Store or iTunes gift card.
The subscription economy has skyrocketed to the point that it seems like everything is a subscription. On one side, the growth of subscriptions is driving benefits, new services, and more options for consumers and businesses. On the other side, subscription fatigue, often driven by customer frustration from there not being enough perceived value in the product, is driving customer unhappiness and churn for businesses.
One thing that is clear is the subscription economy is big business. Below, we’ll take a look at a few key numbers you should know about the booming subscription economy.
Subscription Economy to Reach $1.5T USD
A recent report from UBS Wealth Management estimates that the subscription economy with reach 1.5 trillion USD by 2025. That’s more than double the addressable market size in 2020.
Source: UBS
The US Consumes 53% of all Digital Subscriptions
The United States consumes a majority of all digital subscriptions worldwide. The next closest market is Europe at 21% followed by China at 14%. For more details, see the full UBS report.
Mobile App Spending to Reach $270B
Mobile app spending is one of the first places we often think of when it comes to subscription businesses. Mobile devices have become integral to our lives and that is reflected in our spending habits. Data from Sensor Tower shows continued large growth in mobile spending. In the last year, the top 100 subscription apps’ revenue was up 34% alone.
Software as a Service Doubles to $307B
Software as a Service (SaaS) is another top-of-mind subscription sector after mobile. 2020 was a big year for IPOs in the tech sector and SaaS in particular.
Recent reports see revenues in SaaS doubling over the next 5 years to reach US $307B by 2026.
Largest Category: e-Commerce Subscriptions at $478B
Companies in the e-commerce subscription market are set to eclipse every other category of subscription revenue over the next few years. From clothes to snacks from Japan, this space covers everything you could ever want to buy. Amazon alone had $25.21 billion in subscription revenue in 2020.
Recent research available on UnivDatos shows the e-Commerce subscription market growing to $478B USD with a 63% CAGR from 2019.
Streaming Services to Grow to $155B
While streaming services aren’t the largest category of subscription services, they are the first ones that most of us think about.
Subscription Video on Demand (SVOD) services are the most popular category of streaming services. Netflix spent $17 billion on content in 2020, Disney+ crossed 100M subscribers 16 months after its launch, and with all the new entrants from HBO Max to Discovery+, Netflix’s market share dropped by 31%.
With so many huge companies fighting for our attention, it is no surprise that this sector of the subscription economy continues to see growth. Research estimates that by 2025 SVOD revenue grow to $100 billion with the number of subscriptions topping 1.1 billion.
Streaming audio including podcasts and music is also a growing category not to be ignored, with Spotify and giants like Apple, Google (through YouTube), and Amazon all in the mix. Grand View Research has streaming audio growing to $55 billion USD by 2025 and up to $76.9 billion USD by 2027.
Subscription and Billing Management - $10.5B
Last but not least, the business of running a subscription business is booming. This includes subscription management companies like publicly traded Zuora, payments infrastructure giant Stripe, and recent entrants like Nami ML that provide a platform to create better subscription experiences.
How big is this space and how many companies are fighting for a slice of the subscription industry pie? Business software and review site G2 is tracking over 100 companies in 4 different categories in the subscription ecosystem, including Subscription Management, Subscription Billing, Subscription Revenue Management, and Subscription Analytics. Take a look at the breakdown below.
This week Google had its Google I/O conference. A number of announcements were made about in-app purchases (IAPs), subscriptions, the Google Play Store, and the Google Play Billing Library.
We’ve found all the major announcements related to selling digital products with your apps on the Google Play Store so you don’t have to go watch all the talks.
Google Play Billing v4
The single biggest announcement for in-app purchases and subscriptions is the release of v4 of the Google Play Billing Library. Release notes for Play Billing v4 can be found here. While the library is available immediately, the new capabilities it provides have not been released yet and details are pretty scarce on exactly how all the features work.
We’ll continue to updated this blog as more information is released on these exciting new ways to sell products on Google Play.
Multiline Subscriptions
Coming later this year, Google teased how you can bundle together multiple different subscription products and sell them as a single purchase.
Currently, if you want to bundle up multiple subscriptions in your app, you have to create a new subscription product in the Play Console. You might call it Bundled Subscription, set a price, and then internally in your app grant the correct access to the content and features unlocked by the set of subscriptions that were accessed via the purchase. This logic all has to be created in your app code.
This new approach potentially offers some advantages over the old method of selling bundles:
The customer can see a line item breakdown of each subscription they are purchasing.
Presumably, Play Billing will grant purchases on each included subscription, simplifying your in-app logic for granting access to paid content and features.
Hopefully, Google will offer a mechanism to offer a bundled purchase discount, though they did not show that capability in their talks.
Multi-Quantity Purchases
Another exciting announcement is the support of multi-quantity purchases. This enables Play Billing to work in a manner similar to a shopping cart. For one-time purchases, customers will be able to add multiple quantities of an item during the checkout process and buy them with a single purchase.
Prepaid Plans
Google also announced Prepaid Plans. These will allow you to sell access to content or features for a fixed period of time. Google will prompt the customer to renew for more time as their prepaid plans expire, but there are no details yet on how that will work.
As announced at Google I/O last year, each major version of the Google Play Billing Library will be supported for 2 years. Google is officially sunsetting AIDL for in-app purchases as well as Play Billing Library versions 1 and 2 this year.
All new apps must use version 3 or 4 of the Play Billing Library by August 2, 2021. All existing apps must switch by November 1, 2021.
For more information on migrating from AIDL to Google Play Billing, consult this migration guide from Google.
Comparative Revenue Metrics
Google started rolling these out earlier this year. 15 new metrics covering both engagement and monetization of your app have been added to the Play Console. The most interesting part is that they’ve created comparative benchmarks to help you understand how well your app is performing versus similar apps. This can help you quickly see where you might need to spend effort on improving your monetization efforts.
Google has created over 250 categories of apps and games to help you find your correct peer set. They have excluded small, underperforming, and abandoned apps to improve the accuracy of the benchmark reporting.
In the Play Console, select your app, click on Statistics in the left navigation, and then click the Compare to peers tab. You can then click on the Metric Name, select Monetization, and see the list of metrics available.
You can also click on the Peer group to limit the comparison to specific categories of apps. Clicking on the Country / region will allow you to further filter by location.
Lower Priced IAPs in Some Markets
In many markets around the world, Google is introducing sub-US dollar pricing. This will help you better market your app in places where the current price points do not align with the spending power in the local market. A full list of price points and countries is not available yet, but Google did share which countries will be getting new price points for IAPs on the map below.
Play Billing and Progressive Web Apps
Play Billing support for Progressive Web Apps (PWAs) was launched earlier this year. You can now integrate Play Billing into a PWA and sell in-app purchases and subscriptions on Chrome OS.
Purchases made with Play Billing will be shared between Chrome OS and Android, which is very exciting. Integrating Play Billing with a PWA requires using 2 APIs, the Digital Goods API and the Payments Request API. See Google’s documentation on how to use both these APIs to enable purchases in PWAs.
Google has also provided an example app to show how this all works.
The promise of Apple’s App Store ecosystem is that you can capture a bigger audience and make more money than if you tried to build it on your own. For the benefit of everything Apple provides, you pay 30% of all your revenue. For subscription products, if you keep your customers past the 1-year mark, that rate drops to 15%.
Are you really making more money while giving Apple so much? In the rest of this article, we’ll break down a typical subscription business for a small app. There’s been a lot written recently about how the Indie Developer is not treated fairly in Apple’s ecosystem but is that really the case?
We’ve put the analysis below into a spreadsheet. Feel free to copy it and plug in the values for your own app to understand what type of benefit you are receiving if you leverage everything Apple is offering.
A Quick Look at the Benefits Offered by the App Store
Apple positions the value of its marketplace around a few key benefits:
Multiple platforms including Apple Watch, Apple TV, iOS, iPad, and Mac
Access to a worldwide audience
App and revenue analytics
No hosting fees
Payment processing
According to Apple’s latest numbers, this combination of platforms and audiences spent around half a trillion dollars in 2019. There’s plenty of money to be made, and yet in 2018 fewer than 3,000 apps were making more than $1 million a year in revenue according to App Annie.
and others that are important in growing and maintaining a paid base of subscribers.
Building a Basic Subscription Revenue Model
What are the basic components needed to build a subscription revenue model? For our model we assume there is only one entitlement in the app and all the different product SKUs offered in the app correspond to different billing terms for the same product. As a simple example, our app offers a single product and sells it for $4.99 a month or $49 a year.
For a basic model we’ll need:
The current number of subscribers
The average monthly revenue per subscriber
The monthly rate at which the app acquires new subscribers
The monthly rate at which the app loses subscribers
In our example app, we assume that starting this month we have 1,000 subscribers. Further, 20% of our subscribers are on our annual subscription and the remaining users are on our monthly subscription, so our average monthly revenue is about $4.81.
That puts our total annual revenue over the next 12 months with our current 1,000 users at $57,720. Not bad, but if we want to grow our business, we’ll need to drive those numbers up.
We’ve measured our growth rate over the last few months and we are acquiring 100 new subscribers on average each month.
The last piece we need to build a basic model is how many subscribers we lose each month, or our churn rate.
Recent research from the subscription management platform Recurly places the average churn rate for B2C products at 7.05%. We can further break down churn rates into voluntary churn, these are your customers that have decided to cancel their subscription, and involuntary churn. We’ll dive into these more in the next section.
Estimating Revenue Gains from Key Features Provided by Apple
Let’s take a more careful look at some of the benefits for subscription businesses selling digital products on Apple’s App Store and make some simple estimates to see how much money Apple may help us make on their platform.
First, how can you leverage Apple’s large international audience? Selling products in multiple foreign jurisdictions comes with a slew of challenges from currency conversion, taxes, and other legal requirements. Every developer will need some platform to tackle these challenges so they do not have to take them on themselves.
Of course, selling your app in multiple countries is not as simple as flipping a switch and going live, but for the sake of simplicity, we’ll assume that our app is already good to go.
For an app currently selling in the United States, there’s a 40% growth in the potential audience just in moving into other countries with English as their official language, such as the United Kingdom, Canada, and Australia.
Second, let’s look at involuntary churn. There are many reasons involuntary churn can occur including expired cards, fraud, card limits, and more. So how do we estimate a baseline rate? If the average credit card expires every 3 years, then if your customers are never updating their billing information, you could expect to see about 2.7% having their credit card declined for this reason alone. Let’s assume that with all the other reasons declines may happen that you hit 3%.
One of Apple’s key benefits is that they put a lot of effort into reducing involuntary churn. Also, your app is pooled in with every other way a user spends money with their iCloud account, so even if their card expires another payment may come up before yours is due that forces the customer to update their credit card information. What does a more healthy involuntary churn look like? Subscription management platform Recurly’s research places average involuntary churn in consumer subscriptions at about 1.11% and voluntary around 5.94%.
In our model, we’ll start by looking at what your revenue might look like with nothing in place to mitigate involuntary churn, and then use the 1.11% average as a number that has solved many of these issues that you would get with a platform like the App Store.
Here’s a summary of our current model parameters.
Analyzing our Annual Revenue
Let’s take a look at our app’s annual revenue from three different viewpoints:
No involuntary churn mitigation
Using Apple’s involuntary churn tools
Using Apple’s involuntary churn tools and expanding into other English speaking countries
With no involuntary churn mitigation, our app makes about $60,000 over 12 months.
Adding involuntary churn mitigation, we grow our annual revenue to around $65,000.
Releasing our app in other English speaking countries can grow our revenue to a little over $75,000.
So where did we end up? That’s just about a 25% increase in annual revenue.
Did we beat Apple’s 30% take? Not quite, but we are healthily over the 15% revenue cut Apple takes starting after you’ve had a subscriber for 12 months.
Since the launch of the App Store in 2008 and Apple’s StoreKit framework in 2009 for selling in-app purchases, a lot has changed in the world of payments and subscription management. The growth of platforms like Stripe and Shopify have certainly changed the landscape from when Apple landed on its 30% number.
Is Apple’s App Store cut worth it? They definitely offer a lot of benefits, but with a rapidly changing SaaS landscape, it may come down to a question of how many resources you have available to tackle these challenges yourself to grow your revenue.
Take a look at the spreadsheet and plug in the numbers for your app. How do Apple’s involuntary churn and access to international audiences help grow your app revenue?
