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Ren
Ren
June 20, 2019
12 min read

7 Things You Should Know About iOS Auto-Renewable Subscriptions

Auto-renewable subscriptions have already become a “silver bullet” in iOS apps. And why is that?

12 min read
7 Things You Should Know About iOS Auto-Renewable Subscriptions

Users get your service without any interruptions, and you can predict your cash flow. And let’s be honest: in the majority of cases, using a subscription-based business model can help you earn more.

This is our first article about subscriptions. Read on to learn the 7 most important things you should know.

1. Auto-renewable subscription. What is this?

That’s easy; this tutorial on auto-renewable subscriptions in iOS will guide you through the concept. You offer users access to your content or app’s functions on a regular basis. The user pays for this access regularly (e.g., every week or month). At the end of the subscription period, Apple withdraws money from the user’s credit card.

Apple tries to withdraw money 24 hours before the subscription ends. If it fails, then Apple will try to do this during the next 60 days.

Auto-renewable subscriptions in iOS have this period of 60 days for a good reason. It is known as the “Billing Retry” state and is needed in order to retain customers whose subscriptions failed to renew due to billing issues.

The duration of an auto-renewable subscription can be different: 1 week, 1 month, 2 months, 3 months, 6 months, or 1 year. You can freely choose this duration.

But you should never forget about the free trial period. During this time, a user can try the paid features for free. At the end of the trial, if the user didn’t cancel it, Apple will try to withdraw the full amount of money for the next subscription period.

How auto-renewable subscription worksHow auto-renewable subscription works

In general, trial period is a case of Introductory offers. There are 3 types of Introductory offers: Free trial, Pay as you go, Pay up front. We will talk about introductory offers below.

2. Auto-Renewable Subscriptions: Best Practices

Now that you know what an auto-renewable subscription is, let’s review some of its best practices.

  • You should fetch your product IDs from your server. Such a decision will grant you more flexibility in which options you offer and when.
  • Storing subscription data such as prices and descriptions in your app is a no-no. It’s important that you count on Apple for this type of data. This way, you will be able to alter prices and create unique promotional offerings without the need for users to upgrade to a newer version. 
  • Another great move is to let users manage their subscriptions within your app. This way, they can get a tailor-made subscription experience for your specific app. 
  • It is also very important to write the description of your subscription in a clear and transparent way, so your users know exactly what they are paying for. This will both draw in new users and eliminate any confusion existing users might have about their subscription features.
  • And finally, whatever you do on iOS, it’s important to consult Apple’s guidelines. Be sure to check the in-app purchase section in Apple’s guidelines before you start to work on your next app.

3. Products, levels and products groups

Every subscription is a separate product that you create on App Store Connect. Let’s imagine an app called DropCloud. DropCloud is a cloud-based storage app for your photos. There are 2 different options users can choose between: Silver and Gold. Silver offers 50 GB of cloud storage, and Gold offers 100 GB. Additionally, a user can subscribe to the paid weekly newsletter with tips and recommendations from the world’s famous photographers. In this case, every subscription is considered a separate product:

  • Gold subscription: $19.99 / month
  • Gold subscription: $9.99 / week
  • Silver subscription: $14.99 / month
  • Silver subscription: $4.99 / week
  • Inspiration subscription: $1.99 / week

Products are put into product groups. Every product belongs to one group only. We have 2 groups in our example. Let’s call the first “Cloud,” and the second – “News.” The structure of products will be the following:

An example of products groupAn example of products group

Create two or more subscriptions groups if only it’s really necessary.

A user can have only one active subscription per group at any moment. In our case, a user may subscribe to Gold and Inspiration plans at the same time, but they can not have active Gold and Silver subscriptions simultaneously.

All products within one group are being grouped into levels. Depending on the level, a user will be offered a different list of available functions or (in our case) a different volume of cloud storage. You should sort levels in descending order, starting from the products with the highest level of service.

Products levelsProducts levels

Why do we need levels? That’s not a super-easy question. Apple uses levels to upgrade, downgrade, and crossgrade subscriptions. This happens when a user switches from one active subscription to another within one group (e.g., from Gold plan to Silver plan). Apple uses levels to calculate the final price and duration of a new subscription. We will talk about this in one of our next articles.

4. Introductory offers

You can offer a special one-time offer to new users. Such offers are called Introductory Offers. There are 3 types: free trial, pay as you go, and pay up front. We’ve already talked about trials, so let’s look through the others.

Pay as you go

Using this model, you offer a one-time discount for one or several subscription periods. Apple will withdraw the regular subscription’s price at the end of these periods. For example, a user can subscribe to your service for $3.99 per month. This price is valid for 2 weeks, after which the user can continue using your service at the regular price of $9.99 per month.

How pay as you go worksHow pay as you go works

The price of the pay-as-you-go offer must be less than the regular price. For example, you can not offer a user to pay $19.99/month during the first 2 months and $9.99/month after. This issue is partially solved by using the pay up front model.

Pay up front

Here, you let users pay immediately for several months (1, 2, 3, 6, or 12) in advance. At the end of this period, the user will pay for the subscription at the regular price. For example, you can offer 3 months of cloud storage with a one-time payment of $14.99. And after these 3 months, the user will pay $9.99 per month. There are 2 main differences from the pay-as-you-go offer:

  • The price of a pay-up-front offer does not have to be less than the cost of the regular subscription.
  • The number of periods where the offer is valid is always 1. In other words, the offer is valid for only one period of 1, 2, 3, 6, or 12 months.
How pay up front worksHow pay up front works

Several notices

  • Every subscription can only have one introductory offer per territory (country). Thus you can create a separate offer for each territory. But only one per territory. It’s enough to create one introductory offer for all territories in most cases.
  • A user can use only one introductory offer per products group.
  • Introductory offers are available for iOS 10, macOS 10.12.6, tvOS 10 and later.

5. Promotional offers

Promotional offers are a great way to win back your customers who were active subscribers in the past. They are special offers that are valid for a limited period of time.

The main differences between promotional offers and introductory offers are:

  • Introductory offers are designed to attract new customers, while promotional offers aim to retain current customers and win back previous subscribers by offering discounts.
  • Only users who have an active subscription or had an active subscription in the past are eligible to use a promotional offer.
  • Unlike an introductory offer, the user can redeem several promotional offers.
  • You can create up to 10 active promotional offers per subscription.
  • Promotional offers, unlike introductory offers, are not visible on the app’s App Store page.
  • They are available for iOS 12.2, macOS 10.14.4, tvOS 12.2, and later.

Configuring promotional offers is not a straightforward process and requires setting up your own server. We will go deeper into this question in one of our future articles.

6. Subscription Cancellations

A user can cancel their subscription at any time and in the following ways:

  • Through iOS settings or the App Store app.
  • Through Apple customer support. The user may get a refund for the last subscription period in this case.

A subscription will be canceled automatically in the following cases:

  • There are not enough funds on the user’s credit card to complete the purchase during the subscription renewal.
  • The user didn’t agree with a subscription price increase. We will talk about this below.
  • The product was unavailable during the subscription renewal.

You will receive 85% of the net revenue after one year, minus applicable taxes, if you manage to keep a user during this year. The regular Apple commission is 30%. But if a user had an active subscription during one year, you would receive 85% of the net revenue after this year for this user.

There is one extra consideration to this rule: the subscription can be canceled during this year (e.g., the user can cancel it, or some billing issue may occur) for a duration of fewer than 60 days. This period is called a grace period. The grace period starts when the subscription stops. If during the next 60 days, it becomes active again, then the countdown of the year to the 15% commission is not reset.

It is a good practice to try to return lost customer. For example, you can offer him a discount using promotional offer or at least ask why did he cancel subscription.

Grace periodGrace period

The grace period doesn’t reset in cases of upgrades, downgrades, or crossgrades within one product group.

UPDATE. You can also get 85% of the revenue if you participate in the Apple Small Business Program.

7. Subscription price change

You can raise or lower prices at any time. But you should take into account several important things.

Price Reduction

That’s easy: reduced price will be applied to all customers: both current and future. Current customers will pay reduced price on the next billing cycle.

Price Increase

You can choose between 2 options when increasing prices:

  • Keep the old price for current subscribers.
  • Increase price both for current and new customers.

If you select second option, keep in mind that all current customers will receive push and email-notifications with a question if they agree with price increase or not. If a user agrees, new price will be applied in the next billing cycle. Otherwise subscription will be cancelled.

Think several times before raising prices for current subscribers. It may possibly lead to loosing many active subscribers, who disagree with new terms. Apple recommends to increase prices step-by-step and by users cohorts: you should increase prices for users who already pay price close to new one first. Then you can apply increased price for the next cohort of users and so on.

Conclusion

As we can see auto-renewable subscriptions subject is vast, and there are numerous successful examples of auto-renewable subscriptions in iOS apps. There are many nuances which worth taking into account while designing, analyzing and making decisions regarding subscriptions.

The Problem With Tracking Subscriptions

Subscription tracking and sending subscription-based events (like subscription renewals, cancellations, or refunds) to third-party analytics (Firebase, Amplitude, Mixpanel) are important tasks. Why do you need subscription tracking? It allows you to:

  • Calculate how much money one paying user brings to you
  • Detect the most effective advertising channels
  • Know which users cancel subscriptions more often: know their gender, age, location, etc.
  • Find out which users face billing issues the most.

You can collect and analyze this data. Then, you may offer some users a discount, ask them why they canceled a subscription, or ask them to update their billing info.

Unfortunately, Apple doesn’t provide a convenient instrument for this (App Store Connect analytics is not considered; it does not allow you to analyze subscriptions for a specific user).

You can use Apphud to properly track your subscriptions and get actual real-time analytics. Start now for free!