Auto-renewable subscriptions have already become a “silver bullet” in iOS apps. And why is that?
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.
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.
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.
Now that you know what an auto-renewable subscription is, let’s review some of its best practices.
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:
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:
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.
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.
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.
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.
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.
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:
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:
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.
A user can cancel their subscription at any time and in the following ways:
A subscription will be canceled automatically in the following cases:
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 them a discount using promotional offer or at least ask why did he cancel subscription.
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.
You can raise or lower prices at any time. But you should take into account several important things.
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.
You can choose between 2 options when increasing prices:
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.
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.
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:
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).