Expensive app subscriptions lead to more loyal users, whereas developers who opt to sell their mobile services at more affordable rates may actually lose customers, according to the latest market study conducted by Liftoff. The Palo Alto, California-based firm analyzed three main groups of subscription apps: those priced at between $0.99 and $7, services with a monthly fee of $7 to $20, and apps with a $20 to $50 subscription. While the firm expected that the most affordable group will also boast the highest install-to-subscription rate due to the fact that they’re cheapest, its findings showed that apps in the medium price range actually boast the highest engagement rate which sits at 7.16 percentage points. Furthermore, such offerings are also the most sustainable from the cost-effectiveness standpoint, as their average subscriber acquisition cost amounts to $106, Liftoff concluded, adding that the most affordable segment actually has a conversion rate that’s five times smaller compared to the medium one.
Liftoff speculates that the reason why cheap mobile subscriptions aren’t the most popular ones among consumers may pertain to the fact that quitting an affordable subscription is easier than doing so with a more expensive one, as people will feel less attached to services to which they haven’t committed any significant money. While such a state of affairs may indicate that charging more for a mobile subscription service is a sensible business decision, Liftoff points out that developers still shouldn’t overdo it, as the most expensive app segment only has a conversion rate of 0.73 percent and can hardly allow for a sustainable business unless the app manages to amass a vast user base, which is rarely the case with such premium offerings.
While user retention rates essentially amount to a bell curve based on how much mobile subscriptions cost, the average decision times are unsurprisingly still highest in the most affordable segment where the average consumer chooses whether to pay a monthly fee for an app within 15 minutes of installing it. As those who ponder about the fee longer are less likely to subscribe, aggressive user acquisition tactics are still best pursued with low pricing, Liftoff’s study suggests. According to the same data, apps in the medium segment are also relatively successful in this aspect, with their users taking 25 minutes on average to decide whether to pay for a subscription or not.
