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Subscriptions Are Here to Stay — Apple Signs On With iOS 14

Revenue & Finances

Tammy Slaughter wrote this article

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Many updates are on the way once iOS 14 officially arrives later on this year, but it would seem that Apple is not done yet when it comes to delivering innovation.

They announced on September 2nd that developers would soon have the ability to offer a unique code to users for signup — allowing them to unlock a subscription offer with discounts, free trial periods and more.

What exactly will this mean for app developers and users alike?

Let’s take a closer look.

One-Time Use Codes to Drive More App Downloads

It’s been pretty clear for awhile now the subscription-based model isn’t going anywhere anytime soon.

“In 2019, we each spent $640 on digital subscriptions like streaming video and music services, cloud storage, dating apps and online productivity tools, according to an analysis for The New York Times by Mint — a 7% increase from 2017.”

 

– Brian X. Chen, The New York Times

For one thing, they’re more profitable for the app creator, earning on average 2-3 times more per user than apps depending on in-app advertising alone.

Users also seem to dig the subscription-based model (the cost to acquire new subscribers has never been lower), and Apple embracing subscriptions as a conduit for app downloads is a pretty big endorsement, too.

These subscription offer codes will give apps a more direct, appealing avenue to present potential users with in order to entice them into downloading the app, and (hopefully) stick around. Click To Tweet

How does this work?

Using a unique, alphanumeric code (URL) provided by the app developer with StoreKit APIs, a subscriber gains access to an app’s service for free or discounted for a specific duration — after which an auto-renewal starts at a renewal price set by the developer. These one-time use codes (technically considered an in-app purchase) can be provided digitally or in-person to best fit your marketing needs.

 

The best part? Apple’s UI handles the ‘redemption’ experience, with your goal being to nail your messaging, so users understand the value of the app subscriptions you’re offering.

All codes expire after six months and users can only redeem one code per offer, but can potentially redeem multiple offers if they’re provided under a single subscription.

Offer Codes Fall In These Categories: Free, Pay-As-You-Go or Pay Up Front

Free. Or the ‘freemium model’, as it’s long been referred to, allows a subscriber to access your app for free for a specific duration. You could offer a one-month free subscription for your app with a standard renewal price of $4.99 per month. Their subscription begins immediately, but they won’t be billed until the offer duration ends. This offer may be useful if you want to let users experience your subscription at no immediate cost to them. This subscription model makes it easy to attract users to try out your app.

 

Pay as you go. A subscriber pays a discounted price each billing period for a set period — for example, $1.99 per month for three months for a subscription with a standard renewal price of $9.99 per month. Afterwards, they’ll be billed at the standard renewal price. This option may be useful if you want to attract price-sensitive users with a temporary recurring discount.

 

Pay up front. A subscriber pays a one-time price for a specific duration — for example, $12.99 up front for the first six months of a subscription with a standard renewal price of $39.99 per year. Once the duration is over, they’ll be billed at the standard renewal price. This offer may be useful if you want to offer an extended experience that gives users time to enjoy their subscription. We see this as being a really big draw to users of personal SaaS apps for business and organizing every day life.

But no matter which subscription offer a user initially selects, all roads lead to auto-renewal, unless the user decides to opt-out.

Apple has classified these three types of offers even further with ‘Introductory Offers’ and ‘Promotional Offers’ for attracting new users to the app, or re-engaging with users who’ve already used the app once before.

App creators will even be able to utilize metered paywalls and free trials to give user’s a taste of the in-app experience, with the ability to advertise up to twenty subscription offers on their App Store product page.

Push notifications will come in handy with retaining and engaging subscribers under this new model, so long as they ‘opt in’ to receive them.

Moving forward, it’ll be really important to understand the offer’s intended use, customer eligibility and any limits that may apply before selecting which to offer users (and when). This latest update will likely inspire a host of online resources to be on the lookout for in order to harness its full power.

Developers will also be able to offer auto-renewable subscriptions for users to access multiple apps at once, including up to 10 of your iOS or macOS apps under the same developer account. For large brands with many apps under their umbrella, this could be a complete game changer.

Perhaps nothing is as illuminating to Apple’s intentions with subscriptions as their repeated references to ‘subscribers’ instead of ‘users’ in their official announcement.

Who knows, this could spell the beginning of a whole new era in the App Store, changing the way users pay for the apps they’re using, and app developers monetize their products.

Distribution Verses Discovery

The App Store's latest move marks a pivotal moment in Apple's distribution model to become just that: distributors of content, verses just a discovery platform. Click To Tweet

Of course, businesses and developers will likely get a bit squeamish when they check out some of the fine-print on these shiny new subscription offers Apple will now be facilitating directly via the App Store.

For the first year, Apple will collect its obligatory 30% ‘Apple Tax’ from all paid subscriptions your app earns. After a year, their earning percentage drops to 15%. However, the clock starts over each time the subscription offer type is updated (lame).

This has long been a point of contention amongst companies and developers alike, usually leading them to guide users off the App Store (and online) in order to sign-up for subscription services as a workaround to the ‘in-app purchase’ rule.

But with Apple cracking down on this oft-used method recently, and now this latest addition, it’s quite clear that Apple is seeking to make the App Store itself the central hub of all app-related purchases.

Subscription fatigue is real, but it would seem users will simply have to get used to it.

About ChopDawg.com: Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.

 

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