A new video that Apple produced for app developers is aimed at convincing them that the subscription fee model is the way to go. Can you say recurring revenue? The video features interviews with developers who created apps like Elevate, Dropbox, Bumble and Calm. The bottom line is that these developers seem to agree that offering their services to consumers on a subscription basis helps customers get a better "consumer experience."
An app providing a good service will probably make much more money asking users to pay a subscription fee each month instead of having them fork over a one-time payment. In fact, using a subscription fee model allows the developer to attract potential paying customers by offering a free trial. Those who try an app for free and like the service are apt to pay monthly to keep using it.
The video released by Apple comes after news broke last month about a secret meeting Apple allegedly had with 30 developers in New York last year. This meeting allegedly took place in April, 2017, and during the meeting Apple discussed what is internally known as "Subscription 2.0." This initiative tries to get developers to switch to subscription based pricing for their apps.
And as you might have suspected, there is something in it for Apple. Similar to the 30% cut it receives for a one-time payment, Apple takes 30% of an app's first year subscription revenue. But it also receives 15% of subscription revenue for subsequent years. This helps Apple receive recurring income and can help it achieve its goal of reaching $50 billion in services revenue by 2021. Last year, Apple took in $30 billion in such revenue.
To view the video, click on the sourcelink below.