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For instance, imagine I have two subscription offerings. One is monthly at \$5. The other is yearly at \$50. I want to know "is a user who subscribes monthly likely to generate more lifetime revenue than a user who subscribers yearly"? The results might be: "average amount monthly user pays before unsubscribing: \$72.86, yearly: \$112.42"

How would I calculate this?

Say I'm given the following historical data:

Monthly Users

Month 1: 80% retention
Month 2: 75% retention
Month 3: 72% retention
Month 4: 66% retention
Month 5: 63% retention
Month 6: 59% retention
Month 7: 56% retention
Month 8: 53% retention
Month 9: 49% retention
Month 10: 44% retention
Month 11: 42% retention
Month 12: 39% retention

Yearly Users

Year 1: 80% retention
Year 2: 75% retention

How would I then take that and find out which is estimated to generate more revenue, and by how much? Apologies if this is a basic question, I came up short when Googling and I fear I just don't know what the terms are for what I'm searching.

christianselig
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  • You are going to compute a weighted average of the monthly retention rate with the monthly sub volume as rates. Your table therefore needs more information; you need separate columns for new subs vs. unsubs, not just percent. – C. Ventin Mar 28 '22 at 17:36
  • @M.Reeves Are you sure? In this case App Store Connect (where I'm pulling data from) says it's renewals divided by subscriptions that were up for renewal, not new subscriptions. – christianselig Mar 28 '22 at 17:44
  • Same thing, the point is that you need both the numerator and the denominator that produce the percentage, not just the percentage. – C. Ventin Mar 28 '22 at 17:52

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