The Subscription Value Loop Calculator

A tool for measuring your consumer subscription app's performance vs. benchmarks

In a previous post called The Subscription Value Loop, I introduced a framework consumer subscription companies can use to grow their businesses in three steps:

• Value Creation: Building a great product that offers ongoing value to subscribers.

• Value Delivery: Delivering value through cost-efficient user acquisition.

• Value Capture: Converting free users into subscribers to generate revenue.

Now, I’ve built a Subscription Value Loop Calculator that allows you to measure the performance of your company’s loop and identify potential growth opportunities. This tool is powered by RevenueCat’s proprietary data, with benchmarks compiled from >30,000 consumer subscription apps accounting for >290M subscribers!*

You can use this tool in five simple steps:

• Step 1: Answer a few questions about your app.

  • Category: What mobile app category are you competing in?

  • Tier: What tier of apps do you want to benchmark against? (25th percentile, 50th percentile, 75th percentile, and 95th percentile)

  • Geography: What geographic region do you want to benchmark against?
    (right now the tool only supports global benchmarks, but we’ll be adding filters for North America, EMEA, Japan, South Korea, and Rest of World!)
    

• Step 2: Input your company’s performance against key metrics.

  • Ideally, I recommend calculating your performance over the last 12 months. This eliminates seasonality and ensures a large enough sample for the data to be reliable. However, if you’ve made recent updates that significantly impacted your metrics (e.g., changing pricing or updating trial format), consider updating your calculations to more accurately reflect your performance since those changes were made.

  • The calculator currently comes loaded with 22 metrics including:

    • Key Outputs: LTV/CAC and Payback Period

    • Value Creation Inputs: Signup Rate, Monthly and Annual Subscriber Retention Rates, and Monthly and Annual Average Subscriber Lifetimes

    • Value Delivery Inputs: Cost per Install (CPI), Cost per Trial (CPT), and Cost per Subscriber (Blended CAC)

    • Value Capture Inputs: Monthly and Annual Subscription Prices, Subscription Plan Mix (% Annual), Subscription Gross Margin, Trial Start Rate, Trial Conversion Rate, and Install to Paid Conversion Rate
      

• Step 3: Compare your performance against each metric vs. benchmarks.
  The calculator will automatically populate benchmarks for each metric that are pulled specifically for the category and tier you selected (and eventually for specific geographies as well). This is important because many benchmarks look quite different across consumer subscription categories and geographies. Performance also varies widely by stage - if you’re an indie developer just getting started, you might want to benchmark against 50th percentile apps, but if you’re a venture-backed startup that already has momentum, you probably want to look at benchmarks for apps in the 75th or 95th percentiles.
  

• Step 4: Identify opportunities based on metrics where you underperform.
  The calculator automatically quantifies deltas between your performance vs. benchmarks, highlighting metrics where you’re overperforming in green and metrics where you’re underperforming in red. This heatmap identifies which steps in The Subscription Value Loop - Value Creation, Value Delivery, and/or Value Capture - are creating the biggest bottlenecks for your business.
  

• Step 5: Prioritize initiatives to improve metrics with the greatest upside.
  Once you’ve identified which Subscription Value Loop steps and specific metrics are holding you back, you can prioritize specific initiatives to improve them.

Now that you know how to use the tool, let’s walk through a hypothetical example. Imagine you lead the growth team for an EdTech startup that is based in the U.S. but that serves students all over the world. Your company is growing well enough, but you want to find ways to make it grow even faster. After pulling your performance on key metrics over the past 12 months, you open the Subscription Value Loop Calculator, input all of your company’s information, and see the following output:

There are a few key insights you can learn from these results:

• Compared to other Education apps in the 75th percentile, both your LTV/CAC and Payback Period are a bit worse than benchmarks

• Digging into the other metrics, there are three key areas where you underperform:

  • Value Creation: Your monthly subscriber retention rates are low compared to the benchmarks implied by other apps in your peer set, although importantly, your annual subscriber retention rates look strong

  • Value Delivery: Your subscriber acquisition is less efficient than peers, with higher costs per install, trial, and subscriber

  • Value Capture: You are charging a higher annual subscription price but have a much lower share of annual vs. monthly plans compared to your peer set

These insights indicate you can improve your performance by acquiring subscribers more efficiently and converting more of them into annual plans. This will not only improve cash flow, accelerating your Payback Period, but it will also boost LTV/CAC given that your annual subscribers have much stronger retention rates than your monthly subscribers. In fact, if your company did nothing else but bring its overall subscription plan mix to parity with peers by increasing its share of annual plans from 20% to 61%, this alone would close its gap on both LTV/CAC and Payback Period!

While this is a hypothetical example, it’s one many Education apps run into, because most students don’t have a lot of money to pay for annual subscription plans upfront, but those who do often exhibit higher retention rates after building study habits around the product for an entire academic year.

Based on these insights, your company might focus on:

• Boosting the efficiency of paid acquisition campaigns by improving ad creative, refining campaign targeting, and/or experimenting with other channels

• Reducing your reliance on paid acquisition by making additional investments in organic acquisition channels like word of mouth and SEO

• Lowering your annual subscription price and/or raising your monthly price to encourage more subscribers to choose your annual plan

  • Right now, your monthly subscription plan costs $15/month while your annual plan effectively costs $10/month, representing a 33% discount

  • However, many Education apps offer discounts on their annual plans as high as 50-75% vs. monthly plans, giving them a more favorable subscription mix

• Updating your paywall by tagging your annual subscription with “Best Value” and calculating the discount for your users to encourage them to choose annual plans

• Using lifecycle marketing emails and in-product communications to improve monthly subscriber retention rates and/or upsell some of them into annual plans

Hopefully, this example illustrates how your company can utilize a tool like the Subscription Value Loop Calculator to improve the performance of your business!

While you’re doing so, please keep a few things in mind. First, this is the first time a tool like this has ever been built and it’s very much a work in progress. I plan to continue improving the tool over time, partnering with RevenueCat to increase the quality of the underlying data. This includes improving the accuracy of existing benchmarks as the ecosystem of subscription apps using RevenueCat’s SDK expands, adding new benchmarks through surveys and partnerships with other third-party SaaS platforms, and incorporating more filters like geographic region. Second, you have an opportunity to accelerate this process by providing feedback! As you are using the calculator, if you spot any errors or inaccuracies, or if you have thoughts on how to improve the tool, please reach out to me via LinkedIn. I would love your input! Finally, remember that a benchmarking tool like this only represents a jumping-off point. Every company is different, which means interpreting your company’s performance vs. peers and using this information to inform your growth strategy is an art and not a perfect science. My hope is that the Subscription Value Loop, and now this calculator, provide you with additional tools for growing your consumer subscription business, but they are part of a larger toolkit. With that in mind, I hope they serve you well!

For folks interested in going deeper on these concepts, check out my Maven course on Consumer Subscription Growth or reach out to me anytime on LinkedIn and X!

*Methodology: RevenueCat compiled the data for most of the benchmarks in this tool directly from >30,000 consumer subscription apps using its SDK. However, there were a few important metrics RevenueCat did not already have access to, including Signup Rate, Average Monthly Subscriber Lifetime, Average Annual Subscriber Lifetime, Cost per Install (CPI), and Subscription Gross Margin. For these metrics, RevenueCat launched a survey to its ecosystem of consumer subscription apps that generated 563 responses. We used this data to populate benchmarks for the five metrics listed above, which means they are likely quite a bit less reliable than the other benchmarks in the calculator (particularly at the 95th percentile). Since outputs like LTV/CAC and Payback Period include some of these metrics in their formulas, they are subject to this volatility as well. For the next version of the tool, we plan to partner with third-party SaaS platforms that have direct access to user acquisition benchmarks (including one or more MMPs), and/or run additional surveys with much larger sample sizes. This should improve the accuracy of our existing benchmarks and allow us to add more benchmarks and filters like geographic region. In the meantime, please recognize that the data used to support the five metrics listed above are based on a relatively small sample size, and should therefore be used with discretion.