How to Make More Money with Your Subscription App w/ Dan from Subscription Index
Ariel hosts Dan from Subscription Index to explore strategies for increasing revenue from subscription apps, discussing monetization layers, churn reduction, pricing optimization, and actionable tactics for improving user retention and lifetime value. The session includes a deep dive into real-world examples, audience Q&A, and practical advice for app developers.
Ariel:
Welcome, everyone, to a brand new AF Chat! Today, we're diving deep into subscription optimization—how to make more money with your app subscriptions. I’m excited to introduce our guest, Dan, who brings a wealth of hands-on experience in subscription and revenue optimization. Dan runs a fantastic newsletter and blog, Subscription Index, which I highly recommend if you’re looking to level up your subscription strategy.
Dan:
Thanks for having me, Ariel! To give a bit of background, I started working with subscriptions at Codecademy, a B2C web-based subscription service that teaches people how to program. I joined when there were about 20 people and left when there were around 200. I ran growth there, helping scale from $10 million to $50 million in ARR, with the help of a great team.
Codecademy was a fantastic learning experience because it had a huge user base. The company focused heavily on monetization—how to get people to pay for the product and stick around. I learned a ton about running subscriptions at scale and was fortunate to spend four years experimenting with tactics that really moved the needle.
After Codecademy, I was a PM at Uber for two years, running the home feed for Uber Eats. Now, I consult for subscription products through my one-man consulting firm, Subscription Index.
Ariel:
That’s a great overview, Dan. Today, our goal is to talk about how to take an existing subscription app—with tiers, in-app purchases, and subscriptions—and do more with it. Let’s jump right in: What tools and frameworks do you use to optimize subscriptions, especially for apps (but also for desktop and web)?
Understanding Your Audience and User Behaviors
Ariel:
Let’s talk about the audience. How does understanding your users translate into optimizing subscriptions?
Dan:
The “LTV ceiling” for a product is determined by who your users are and how long they have the problem you’re solving. For example, B2B products often solve long-standing, complex problems—people will pay a lot and stick around. Consumer products often solve shorter-term problems, like losing weight or learning a language.
You need to design your business around these user behaviors. For short-term use cases, maximize the window you have with the user, or layer on additional problems to extend their engagement. For long-term use cases, focus on continually adding value and keeping users engaged for years.
Ariel:
That makes sense. If you start thinking about why users are paying you, it changes everything—how, why, and when they pay, and when they no longer need you.
Dan:
Exactly. For example, most weight loss products keep users for two to four months. After that, they’ve either achieved their goal or given up. You have to design your business knowing you can’t overspend on acquisition, or you need to build additional products to keep users engaged longer.
Low-Hanging Fruit: Onboarding and Product Review
Ariel:
What other low-hanging fruit do you recommend?
Dan:
Set up effective onboarding and track which personas are successful. If your product is older, do a full product review—go through every screen, dump screenshots into a board, and highlight anything broken, confusing, or mistimed. You might be surprised by how many issues you find just by reviewing the product with fresh eyes.
Ariel:
I see so many apps—even big ones—with CTAs not above the fold or confusing upsells. Why does this happen?
Dan:
As companies grow, there’s often a gap between how people think the product works and how it actually works. New employees or consultants have the advantage of fresh eyes and can spot issues more easily.
Making Data Actionable
Ariel:
How do you make user feedback actionable, especially around pricing?
Dan:
Pricing surveys almost always return “too expensive” as the top objection. But that doesn’t mean your product is actually too expensive—the only way to know is to test. Use feedback as input, but don’t take it literally. Ultimately, you have to use judgment and prioritize based on your business goals.
At any given time, decide if you want to focus on increasing retention, upfront revenue, or conversion from free to paid. Most valuable experiments are often the second, third, or fourth attempt at a goal—don’t scatter your efforts too much.
Driving Annual Plans and Pricing Strategies
Ariel:
Glenn asks: For an education/reference app with monthly and annual subscriptions (54% savings on annual), would you recommend a one-week free trial for annual?
Dan:
For short-term use cases like education, driving users to annual plans is one of the best tactics to grow MRR. At Codecademy, we priced annual plans at one to two months more than the average monthly LTV. If users typically stay three months, price annual at four or five months’ worth. Use every tactic—pricing, longer trials, clear savings messaging, and even layout changes (like putting the annual plan on the left) to boost annual conversions.
Ariel:
If you don’t have an annual plan, consider adding one immediately—unless your users typically stick around for years, as with cell phone plans.
Dan:
Exactly. Also, monitor your monthly plan payment failure rate—if you lose 5% of payments each month, you can discount annual plans up to that level.
Lifetime Plans: Pros and Cons
Ariel:
Rachel asks: Retention has declined, and I’m considering a lifetime subscription to boost cash flow. Will it detract from yearly subscribers? What’s your view?
Dan:
Many major subscription products start with lifetime plans and phase them out. Lifetime plans are tricky to price because you only know LTV when the cohort reaches zero. If your product has any ongoing cost to serve, lifetime plans can be risky. They’re useful for early cash flow but won’t fix underlying retention problems—just paper over them.
Ariel:
I agree. Focus on fixing retention first, as lifetime users may demand more support and never pay again.
Final Thoughts and Audience Q&A
Ariel:
Dan, your blog is a goldmine for anyone working on subscriptions. Is there anything else you want to share?
Dan:
The newsletter is where I put my best and brightest ideas. It goes deep into tactics that work across the industry. My goal is to write what I wish I had five years ago—so more products can survive and thrive by setting up effective monetization systems.
Ariel:
Absolutely. Many products fail not because the product isn’t good, but because monetization isn’t set up effectively. There’s a middle ground where you’re making some money, but not enough to thrive. Optimizing even small things—like error copy—can make a big difference.
Dan:
Best practices in subscriptions aren’t as well understood as in e-commerce or paid ads. That’s why I share everything I learn.
Ariel:
Thanks, Dan! For everyone watching, subscribe to Dan’s newsletter at Subscription Index. We’ll include his contact info in the description.
That’s all the time we have for questions today. If you have more, leave them in the comments and I’ll answer them there. I hope you learned something new! We’ll be talking more about subscriptions and ASO in future live streams. If you have specific topics you want covered, let me know in the comments or reach out on Twitter or LinkedIn.
If you enjoyed this, please give the video a like and subscribe to the channel. See you in a few weeks for our next live chat!
✨ This transcript was generated and enhanced by AI and may differ from the original video.
