Apple announces introduction of a grace period for lapsed App Store subscriptions
Apple, Inc. is making changes to its previous subscriptions plans on App Store. Earlier, a delay in payment could lead to end subscription automatically and cut off the subscriber from using an app’s subscription-based features. This made it difficult for not only the customers, as well as the developers to retain that subscriber’s business in the future. However, Apple, Inc. now confirms that the developers can offer a ‘grace period’ to customers for subscriptions that can be auto-renewed, thereby giving Apple, Inc. additional time to collect payment on behalf of the developers.
It was observed that lapse of payments mostly occurred due to various reasons including expired or disabled credit cards, change of addresses and billing ZIP code, disabled corporate cards, among others. This means, in most of the cases, the developers lost out on their revenue due to billing issues and not because the subscriber opted out at the end of ongoing subscription.
The investment of time and money on grace period is to catch up with Google’s Play Store which has grace period option since 2018. It takes a bit more when it comes to integrating an in-app support, however it may prove to be worth the effort for many developers to retain their subscribers easily henceforth. In addition, revenue from subscriptions is very crucial for the developers as Apple, Inc. has stopped paid downloads from the App Store, and are focusing on recurring revenue options.
Once the ‘Billing Grace Period’ feature is enabled from App Store Connect tab in the app, Apple Inc., confirms that it will make an attempt to collect the payment for 6 days or 16 days, depending on the duration of the subscription, whether it is weekly, monthly, or longer, respectively. Meanwhile, subscribers will have full access to app’s subscribed paid content.
If the renewal is done within the grace period, there will not be any interruptions, and there will be no changes to the number of days of paid service or to developer’s revenue. However, if customer re-subscribes after sixty days, the days of paid service will be reset, and the developer will obtain only 70% of the subscription amount until one year of paid service passes.
Subscriptions account for significant share of Apple’s growing services business segment. Moreover, retaining subscribers means sustainable business and revenue for the developers.
Revenue from the services segment increased by 13% in a year earlier, and currently accounts for a fifth of revenue of the company.