D

What is Dunning?

Definition, examples, and more

Definition

A lifecycle system for managing failed payments. Dunning flows often include retries, reminders, grace periods, and in-app nudges — all aimed at recovering revenue and minimizing involuntary churn from billing issues.

How to Calculate

Dunning Recovery Rate = (Failed Payments Recovered / Total Failed Payments) x 100. Revenue Recovered = Recovered Subscribers x Average Revenue per Subscriber. For example: 720 recovered / 1,000 failed = 72% recovery rate. Revenue saved = 720 x $9.99 = $7,193/month.

Example

A streaming app detects a failed payment for a subscriber. Day 1: Apple retries the charge automatically. Day 3: The app sends a push notification saying ‘Your payment could not be processed — update your card to keep your playlists.’ Day 7: An email with a direct link to payment settings. Day 14: A final in-app banner. This multi-touch dunning flow recovers 72% of failed payments.

Why Dunning Matters

Dunning is literally picking up money off the ground. A wellness app with 30,000 subscribers had 2,400 payment failures per month (8%). Before implementing dunning, they recovered only 1,200 (50%). After adding email reminders, in-app banners, and push notifications, recovery jumped to 1,920 (80%). That extra 720 recovered subscribers saved $86,400 in annual revenue — for a system that took 2 days to set up.

Frequently Asked Questions

What is the best dunning email sequence?

A proven sequence: Day 1 — friendly ‘payment issue’ notification with update link. Day 5 — reminder emphasizing what they will lose (‘Your 142-day streak is at risk’). Day 10 — urgency message (‘Last chance to update before losing access’). Day 14 — final notice. Keep the tone helpful, never threatening. Personalization increases recovery rates by 15-20%.

Should I revoke access during the dunning period?

Most apps maintain access during the grace period (typically 16 days on Apple, 7 days on Google) to give users time to fix the issue. Revoking access too early creates a bad experience and reduces the chance of recovery. However, showing a subtle in-app banner that says ‘Payment issue detected’ creates gentle urgency without punishing the user.

How much revenue can dunning recover?

Well-implemented dunning flows recover 60-80% of failed payments, compared to 40-50% with platform retries alone. For a typical subscription app, involuntary churn represents 20-40% of total churn. If you reduce involuntary churn by 30% through better dunning, you could see a 6-12% improvement in overall retention — a massive impact on LTV and revenue.

Category
Subscription App Terminology
Related Area
Mobile App Growth & Monetization

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