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What is Renewal?

Definition, examples, and more

Definition

The continuation of a subscription after a billing period ends, either manually or through auto-renew. Renewals are a core component of recurring revenue and serve as key milestones in a user's lifecycle.

How to Calculate

Renewal Rate = Successfully Renewed / Eligible for Renewal x 100. First Renewal Rate is typically 70-85%. Subsequent renewals: 85-95%.

Example

A meditation app has 20,000 monthly subscribers up for renewal. 17,200 renew successfully (86%), 1,600 fail to renew due to billing issues (8%), and 1,200 actively cancel (6%). The first renewal is the hardest — after surviving month 2, renewal rates climb to 92% by month 6.

Why Renewal Matters

Each renewal extends LTV and validates your value proposition. A fitness app found that the first-to-second month renewal was their biggest drop-off (75%). By adding a 'what you accomplished in month 1' summary email before renewal, first-renewal rate improved to 82% — adding 1,400 retained subscribers per month.

Frequently Asked Questions

Why is the first renewal the hardest?

Users are still evaluating whether the subscription is worth it. After 2-3 renewals, the subscription becomes habitual and renewals stabilize at 90%+. Focus your engagement efforts on the first billing cycle to get users past this critical threshold.

How do I improve renewal rates?

Drive engagement during the current billing cycle, send a value-reinforcement message before renewal, fix billing failures with dunning, and make the subscription feel indispensable through habit-building features.

When does renewal happen technically?

Apple and Google attempt to charge the user within 24 hours before the end of the current billing period. If the charge fails, the platform enters a retry period. You receive server-to-server notifications about renewal status through Botsi.

Category
Subscription App Terminology
Related Area
Mobile App Growth & Monetization

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