Subscription businesses face a constant battle against churn, particularly in Q1, as holiday-driven subscriber spikes normalize. In a new churn analysis, UK-based Subbly, a subscription commerce and management platform, analyzed data from thousands of merchants on its platform, uncovering key trends that challenge conventional wisdom about pricing, customer behavior, and retention strategies.

Churn Benchmarks and Trends

Subbly found that the median churn rate across all merchants, verticals, and models stood at 7.44% in 2024. However, churn varied widely depending on location, business model, and subscription category.

• Geographic Variations: Regional differences in digital payment adoption, cultural attitudes toward subscriptions, and market maturity significantly impact churn. These findings reinforce the importance of location-specific retention strategies.
• Industry Trends: Arts & DIY subscriptions had the lowest churn rates, followed closely by pet-related subscriptions—both benefiting from strong customer engagement. Fashion and health-related subscriptions, on the other hand, showed higher churn, likely due to purchasing behaviors and perceived necessity.
• Seasonal Churn Patterns: November saw higher churn rates across most industries, coinciding with increased competition and shifting consumer priorities. Meanwhile, churn dropped in September, likely due to back-to-school stability.

The “Churn Paradox”: Price Has No Impact on Retention

One of the most unexpected insights from the study is that subscription price has no correlation with churn. Contrary to the assumption that higher-priced subscriptions are more likely to see cancellations, Subbly’s analysis found that churn rates remained consistent across all price points.

The correlation coefficient between Average Order Value (AOV) and churn ranged from 0.03 to 0.1, indicating virtually no relationship. This means that customers are just as likely to maintain a $100 subscription as they are a $10 one.

“I was really surprised and excited to learn about this insight. This presents a huge opportunity for subscription businesses to unlock more growth almost instantly,” said Stefan Pretty, Founder and CEO of Subbly.

This finding suggests that retention is driven more by perceived value, experience, and product relevance than by price sensitivity. It opens the door for subscription businesses to explore higher pricing models with less fear of customer drop-off.

Retention Strategies by Business Model

Subbly’s research also highlights which subscription models are best at retaining customers:

• D2C Replenishment Services (e.g., consumable products) had the lowest churn rates, benefiting from convenience and necessity.
• Curated Subscription Boxes performed well but had slightly higher churn, reflecting their discretionary nature.
• Digital Content Subscriptions had the highest top-quartile churn rate at 16.7%, indicating engagement challenges.
• Larger Merchants Retain Better: Bigger subscription businesses see significantly lower churn, with membership models showing the strongest retention rates.

Technology Drives Retention

Subbly also found a strong correlation between feature adoption and retention. Merchants that leveraged AI churn predictions, cancellation mitigation offers, and chat-to-cancel tools experienced significantly better customer retention.

This highlights the role of technology in reducing churn and enhancing customer experiences.

INSIDER TAKE

Subbly’s report offers a data-backed reality check on key subscription business assumptions. The findings reinforce that churn is not just a pricing issue—it’s a broader retention challenge influenced by industry trends, engagement strategies, and platform capabilities.

Key Takeaways for Subscription Leaders:

• Rethink Pricing Strategies: With no correlation between price and churn, businesses have more flexibility in pricing models—focus on value, not discounting.
• Industry-Specific Retention Strategies Matter: Subscription verticals behave differently—understanding churn drivers by category can help tailor retention efforts.
• Leverage Automation for Retention: Merchants using more platform features see stronger retention—invest in AI-driven churn mitigation tools.
• Seasonality Matters: Subscription businesses should prepare for higher churn in November and take advantage of the stability seen in September.
• Larger Businesses Win on Retention: Scaling retention strategies can help smaller businesses achieve the churn advantages seen by larger merchants.

For subscription-first companies, this research underscores the need to move beyond pricing fears and double down on customer engagement, technology, and value delivery.