Retention rate in app development refers to the percentage of users who continue to use an app over a specific period. It measures the ability of an app to retain users after their initial download or installation.

A high retention rate is usually a good indicator of an app’s overall success.

Formula for retention rate

Retention rate is typically calculated by dividing the number of users who continue to use the app by the total number of users at the beginning of a given period and multiplying by 100 to express it as a percentage. Here’s how this calculation looks like in a formula:

Retention rate = (Users who continue to use the app at the end of a chosen period / Total number of users at the beginning of the chosen period) X 100

How developers benefit from high retention rates

• High user engagement. A high retention rate indicates that users find value in the app and highly enjoy its features. Consistent user engagement is crucial for the long-term success of an app since a large body of active users increases the likelihood of earning from various monetization models.
• Revenue from purchases or upgrades. Retained users are more likely to make in-app purchases, subscribe to premium features, or generate revenue through other monetization strategies. A higher retention rate can contribute to increased revenue over time.
• Cost-efficiency. Acquiring new users can be more expensive than retaining existing ones. A focus on retention allows developers to maximize the lifetime value of users, making customer acquisition costs more manageable.
• Word-of-mouth leverage. A strong retention rate is often indicative of user satisfaction and loyalty. Satisfied users are more likely to continue using the app and may even become advocates, recommending the app to others.
• App store rankings. App stores often consider retention rate when determining app rankings. Higher rankings can lead to increased visibility and more downloads while keeping user acquisition costs down. See also App store optimization (ASO).