P

What is Purchase funnel?

Definition, examples, and more

Definition

The progression users follow from install to paid subscriber. Common steps include onboarding ‚Üí paywall view ‚Üí trial ‚Üí paid conversion. Funnel drop-off analysis helps teams identify friction and opportunities to improve monetization.

How to Calculate

Step Conversion = Users at Step N+1 / Users at Step N x 100. Overall = Final Step Users / First Step Users x 100.

Example

A fitness app maps: 50,000 installs > 42,000 onboard > 35,000 view paywall > 7,000 trial > 4,200 paid. The 80% paywall drop-off is the biggest leak. Redesigning with better social proof improves paywall conversion to 28%, adding 2,800 trials/month.

Why Purchase funnel Matters

Funnel analysis reveals exactly where to focus. A cooking app assumed they needed more installs. Analysis showed 90% completed onboarding but only 5% converted at the paywall. The problem was the paywall, not acquisition. Three optimization rounds tripled revenue.

Frequently Asked Questions

What does a healthy funnel look like?

Install to Onboarding: 70-90%. Onboarding to Paywall: 60-85%. Paywall to Trial: 15-30%. Trial to Paid: 40-65%. First Renewal: 70-85%.

How often should I review funnel metrics?

High-level weekly. Segment-level monthly. Set alerts for significant changes. After product changes, monitor daily for 1-2 weeks.

Should I have multiple funnels?

Yes — segment by acquisition source, platform, and user type. Each reveals different optimization opportunities.

Category
Subscription App Terminology
Related Area
Mobile App Growth & Monetization

More terms starting with “P

Payback period

How long does it take for you to "payback" the money you've spent on acquiring a new user. A faster payback period is better because it means that you can reinvest that money into growing faster. Typically, a faster payback period means faster growth. At the same time, depending on your business you can use a longer payback period to give you the freedom to acquire users at a higher price. If you're only bidding based on a 1 month payback period, the amount you're able to spend per user will change greatly versus a 1 year payback period. This will be influenced by your free cash flow, desire to grow profitability, and maturity of your business.

Paymium

A hybrid pricing model where users pay both an upfront fee to download the app and an ongoing subscription for continued access or premium features. While less common today, it can work for high-value niches where initial access alone delivers perceived value.

Paywall

A screen that restricts access to content or features until the user subscribes or starts a trial. Paywalls are critical for monetization and can be static (same for all users) or dynamic (personalized based on behavior or segment).

Paywall A/B testing

Running controlled experiments that test variations of the paywall - including copy, design, pricing, or feature messaging - to find the highest-converting version. This is a high-leverage area for increasing monetization without changing the product itself.

Perceived value

A user's subjective assessment of how much value they are receiving relative to what they're being asked to pay. It's often influenced by onboarding, feature exposure, social proof, and overall app design and directly impacts conversion and retention.

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