The Subscription Growth Formula: Churn Math, Retention Wins, and Smart Product Bets — Dan Layfield, Subscription Index

On the podcast, I talk with Dan about estimating the ROI of product changes before building them, calculating your subscription app's growth ceiling, and why you shouldn’t make assumptions about what is and isn’t working in other apps.

Top Takeaways:

💸 ROI-first thinking helps teams prioritize what actually moves the needle
Every project has a cost - whether or not you calculate it. Estimating the ROI of a sprint, even with rough assumptions, can reveal when you’re investing $50K of dev time into a feature with minimal upside. It’s not about forecasting with precision, it’s about using basic math to avoid chasing ideas that won’t pay off.

⚾ Big swings take more than one try
Launching a major feature is rarely a one-and-done success. The biggest wins often come after multiple iterations - refining the UX, testing variations, learning from early data. Too many teams ship once and move on. But if there are signs of life, sticking with it for a few rounds is often where the real gains are made.

⏳ Churn math reveals the ceiling on your growth
If you’re adding 500 users per month and churn is 10%, your max subscriber base is 5,000. It’s simple math, but easy to overlook when topline numbers are growing. Looking at cohorts and long-term retention curves helps you spot when you’re approaching that ceiling - and whether you’re building a durable business or just replacing churned users.

🧵 Small UX improvements can beat big features
Rewriting confusing checkout error messages took just two days and lifted revenue by 1%. Polishing key flows like onboarding or paywall views often delivers a better return than shipping something new. If every user hits a flow, making it smoother can have an outsized impact on conversion and retention.

🚀 The fastest team wins, not the most secretive
Worried someone will copy your idea? Don’t be. The teams that win are the ones who move faster, not the ones who keep ideas hidden. Speed matters more than secrecy. Whether you’re validating a viral feature with TikTok mockups or running a rough A/B test, moving quickly lets you learn, adjust, and stay ahead.

About Dan Layfield: 

✍️ Founder of Subscription Index, a blog that breaks down the strategy, math, and real-world lessons behind successful subscription products.

🧠 Dan helps startups grow revenue by optimizing retention, reducing churn, and making smarter product bets rooted in ROI.

💡 “Your company will not be profitable ever if the output of your sprints doesn’t exceed the cost of your sprints.”

👋  LinkedIn

Resources:

The Hidden Math of Churn: Why You Can’t Scale Past $1M — Subscription Index blog post

Follow us on X: 

• David Barnard - @drbarnard
• Jacob Eiting - @jeiting
• RevenueCat - @RevenueCat
• SubClub - @SubClubHQ

Episode Highlights:

[1:03] Over/under — The importance of estimating the ROI of your product development efforts in advance.

[6:39] Making a splash: The pros and cons of building features in order to get attention on social media or in the press.

[12:49] Sweat the small stuff: Why fixing “small” issues with your user experience can lead to big payoffs.

[19:41] Hitting a ceiling: How to calculate your company’s maximum subscriber base based on your monthly new users and churn rate.

[24:03] The long game: Accounting for long-term users (“locals”) versus short-term users (“tourists”) in your growth ceiling estimates.

[32:11] Good use: How the degree of product-market fit for your app affects your churn rate.

[37:40] User activation: Mitigating churn by providing a great onboarding experience and giving users early wins.

[39:21] Money talks: Why auditing your pricing tiers and payment processing systems can significantly bolster your bottom line.