What is a grace period?
Let's say you have a subscription-based streaming service and your users are required to renew their subscription every month to continue accessing your content. However, sometimes a user's subscription renewal might fail due to reasons such as an expired credit card or insufficient balance. In such cases, the user becomes inactive and loses access to your content.
To give your users some extra time to update their payment information and renew their subscription, you can provide a grace period during which the user will still have access to your content even if their subscription renewal failed. This way, the user can continue enjoying your content while they resolve the payment issue.
For example, if a user has a monthly subscription that renews on the 1st of every month and their payment fails, you can give them a grace period of 2 days during which they can still access your content. If the user updates their payment information within the grace period, their subscription will be renewed and they will continue to have access to your content. If the user does not update their payment information within the grace period, their subscription will be canceled and they will lose access to your content.
How does the grace period work?
Sometimes the user will update their card after 2-3 days after the subscription is ended.
The users will think that their subscription will be updated automatically and sometimes they will not renew their subscription leading to an increased churn rate.
After becoming inactive, they need to go to the plan page again and subscribe to a plan as a new subscriber. It is possible that some users are unaware of this and will not resubscribe to your services.
To avoid this, we can provide some time for users to update their card/Payment details without interrupting their content access.
Users will be able to update their card and the subscription will be renewed automatically once the payment is retried by the respective payment gateway.
If the user failed to update the card or payment method within the provided grace period, then their subscription become inactive.
The number of days and retires can be set for each payment gateway as required.
Options for the grace period for different payment gateways:
3, 17, 14, 30 days
5 days- Retry every 5 days
1-day- Retry 4 times
What is the Optimum number of days for the Grace period?
As you can see from the above table, the grace period provided by the gateways differ from each other.
It's optimum to set the grace period for the users as 7-10 days so that the users will get more than enough time to update their payment details.
You can set this to as many days as you like but a prolonged duration will lead some users to misuse the grace period to access the content for free more than once.
Also, it is advisable to make the grace period duration the same throughout the different payment gateways.
Unlike the trial period, the Grace period will be enabled every time the payment fails during the subscription renewal.
Also, If the user's payment failed during the trial period, the Grace period will not be enabled.
Some gateways have a grace period enabled by default. For example, Roku has a 3 days grace period by default and the payment will retry every day for 3 days.
Once the number of days is finalized from your end, you can send an email to our support team to implement the same across the gateways.
Grace period report- How it works?
From the left menu, Go to the Analytics section → Monetization → Grace period user reports.
You can see the report with the date filter.
Below are the fields present in the reports:
Payment gateway(Stripe, PayPal, Apple, Roku etc)
Grace period start and end date
Grace period recovered date
The report can be analyzed based on the status of the user. They are as follows:
Grace period- Users who are currently under the grace period.
Grace period recovered- Users who are being recovered from the grace period and their subscription become active again.
Grace period expired- Users whose grace period ended. Their subscriptions become inactive and they no longer have access to the content.
Number of users recovered from Grace period > Number of users grace period expired
If the number of users who recovered is more than the number of users whose grace period expired, then we can confirm that the churn rate is reduced and the number of active subscription users will also increase.
This report will help you analyze the reason for the user's Payment failure and help you to assess the payment failure details for the users.
If you have a huge user base from a single Payment gateway let's say stripe, then you can extend the grace period for that gateway alone so that you can reduce the number of inactive users and improve the Subscription/Renewal rate.