How Failed Payment Revenue Loss Is Calculated
For subscription businesses, failed payments from expired cards or insufficient limits are a hidden source of revenue leakage. Retries recover some of it, but every subscriber who never pays after the failure represents lost revenue every single month.
Formula
- Failed Payments = Subscribers × Failure Rate
- Unrecovered Payments = Failed Payments × (1 − Recovery Rate)
- Monthly Loss = Unrecovered Payments × Monthly Price
For example, with 5,000 subscribers at $9.99, an 8% failure rate, and a 40% recovery rate, you get 400 failures, 240 of which are never recovered — about $2,398 lost per month, or $28,771 per year.
Frequently Asked Questions
Expired cards, insufficient limits, and issuer restrictions are common causes of failed recurring payments. Subscription businesses typically see a 5-15% failure rate.
It's the percentage of failed payments that succeed on retry, often triggered by automatic retries or email reminders. A typical range is 30-60%, and higher is better.
Send card-expiration reminders before renewal, use smart retry scheduling, and offer an alternate payment method to cut down on unrecovered payments.