What is dunning?

By Roy · Marketing manager at Subi · Published May 6, 2026

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If you run a subscription business on Shopify, you've already paid the dunning tax — even if you don't know what dunning means. Every customer whose card expires mid-subscription, every payment that fails because of an insufficient balance, every silent cancellation triggered by an unresolved retry: that's dunning. Or rather, it's what happens when dunning isn't handled well.

What is dunning?

Dunning is the process a business uses to recover failed or overdue payments from customers — typically through automated retry attempts and customer communications until the payment succeeds, the customer updates their card, or the subscription is allowed to lapse.

In subscription businesses, dunning is mostly automated. The billing system detects a failed charge, schedules retries on a configurable interval, notifies the customer, and tries to collect again before either recovering the payment or marking the subscription as past due.

The term is borrowed from accounts-receivable language — historically, dunning meant sending letters to demand overdue payment. In modern subscription commerce, the letters are emails and the demands are polite, but the goal is identical: turn a failed charge into a successful one.

How does dunning work for subscription payments?

A subscription dunning sequence has four moving parts:

1. Detection — the payment processor (Shopify, Stripe, etc.) returns a failure status with an error code. Common codes include card expired, insufficient funds, or a payment method that's been removed.
2. Retry — the billing app retries the charge automatically, on a schedule the merchant configures. Three retries spaced two days apart is a common starting point.
3. Customer outreach — emails (and sometimes SMS) ask the customer to update their card or check their bank. Some apps send before the retry; some send after; some do both.
4. Resolution — either the customer updates their payment method and the next retry succeeds, or all retries fail and the merchant decides what happens next.

The last step is where products differ. Some apps cancel the subscription automatically after the final retry fails. Others — including Subi — leave the subscription active so the merchant can decide whether to manually intervene, pause the contract, or reach out personally.

Why does dunning matter for Shopify merchants?

Failed payments are the silent killer of subscription revenue. Industry research consistently puts involuntary churn — churn caused by payment failure rather than active customer cancellation — at 20% to 40% of total subscription churn for direct-to-consumer brands.

Concretely: if you have a subscription business doing $50,000 monthly recurring revenue, and even 25% of your churn is involuntary, that's $12,500 a month leaking out the back of the funnel because of card declines you could probably recover.

The math on dunning:

• Recovery rate matters more than retry count. Two well-timed retries with good email copy can outperform six retries that all fire on day one.
• Customer-side experience matters. If a merchant's "update your card" email looks like phishing, customers won't click.
• The "do nothing" option is implicitly losing 30% of attempted retries. Even basic dunning earns its keep.

What dunning looks like in Subi

Subi handles dunning through its Payment recovery feature (formerly called "Billing management" — you'll see both names in older help articles). Three things to know if you're setting it up:

1. You configure the retry schedule. In the Subi app under Retention → Payment recovery, you set the number of retry attempts and the interval between them. The help center's example uses three attempts at two-day intervals; tune from there based on your customer base.
2. Both you and the customer get notified. When a payment fails, you get an alert in the Subi dashboard's Failed Payments tab and the customer gets an email asking them to update their card.
3. The subscription stays active during retries. Even if all retry attempts fail, Subi keeps the subscription contract active. You decide whether to cancel, pause, or reach out manually — the app doesn't make that choice for you.

If you're recovering payments at scale, the bulk "send update payment method link" action lets you reach all affected customers in one click instead of one-by-one.

Related terms

Dunning is one piece of a broader subscription-retention vocabulary. Related concepts a Shopify merchant should know:

• Involuntary churn — subscription cancellations caused by failed payments rather than customer choice.
• Pre-dunning — sending a "your card expires soon" reminder before the failure happens.
• Recovery rate — the percentage of failed payments that ultimately succeed via dunning.
• Subscription contract — Shopify's term for the billing record behind each subscription; lives in the Contracts tab in Subi.

Frequently asked questions

Does Subi cancel the subscription if dunning fails?

No. If every retry attempt fails, Subi leaves the subscription active. You — the merchant — decide whether to cancel, pause, or follow up with the customer manually. This is intentional: in practice, a customer whose card failed today often updates it within a week, and you'd rather not have lost the relationship in the meantime.

How many retry attempts does Subi do?

You configure the count and the interval. Subi's help center documents an example default of three attempts spaced two days apart; you can adjust both numbers in the Subi app under Retention → Payment recovery to match how your customers behave.

Can customers update their payment method themselves, or do you have to do it for them?

Customers update it themselves. The failed-payment notification email gives them a link to update their card; once they do, Subi automatically uses the new method on the next retry. If you're recovering at scale, the bulk action in Subi sends the update link to many customers at once.