With subscriptions becoming more and more common, the original subscription-based services, like newspapers and gym memberships, seemed to be ahead of their time. Now, innovative companies across a wide range of markets have switched to a system of recurring billing for their products. From streaming services to meal kits, clothing, cosmetics, and so much more, subscriptions are a great way to build a steady revenue stream, interact with customers, and simplify payment processes. However, there is more to a subscription-based business model than simple monthly payments. New patterns of payment are becoming the status quo. Here are four innovative subscription pricing models you can adopt to drive customer growth.
A Tiered System for When You Have Extra Features to Offer
When you offer multiple versions of a product or service, such as basic and professional options, a tiered pricing model is a good subscription offering. Car washes are an excellent example of the technique. They might offer three types of washes and advertise the most expensive one as the best value. Customers might be more inclined to purchase a higher-tiered option when they associate greater value with a higher tier. Even if you don’t plan on selling many of the highest or lowest tiers, the middle tier can serve as your most tried and true tier. Plus, with a variety of options, new customers could be more likely to subscribe, knowing that they can adapt their subscription in the future if their preferences change.
A Usage-Based Price So Customers Can Pay for What They Use
A pricing model centered around usage is a great way to attract both low-budget and high-budget customers. It is also an effective way to prevent “churn.” A churn rate formula refers to the rate at which customers are leaving a particular subscription. One of the main reasons customers cancel their subscription is that they don’t use the product as much as they want. A usage-based pricing model allows customers to pay only for what they use. This pricing model could help your business retain customers by offering greater flexibility.
Pay-Per-User for Companies That Buy Employee Subscriptions
A pay-per-user pricing model is best for B2B companies. If you are selling a product to another business, it makes sense to offer pricing that matches how much of your product they plan to use, even if it’s one company making the purchase for all their employees. This is a method that some software companies have adopted. They will charge subscribers according to the number of accounts created to use their software. If you adopt this pricing model for your business, consider including additional benefits at the higher price points to increase value and accommodate more users.
A Fixed Rate for Ultimate Simplicity
While a fixed-rate model isn’t exactly new to the subscription landscape, sometimes, a single price point might be the best strategy for your business. Customers crave straightforward pricing, and they want to know what they are getting when they buy your product. A fixed rate for a subscription accomplishes that perfectly. If you know your product or service will sell based on its inherent value, price it accordingly and focus on ensuring the customer knows exactly what to expect from their subscription. This pricing model may not be revolutionary, but simplicity can feel fresh if customers are overwhelmed by too many options.
About Recurly
Recurly is the ultimate solution for subscription-based businesses. From streaming services and news outlets to software and consumer goods, the most innovative companies are introducing subscription models to build recurring revenue streams. With over 40 million subscriptions under their management, Recurly has been a driving force in the recurring payment world for over a decade. Their enterprise-class account management system and billing platform allow companies to adapt quickly, scale globally and increase customer lifetime value. Recurly understands that startups and established companies alike can face difficulties. So, they don’t just work behind the scenes—they stay involved to help you increase subscriptions and grow your brand. Whether you want to optimize your churn rate formula or introduce a new payment gateway, Recurly is the top choice to help your business be the best it can be.
See how Recurly can help you take advantage of different pricing models at https://recurly.com/
Original Source: https://bit.ly/3yEhRme
