6 tips for subscription businesses
Subscription pricing is a powerful and versatile business model. But implementing it correctly requires the right tools and strategy. With our comprehensive knowledge of the subscription economy, we've put together six tried-and-true tips to use while building your own subscription business.
1. Calculate willingness to pay
A big mistake made by subscription-based businesses is charging more, or less, than customers are willing to pay. Doing due diligence about the market you're in will help you to optimize the price you charge for your products, and may even help you split your product into different subscription tiers.
2. Determine your goals early
What exactly do you want to accomplish through subscription? More revenue, faster growth? Defining these goals early on helps ensure you're building the best pricing strategy possible for your specific goals. When your recurring revenue is tied directly to the monthly or annual fees, long-term strategic thinking is important.
3. Boost acquisition with a better experience
The more customers you have, the more revenue you'll get. This simple reality is why signing up for your subscription service needs to be as easy as possible. A great customer experience will improve your acquisition numbers over time. When combined with a great overall onboarding journey, you'll also find a higher average willingness to pay.
4. Streamline the billing process
Don't lose out on revenue because your subscription billing system isn't reliable. Most modern software services have a number of complex processes involved in account billing and you need to nail all of them. If your billing process is too complex, your customer won't stick around long.
5. Develop strong customer relationships
Without strong and lasting customer relationships, you'll be constantly losing customers and trying to replace them. Customers who aren't happy, or who aren't reminded of the value your service provides on a regular basis, won't stick around. Focus on retaining customers for as long as possible by fostering these relationships.
6. Plan for growth before it happens
A good subscription business model helps you scale. This steady stream of predictable income, evaluated against churn rates and operating costs, ensures the growth you project is sustainable. Without this knowledge, however, your growing customer base can quickly overload your infrastructure.