Regular materialistic use is easy to access to people through subscription policy. Things like razors, bacon, clothing, towels, you name it. All these can be conveniently availed through a subscription service. The subscription market has
Regular materialistic use is easy to access to people through subscription policy. Things like razors, bacon, clothing, towels, you name it. All these can be conveniently availed through a subscription service. The subscription market has grown a lot. Now businesses eye it as an opportunity to forge lasting relationships with their customers. When a business decides to develop a subscription offering, the follow-up process determines the subscription pricing.
A question in most business owners’ minds is about the kind of pricing model they should use. Today you can find a Subscription Payments platform that is could-based and enables effective management of recurring direct debit payments.
Given below are some subscription-based pricing models. By knowing about them, you can decide for yourself which one is most suitable for you.
Flat-Rate Subscription Pricing Model
It’s also called fixed pricing and provides users with a single price for all functionalities of the product. All the customers have to pay the same amount in each billing cycle. This kind of subscription pricing model is ideal for companies with offerings that have limited features. But it won’t work well for companies where the resource cost differs considerably from one user to another.
The flat-rate pricing model is a very predictable billing process that simplifies accounts receivables and other functions. Companies can focus more on monetization, customer acquisition, and retention when they opt for this model.
Tiered Subscription Pricing Model
Product packages with multiple features are accessible at varied price points. It enables sellers to categorize the costs of their services according to a specified targeted market. Tiers are typically branded as basic, standard, and premium. A subscription pricing model is perfect for businesses with several product features and a varied customer base with different budgets and requirements. SaaS companies specifically can make use of it and enhance their revenue.
The tiered model is highly scalable and flexible. Moreover, it enhances the lifetime value of your customer as they have the choice to upgrade or downgrade according to their needs.
Usage-Based Subscription Pricing Model
This model also called the consumption model, has pricing that’s much more variable. It relates a product’s cost directly to its degree of consumption. An example of this type of model is that found in your cell phone plan. This pricing model is perfect for those products whose usage varies widely.
The model imparts a great degree of flexibility to customers. It enables businesses to attract new buyers with lower upfront prices associated with lower usage. In this model, users who need more resources from the companies have to pay a greater price than those who don’t use it frequently.
Per-Added Module
In a per-added module, the product price is according to the functionality it offers. It consists of a base product and the choice to add more modules for greater functionality at a greater cost. This model is best suited for organizations with modular functionality that can be added easily to their main product. These organizations generally have an audience base that highly regards their ability to select the functionality they want.
An advantage of this model is that it compensates for functionalities that need high resources. It also provides a greater upgrade incentive.
Choosing a subscription pricing process requires much research on your part. Pricing is subject to change with the growth of the business and dynamic market conditions. Look for a subscription payments solution that you can use either as a standalone platform or incorporate into your existing business software. It can help you save time and enhance cash flow. It, in turn, will aid in winning customer loyalty for the long term.