4 ms·
It makes sense to align your costs methodology with your income methodology. In other words most businesses have figured out that their big costs (salaries, re
by bruce511 4y ago
It makes sense to align your costs methodology with your income methodology.
In other words most businesses have figured out that their big costs (salaries, rent etc) are "subscriptions" and so by making their income into subscriptions there are few "surprises." Income becomes predictible, costs are predictable, and so on.
This ultimately makes business a lot less stressful. For everyone.
Annecdotally I play golf. I pay an annual membership at a club which includes "unlimited golf". In other words I pay a nominal $2 per round to play, but a big lump sum annually to be a member.
The actual marginal cost of my round to the club approaches 0. Their costs are fixed, so it makes sense for their income to be (mostly) fixed.
Incidentally paying once upfront means I actually play more. Even if weather is not ideal I can play because the marginal cost is so low.
Aside: this really helped the club during covid, no one was allowed to play, but the bulk of the income was assured. Other sources like bar, visitors etc went to zero, but the base-line meant the club survived better than some other clubs. No jobs were lost.
Every business is different though, and while I don't recommend pay-as-you-go only, perhaps offer both options. Then keep track of which group is more popular, and which is working best for you.