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The three main levers in a subscription business are: 1) the premium: this is the enticement which gets people to try out your product. Most typically it is a
by answerly 18y ago
The three main levers in a subscription business are:
1) the premium: this is the enticement which gets people to try out your product. Most typically it is a free trial period.
2) the fees: what does the service cost the user. My experience has been that if your price point is under about $10 per month, you are better off charging a quarterly or annual subscription.
3)the features: what does the user "get" for a monthly/annual fee. The best features have a high perceived value to the user but a low delivery cost to the provider. The worst subscription business focus on the wrong features which are very high cost to deliver but have a very low perceived value to the user.
Some other things to think about:
1) You need to test like crazy on each of these levers. I have seen examples where a $14.95 price point has performed 30% better than a $15 price point. Make basic assumptions about the different elements you want to test, but make sure to let the data make decisions for you.
2) If you offer a free trial, make sure to get the credit card number up front.
3) Be very upfront with disclosures on your billing process and have a very liberal refund process. Anyone can request a charge back from their credit card company for any reason and too many charge backs will sink your income stream. Make it easier for someone to get a refund from you and you can prevent these types of issues.
4) be very focused on retention. Retaining existing users is much easier than acquiring new ones.