{"id":2126,"date":"2021-04-08T15:16:40","date_gmt":"2021-04-08T15:16:40","guid":{"rendered":"https:\/\/www.subbly.co\/blog\/?p=2126"},"modified":"2022-05-25T22:09:23","modified_gmt":"2022-05-25T22:09:23","slug":"smart-and-effective-subscription-pricing-strategies","status":"publish","type":"post","link":"https:\/\/www.subbly.co\/blog\/smart-and-effective-subscription-pricing-strategies\/","title":{"rendered":"Smart and Effective Subscription Pricing Strategies"},"content":{"rendered":"\n

Running a subscription-based business can be overwhelming. Getting new customers, retaining them, nurturing customer relationships, monetizing, you name it\u2014all these things scream for your attention. Yet, too often, such businesses underestimate one issue \u2014 crafting their subscription pricing strategy.\u00a0<\/p>\n\n\n\n

Too many subscription businesses do not think their pricing strategies through. They either copy their competitors mindlessly or set prices at random. However, market research<\/a> suggests that giving a little more thought to your pricing can translate into better conversion, upgrading, and customer retention<\/strong>.<\/p>\n\n\n\n

There are a lot of subscription pricing strategies out there. We\u2019ve explored options and prepared a shortlist of a few smart strategies that can make a real difference for your subscription business.<\/p>\n\n\n\n

Diversify Your Pricing<\/h2>\n\n\n\n
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You\u2019re probably familiar with this \u201cdon\u2019t put all your eggs in one basket\u201d rule. The same thing goes for a pricing strategy: don\u2019t set a single price for all customers.<\/p>\n\n\n\n

The value of your product is dynamic and, more often than not, personal. It has to do with how much the customers are willing to pay for your product. Some people will not go beyond $10, while others would readily pay $100. Why not offer both options with different sets of features<\/strong>?<\/p>\n\n\n\n

You can also throw in a middle alternative<\/strong> for those who want some extra features but are not ready to pay the highest price. A twist on this strategy is to add an elite pricing option<\/strong> that will make your previous top-priced offer look reasonable while promising exclusive service to the customers willing to pay more.<\/p>\n\n\n\n

Diversifying your strategy comes in tow with pricing localization<\/strong>. People from various locales can estimate your product\u2019s value differently. Offering them pricing options that are closer to their expectations might significantly boost your conversion rates. Localizing prices is a must if you work on the international market, but it can be helpful on a smaller scale, as well.<\/p>\n\n\n\n

Offer to Invest in the Future<\/h2>\n\n\n\n
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Subscription businesses often provide their services over a defined period of time. Typically, the users pay a monthly fee for the product. Why not change your approach and offer them an alternative where they can invest in the future?<\/p>\n\n\n\n

An annual fee<\/strong> is a great option. Cheaper compared to monthly charges, they have an extra value: they motivate your customers to keep using your product throughout the year. On top of that, the users might find it easier to pay once a year than go through the payment hassle every month.<\/p>\n\n\n\n

Why Free Can Be Good<\/h2>\n\n\n\n
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A short answer to this question is to give your customers a taste of your product. It\u2019s a go-to strategy when you feel that your business could get an extra lift. A try-it-free option gives people a chance to see how great your product is and motivates them to become paying customers.<\/p>\n\n\n\n

There are two basic ways of doing this. One of them, a free trial<\/strong>, is a well-known strategy that subscription businesses love. You set a time limit for a user (e.g., 14 days) and, when the limit expires, you offer the user the opportunity to become a paying customer. This strategy works best if you want to show off the whole set of your product\u2019s features to your consumers.<\/p>\n\n\n\n

The other strategy is freemium<\/strong>. Unlike a free trial, it doesn\u2019t have a time limit. Instead, it strips down certain features, leaving only the essentials on offer. The users who want full access have an option to pay to subscribe.<\/p>\n\n\n\n

Neither of these options is better than the other. It all depends on your specific case. Look at your goals and decide which strategy will suit your business better.<\/p>\n\n\n\n

Pay-as-You-Go<\/h2>\n\n\n\n
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Another pricing strategy is when users pay for what they use. The customer is charged per unit<\/strong> (e.g., per 100 visits or 10 downloads). If they don\u2019t use the product, they won\u2019t be charged for a specified period (usually a month). The pay-as-you-go strategy is common for businesses offering content rather than multiple features.<\/p>\n\n\n\n

An alternative to the pay-as-you-go scheme is having a basic fee and charges for extra usage. Known as overage<\/strong>, this strategy ensures that your customers don\u2019t lose interest in your product too quickly.<\/p>\n\n\n\n

Upgrade and Promote<\/h2>\n\n\n\n
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Hunting for new users, don\u2019t forget about your existing customer base. Promotional incentives<\/strong> will come in handy here. This subscription pricing strategy helps you upgrade your customers by offering them new features for an additional price, personal discounts, limited-time offers for the features they haven\u2019t tried yet, etc.<\/p>\n\n\n\n

As your business grows and you come up with new features, make sure to tell your customers about these changes. Adding this pricing strategy to your toolkit, you\u2019ll retain more customers and reduce churn rate (read about top subscription business metrics and KPIs, including the churn rate in this article<\/a>).<\/p>\n\n\n\n

A Few Tips for Building a Successful Subscription Pricing Strategy<\/h2>\n\n\n\n
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Have you found some fascinating insights in our list of smart pricing strategies? Well, that\u2019s not all. We\u2019d like to share a few more things to keep in mind when designing an effective strategy:<\/p>\n\n\n\n