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Top tips to make your subscription pricing strategy successful

  • Written by Carl Warwick, Regional Sales Director APAC and Japan at BillingPlatform

As-a-service pricing can work wonders for your enterprise, provided you implement it smartly.

Are you planning on overhauling your operations and making the switch to a subscription- based pricing model?

In today’s business world, it’s a popular move. Here in Australia and around the world, businesses large and small are alive to the benefits of what making this change can deliver. They include the establishment of a reliable revenue stream, the chance to target new segments of the market that couldn’t afford to purchase your offering outright and greater opportunities to partner with other businesses and cross sell. Subscription based business model trends are becoming easier to track, hence the popularity rise.

Hence, we’re seeing enterprises of all stripes, from car manufacturers to software developers, trying their hand at turning their products into services that can be billed by the month, or billed according to usage.

One recent US report forecasted the subscription business model market, worth $650 billion in 2020, could grow to an extraordinary $1.5 trillion by 2025.

Assessing the suitability of subscription

But while it may be the modus operandi of the moment, subscription pricing isn’t necessarily the optimum approach for every business. Those that lack the flexibility to keep pace with varied and changing customer needs, for example, may fare better sticking to a traditional sales strategy.

As will those that can’t easily demonstrate the alignment between their pricing policy and the value they provide. History has shown that customers won’t sign up for services unless they’re clear about what it is they’re getting and how much it will cost them.

At BillingPlatform, we’ve seen dozens of organisations make the switch to subscription billing and we know that putting customer needs front and centre is the surest way to make a success of it.

Here are some strategies that will help you do so in your business.

Refine your pricing

Not all subscription customers are the same. Some favour a straightforward monthly or annual subscription fee while others prefer an approach which sees them paying only for what they’ve used. Offering a range of pricing models and bundling deals opens up the market to a wider array of customers and makes it more likely they’ll find a deal that meets their needs. Whatever billing options you put in place should be reviewed and revised regularly, in line with changing customer demands.

Be flexible

Subscription pricing can only succeed if you continue to meet customer needs. They’re not static and that means customers won’t want their arrangements with you to be static either. Allow them to upgrade, downgrade and suspend their plans without penalty and add on additional services throughout the subscription lifecycle and you’ll up your odds of keeping them on the books long term.

Optimise your offering

Legendary Hollywood actor Lauren Bacall once observed that ‘standing still is the fastest way of going backwards in a rapidly changing world’. In order to keep pace with the changes and upgrades in today’s business world, innovation and the ability to pivot is key. That’s never been truer than today, with the market for almost every type of product and service evolving at bewildering speed. It’s easy and inexpensive for subscription customers to switch suppliers and if you’re not continually upgrading and enhancing your offering, there’s a good chance yours will look to do so.

Become a customer-centric enterprise

The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.’ Words of wisdom from a man who knows more than most about the subject: Amazon founder Jeff Bezos. When it comes to subscription commerce, your customers won’t be impressed by inefficiencies, inaccuracies, or any other evidence that the departments in your organisation aren’t working in harmony to deliver a seamless service. Tightly align your sales, marketing, finance and customer success teams and you’ll be well placed to surprise and delight your customer with a seamless experience.

Invoice clearly and accurately

Issuing a one-off invoice for merchandise or a service supplied is generally fairly straightforward. Subscription billing is much more complex. . Calculating usage can become sophisticated and getting it wrong is never a good look. For better or worse, the monthly bill is likely to be your most frequent communication with customers and ensuring yours are timely, accurate and easy to understand will help you maintain customer confidence and positive sentiment about your organisation.

Tools to make the task easy

Operating a subscription model successfully becomes significantly easier with the right tools, namely a robust, scalable revenue management platform that integrates seamlessly with your ERP system and enables your enterprise to manage the sales and billing cycles effectively. It will allow you to roll out usage-based billing, navigate accounting and reporting challenges and provide your customers with standout service, whenever and however they choose to get in touch. If you’re serious about making a success of as-a-service pricing, it’s foundation technology you can’t afford not to have.


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