The four common subscription pricing examples for subscription companies are flat rate, tiered, per-user, and usage-based. Data from our study of 512 companies shows that monetization has nearly 2x the impact of acquisition efforts and a massive 4x the improvement from time spent acquiring more customers. We studied over 10,000 blog posts on growth and found that only one in ten blog posts was about pricing.īut while pricing discussions are often overshadowed by acquisition, higher pricing is one of the most important levers for revenue growth. Yet most subscription as a service companies spend precious little time thinking about their pricing. The data backs this up: Companies who regularly revisit and update their pricing every six months see nearly double the average revenue per user (ARPU) gain over those who update their pricing only once a year or longer.Ĭompanies spend countless hours improving their product, tweaking their positioning, and acquiring new customers. Failing to revisit your pricing regularly can only hurt your bottom line. As your product or service improves over time, you should vary your pricing to track the value you provide. Price points that work well in the early days of your subscription business often end up underpricing your product over time. Failing to base your subscription pricing on hard data could lead you to overprice or underprice your product or services. But as you begin quantifying your ideal customers, you'll understand what they truly value in your product and what they're willing to pay for it.ĭata needs to be at the heart of every pricing decision you make. When you're just starting out, you might look to competitors' pricing strategies - or worse you might just guess - where your subscription plans should start. This happens for several reasons, such as pressure to acquire new customers instead of optimizing the value of those they already have, a lack of knowledge on how to price, failure to invest in collecting customer data, and many more.īut even if you spend double that amount of time on your pricing strategy,if you're not also avoiding the following mistakes, you could be charging less than you should.īasing pricing on instinct or “gut feel” over data Companies spend an average of only ten hours each year on their pricing. The amount you charge for products or services should be taken seriously, yet many businesses do not take the time to consider this properly. What companies get wrong about subscription pricing
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