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.
Comments
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.