Getting Your Customers To Understand The Convenience Of Subscriptions

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Subscription businesses are a great model because they offer businesses a significant amount of benefits while also providing a high degree of customer satisfaction and affordability to customers. There is a problem however; many customers do not see the benefits of a subscription business and this can hold them back from joining your business.

The biggest benefit of course to customers is convenience, and customers respond well to businesses that offer this. Therefore, to attract more of your target audience to convert to subscribers, you need to make them understand the convenience of your subscription.

This can be more difficult than selling the benefits of your service, which might be obvious. So here are a few points you can highlight to your potential customers on why a subscription is beneficial.

1. Customers Know When The Payment Is Due / Being Processed

All your subscribers are likely to have a set date in which they pay for their subscription. This date is set each month and does not change. This is one of the most convenient aspects of a subscription service because it allows customers to plan their finances better and ensure they have enough money in their accounts when it is needed.

Another benefit gained from this convenience is that customers need not worry when they are going to receive their bill and panic when it arrives. By knowing well in advance when payments will be due, customers are more relaxed and have a happier customer experience.

2. Customer Know How Much Each Payment Is Going To Be

As your subscription payments are all going to be the same, unless they purchase one time add-ons, then the customer is always going to know what the price is going to be for the products they have bought.

This can be a great convenience as it further supports their financial planning and again stops the panic when the bill comes in. Also, because the payments are regular, there isn’t any negativity when the bill comes. Customers will often try to reduce bills if they are issued periodically and are not set, partly because they want a good deal, but also because they are often surprised about the amount being charged.

Therefore, you can save yourself time and improve opinion of your business by highlighting the set price charged per month.

3. It Saves Time

Receiving and paying an invoice periodically, uses up the customers’ spare time and if it is a business client, they are likely to want to spend more time being productive than completing administrative tasks that are unnecessary.

The same can be said with customers. Most people today live a very busy life and it is important that you highlight to them that an automatic payment for a subscription service will save them time.

4. It Costs Less

Most subscription businesses offer reduced rates for those customers that pay a subscription automatically. This is because it costs less to process these payments and therefore, the business can afford to take a small cut to entice customers.

You need to highlight this to your customers who are likely looking for a good deal and will probably assume you are still charging them for payment processing costs.

Conclusion

Your customers might not understand the convenience of a subscription based service. Therefore, you need to explain to them how it can save them time, stress and money while being good value for money and excellent service. Use the above four points to help you create strong arguments why your business’ subscription service is good for your customers and see the number of subscribers increase.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

4 Innovative Subscription Business Models

Image courtesy of imagerymajestic at FreeDigitalPhotos.net

Image courtesy of imagerymajestic at FreeDigitalPhotos.net

There are many different business models available for entrepreneurs who want to earn money by selling a service or product. The subscription business model is one of those models. Most subscription business models work by the business taking a regular payment from the customer and then giving them access to resources or a computer program for a set period of time.

However, these aren’t the only subscription business models that are available. There are numerous other subscription models that entrepreneurs can use to deliver their services and products. Here are four of the most innovative subscriptions available and what makes them unique.

Personal Styling

Today everyone leads busy lives and time for shopping and self-styling is getting harder to find. For some this can be an excuse for not going shopping too often and this is why the personal stylist has gone online.

Stitch Fix combines e-commerce with the in-store experience of retail shopping and personal styling. They send the customer five items they’ve handpicked for them based on their answers to a lifestyle and fashion questionnaire at the beginning of the subscription.

The customer can then try on the clothes sent and keep only what fits and what they like. Feedback is also passed back to the stylist, so the next box can be tailored to be more in tune with what the customer likes.

Shaving Gear

One of the most popular and recognised subscription services, which is slightly unorthodox, is the Dollar Shave Club. The service promises to deliver blades to the customer’s door for just one dollar a month. There are other options available; but, the service is pretty much the same.

In addition to the blades, each customer gets a free handle and has the option to purchase add-ons such as shaving cream and moisturiser.

The brand entered the market with an incredible advert that broke with tradition and went viral online. Since then, the subscription service has gone from strength to strength and has started new lines and improved customer options.

Kids’ Toys

Box of OMG is probably one of the more unusual subscriptions services available online. Not only do customers not have to pay a subscription to receive anything, but their contents are not guaranteed.

The service works like this: a customer subscribes to the site via email or a social media account and every quarter, the company sends out a limited number of boxes randomly to those on the list (you aren’t guaranteed a box each quarter). Subscribers can increase the chance that they will receive a box by signing up friends, advertising the brand on social media and competing in other activities on the site.

The boxes are full of toys, comics, snacks and other items to keep your children happy.

Travel Clubs

Netjets is probably the most unique business models on this list. For a hefty subscription fee, customers can choose how many hours they wish to fly per month and then reserve that time as a share of the private fleet maintained by the company.

This can be an effective way to reduce travel costs for businesses that travel regularly. The same can be said for public figures.

There are also similar options for cars.

Conclusion

There are a number of options for those looking to start a subscription business. The only barriers to entry are legality and your imagination. Consider how you can convert your business into a subscription business or what new business you would like to start. As recent years have shown, there is a growing demand by customers for this model.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

The Future Of Subscription Model Businesses

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

What is the future for the subscription business model? Are subscription businesses going to grow or are customers going to avoid them? This article is going to look into the current trends and see what is likely to happen to the business model in the future.

The Current Status Of The Subscription Business Model?

In recent years there have been a number of traditional businesses that have moved from the old pay-per-use model to the subscription model. One of the best examples is Adobe, who has moved away from customers purchasing their software outright to a monthly payment scheme. Another example is the film rental company Netflix who offer customers unlimited rentals as long as they are subscribed to their service.

There are many advantages for these businesses. Firstly they can offer their products to a larger market as a small monthly fee is more manageable than a one off payment. Also, a monthly payment becomes less of a purchasing block in the customer’s decision making process increasing conversions and customer retention. Therefore, businesses can gain more value from their customers than they would do with a one off payment.

Another advantage is that a subscription business has more revenue stability; so businesses can accurately project their incoming revenue and determine what they can afford and what they can’t.

Customer’s View Of Subscriptions

Customers are continuously looking to improve their wealth and access to more luxurious goods while paying less for them and having fewer purchasing decisions. Subscription businesses are continually giving them these benefits. For example; Dollar Shave Club costs just $1 per month for a shaver and there is little decision making for the customer.

Likewise with online film subscriptions, the decisions for the customers are made easier. By having access to an entire library, customers are able to switch what they are watching if they are not satisfied with their choice. With the old pay-per-use model, the customer would be stuck with a bad decision and this would reflect negatively on their customer experience.

How Can The Subscription Model Grow

The movie rental experience can be replicated across many different industries. For example, if you sell food you could automatically package food for your customers and deliver it straight to their door. Customers can even give their preferences on what they prefer to eat so you can tailor each box.

This model could have several benefits for a grocer. Firstly, because demand is known beforehand, there is less product wastage. Secondly, products could be provided that are in season and therefore costs can be lowered. Thirdly, there is no need for large stores to display items – a website would be sufficient. This would again reduce running costs, giving the business greater profits.

The grocery market in the UK is already moving in this direction with some of their biggest grocers providing guaranteed weekly delivery slots that don’t need to be booked every week. The shopping list can even be put on repeat only to be changed slightly each week by the customer. Other food sellers do everything for the customer from choosing the food and delivering on a set day.

So What Does This Mean For The Future of Subscription?

The continuing growth of the subscription business model shows that there is a demand from customers for services that can be paid for on a monthly basis. Businesses are also showing that the model can work and grow the business’ profit, customer acquisition and retention.

The model is also applicable to a number of different industries from pet supplies to software applications. The only limit is the imagination of business owners. Therefore, the future is bright for subscription businesses and will continue to be so in 2015.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Determine What Your Subscription Pricing Should Be

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

You went into business because you wanted to make a profit. Achieving that goal relies on a couple of key elements. Firstly, that you provide a high quality service your customers will want to use continuously. Secondly, that your subscription service is priced so you are able to make a profit.

Profit is very important because it allows you to enjoy your lifestyle as you like and fuels growth within your business. If you do not charge enough, then you may not have enough income to cover your costs. On the other hand, if you charge too much, your customers may not see the value in your product and leave your business. It will therefore be harder to maintain your income and profits.

So what can you use to help determine your pricing strategy?

1. Your Business Model

The number of clients you are hoping to have at any one time is an important factor. If you plan for a significant number, then you can charge less per customer but you will be limiting the amount of time you can afford each for troubleshooting, customer service, etc.

In contrast, if you want to have a more exclusive club and have few customers, you need to increase your prices but can afford more time per customer. This may be the best option if you have a very niche product or want to create an elite group of clients where you have very close relationships.

2. The Cost-Plus Method

This is a standard way to price services. The first step is to determine the cost of delivering the service to your market. This should include the fixed costs and the variable costs. The fixed costs should be spread out over the number of customers that you are looking to attract and manage in your subscription business.

The most common mistake to make with this method is that while you may pay someone $12 per hour, the costs are more than that. For instance, you may have rent, utilities, insurance, website, taxes, etc to consider.

3. How Much Your Competitors Are Charging

You might also want to look at how much your competitors are charging. There are various ways in which you can determine if their prices are related to yours, and we have covered this previously.

To find out their costs, have a look on their website, speak to their sales team and talk to associates who have dealt with them. This will give you an indication of how the market is reacting to pricing, especially if you have a significant amount of competition whose prices are very similar.

However, you shouldn’t base your prices on just your competitor’s price points. Your product may have a greater value or you could have different costs.

4. The Perceived Value Of Your Service To The Customer

Your customers aren’t going to pay for a service they don’t think is value for money. Therefore, you should ask your customers what they believe the value for your subscription service is. It is likely they will slightly underestimate what you could charge, but it can be a good starting point.

An alternative way of achieving this is to A/B test several price points and see which has the higher conversion rate. At the same time you should look at the customer lifespan; if you find that a higher price has a lower customer conversion rate but higher customer lifetime value – it is obviously the better choice.

Conclusion

Pricing your subscription correctly is an important factor in running your business. Charging too high or too low may cause your business to fail as you will not make enough profit to run your business effectively. Ensure you are charging the right amount to earn enough profit to live comfortably, grow your business and provide a high quality service.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

Common Customer Questions About Subscription Programs

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

The use of the subscription business model is growing. Many businesses see this as a way to offer cost effective, but high quality, services to their customers. As with any business model, there will be some frequently asked questions you customers will want to know the answers for before committing to any of your packages. If you answer these well; then you can increase the sign up for your services.

So what are the common questions and how can you answer them?

How Much Is The Cost Of The Subscription?

This is probably one of the most common questions customers will want to know. Don’t be tempted to send them to your subscription page. Instead, detail the costs of each of your packages, the period (i.e. weekly, monthly, annually) and how payments can be made.

What If I Want To Upgrade / Downgrade My Subscription?

There are a number of different reasons why someone might want to change their package with your business. For instance, they might have an increase in the traffic to their website and need a larger package or they might be downsizing their staff and require less licenses for your software.

Whatever the reason, they are going to want assurances that they can change their package easily and with no heavy costs. Detail carefully how long it takes to make a switch and when new charges will apply from. At the end include a link to making the request for upgrading / downgrading a package.

What If I Want To Cancel My Subscription?

Although many of your customers aren’t going to cancel their subscription in the near future, they are likely to want to know the details encase they want to later on. The information they want will include:

  • What notice do they have to give you?
  • What are the costs for cancellation?
  • When will their access be removed?
  • What happens to any outstanding balance?
  • How do they notify you of their wish to cancel the subscription?

By answering these questions you can demonstrate you are a legitimate company and assure them of your professionalism.

How Are Extra Fees Collected?

This is one of the most important questions if you offer add-on services that can be bought at any time. Customer will want to know whether they are provided an invoice for them to pay separately or whether the funds are taken directly from their account immediately or on the next subscription payment date.

What Does My Subscription Include?

Every customer will want to know what each package gives them access to. However, if you operate a number of different packages, this could become a long answer which many people would not read. Therefore, it is probably best if you describe the basic subscription for your readers and then direct them to your packages page for further information on other packages.

How Can I Contact You?

If you don’t provide this information to your customers they are unlikely to think they cannot contact you if there is a problem with their service. This can potentially deter them from using your services. On every page, and especially the FAQ page, you should include a telephone number and an email address.

What Is The Minimum Contract Length?

Customers want to know they won’t be tied into a long term contract that doesn’t give them flexibility. Therefore, let them know about the minimum term and what will happen if they wish to leave your service before that period has ended.

Conclusion

Your FAQ section on your website is a perfect opportunity to demonstrate your professionalism. Use our guide above to start creating your FAQ list and what to say to your potential customers.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

How To Assess The Prices Your Competitors Are Charging

Image courtesy of jscreationzs at FreeDigitalPhotos.net

Image courtesy of jscreationzs at FreeDigitalPhotos.net

When you are assessing your pricing levels you are going to want to make sure your business’ subscription charges are competitive against your main rivals. Many new to business consider this means that their prices have to be lower. However, this is not always the case.

Research from a number of sources has clearly identified that price is not the main reason for customers choosing a service provider or staying with them. Here are three key research findings that have backed this up:

  • The main reason for customer churn is not price. The most cited reason by customers is dissatisfaction of the customer service they have received. Accenture Global Customer Satisfaction Report 2008.
  • When compared to price or product problems, a customer is four times more likely to choose a competitor if they receive poor customer service. Bain & Company.
  • A guarantee of better customer service would encourage 55% of customers to choose the provider that charges more. Defoqto research.

Therefore, looking at their price alone is not going to give you the best idea of how much you should charge your subscribers. Instead you should look at a number of different factors to assess your competitors.

So what do you need to find out about your competitors?

Customer Perception

Linked to the statistics above, one of the first things that you need to assess is what your competitor’s customers are saying about them. There are many different websites that you can use for this, including review sites and business directories. Carefully analyse what is being said by the customers, including:

  • What did the customer say was positive about your competitor?
  • What did the customer not like about your competitor?
  • How often are reviews being left? For every one customer review, there are at least 26 customers who haven’t left a review.

Stories In The Media

You’ll also want to check what is being said in the media about your competitors. These could be positive, negative or just quoted in other articles as an expert. To keep an eye on this over the long term without having to manually search for the results periodically, set up Google Alerts for your competitor’s name.

Their Marketing And Branding

The next option that you’ve got to look at is their marketing position. Look at who they are marketing their product towards, is it large businesses or high earning individuals or is it for small firms / those with limited income? Also look at how they market their services: are they a luxury brand or an essential tool for the user?

Product Specifications

Your competitors’ products are not likely to be the same, nor are they likely to be similar to yours. Therefore you need to check off what the customer will get access to with their product in comparison to yours and others in your industry. You could also estimate how much it would cost you to provide the exact same service and calculate what their profit levels are.

If you are finding this difficult, have an employee call the competitor to get all the information. Their sales team will likely be very helpful.

Suppliers

Finally, try to find out who their suppliers are and what costs they are incurring. Those who have lower supplier costs will able to charge less for their products. See if you can get a meeting with their suppliers and arrange for a better deal – allowing you to be more competitive on price.

Conclusion

Assessing your competitors can help you to determine what prices you should be charging for your subscription business. However, despite what some business leaders believe, lower prices are not always the best price point. Instead you should look at how your competitors are performing, what their branding is and how their supply network affects their costs and then compare these to your business to help you determine your price point.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.

3 Common Startup SaaS Pricing Mistakes

Image courtesy of cuteimage at FreeDigitalPhotos.net

Image courtesy of cuteimage at FreeDigitalPhotos.net

When you create a pricing strategy for your SaaS start-up you need to ensure it attracts customers and allows you to make a profit. Many businesses however make mistakes when they create their pricing strategy.

The wrong pricing strategy doesn’t just affect how much profit you make per customer; it can also affect your conversion rate and how your potential customers view your brand. In this article we will look at the most common brand pricing mistakes that SaaS start-ups make and how you can avoid them to ensure your brand is performing better than its competition.

1. Pricing Your Products Too Low

There is a misconception that the lowest price will always be best and most desirable for customers. Many customers view extremely low prices as indicating there maybe something wrong with the product or the customer service. Alternatively, they may question the legitimacy of the business. Either of these can significantly lower your conversion rate.

Another problem is that having prices too low can be dangerous for your business operations. Only the very best businesses can hope to sustainably charge significantly low prices for a prolonged period of time. These companies often have large amounts of stored capital to support their operations and a strong public image to entice customers to their brand.

Therefore, don’t consider copying some of the major discount brands like Costco and Walmart but instead price at a level that is acceptable for your business. Consider the acquisition cost, the cost to deliver the service and a reasonable profit margin.

You could also look at your competitors and see what they are offering and for what price. You might even find that if you can prove your small business’ authority, you could charge the same amount or more and still attract a significant proportion of the target market.

2. Too Many Pricing Plans

There is often the temptation by new businesses to offer a pick and mix or a large variety of pricing plans to entice customers. This seldom works. Customers like to have options, but too many can confuse them. A confused customer will leave your website and it is unlikely you will see them again.

Instead create a pricing structure that has between 2 and 4 options. Each pricing plan should have slightly more than the previous plan. This gives your visitors an easier choice and clear definitions of what each price grants them access to.

If you have several products available you could consider more pricing plans, but it would be best to separate them so they are on different pages and there are clear boundaries on what each product is.

3. Not Using the Right Pricing Point

One of the biggest mistakes that new businesses make is not using pricing theory. This states that if your product’s price ends with a 9 it will achieve better sales than those that end with another number, even if the price ending with 9 is more expensive.

The only time when this is not the case is when you are comparing an original price ending in 9 with a sale price that shows the original price. This is true even when the sale price is higher than that of the price ending with 9.

Conclusion

Selling online involves providing the right price that can convince your customers to purchase one of your products. When starting your SaaS business, you need to ensure that you are not making some of the most fundamental pricing mistakes that will turn your customers away or limit your profits. By studying the above common mistakes and implementing the advice you could create a successful pricing strategy that will perform well for your business.

Do you need recurring billing and subscription management software? Contact one of our experts at info@fusebill.com, call or check out the Fusebill free trial.