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.

Should You Increase The Price For Existing Customers?

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

At some point, your subscription business is likely to have to increase prices. Whether you apply these higher prices to your existing customers, in addition to new customers, can be a difficult decision for you and your management team. Some businesses (like Amazon Prime) do change the subscription charges for their existing customers. Others, do not unless the customer is coming up to a renewable period.

Whether you increase the charges for your current subscribers is a decision that is very specific to your business. There are several different factors that can impact your decision, here are three of them:

1. Why Are You Increasing The Price?

The first consideration should always be to identify why you are increasing your subscription prices. If it is because you are finding demand extremely high and you would like to increase your revenue, then there is no necessary reason why you need to increase prices for your existing customers. That isn’t to say that you shouldn’t – just you should have another rationale.

On the other hand, if you are increasing prices because the costs to deliver your service have risen, you might need to. You first need to look at your profit margin on providing your service. In your cost analysis, include the customer acquisition cost as well as the expense to maintain and deliver your service.

If the profit margin is too small you’ll need to increase your subscription prices.

2. Have You Added New Features / Changed Package Deals

Sometimes you have to increase prices because you have made changes to your packages. If you’ve added new features to existing packages, and you’ll be offering those same features to your existing customers, you should increase the price for your current customers. Otherwise new customers might be upset that your current customers are getting the same deal for less money.

Therefore, you need to consider either raising the price or keeping them the same for new and old customers the same.

If you’ve changed the package deals so that they are completely new, rather than attached a new feature to current packages, then you have a different scenario. You could keep your current subscribers on their old pricing plans while moving new customers to the new pricing plan. Then as renewals come up or customers want to upgrade / downgrade their plans, you can move them onto the new pricing structure.

3. How Will Your Customers React

Another consideration is whether your customers will abandon your product if you raise the price. This might be the case if you have done several price increases in recent months or you have made promises not to increase the price.

However, there is limited evidence to suggest that rising prices will force long term customers to find alternatives. In fact, many long term customers often retain their membership because they know the benefits and value of the service you provide.

You should also be careful as to whether new customers will be annoyed that old customers are getting the same deal but with lower prices. If they found out, perhaps because they were referred by a friend, they might abandon their subscription.

Conclusion

When you need to increase the price of your subscription service you need to think very carefully as to whether you need to raise the charge for your current customers. There are some factors to consider such as why are you increasing the price, what is your profit margin and how will they react. The answer to these questions will tell you if increasing the price is right 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.

How To Create A Website Pricing Graphic

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Creating the perfect website pricing graphic is a way for your website to achieve a better rate of conversions. A good pricing table is perfect for businesses offering subscription services as it allows potential customers to easily compare the packages you offer.

However, creating a pricing table is not easy. There are several design elements to consider so you effectively communicate information about your packages. So what are those design elements you need?

Limit The Information

You might assume that the more information you place within your table the more impressive and convincing it would be for potential customers. However, the more information within the pricing table, the larger the amounts the prospect needs to read and process.

If your customers can’t scan the information easily, they aren’t going to be able to compare subscription options. Also, too much information means that visitors are less likely to remember which plan the features represent.

To avoid this use simple 3-5 word sentences in each row or a tick system.

Demonstrate Differences

When a customer is viewing your different subscription options, they are looking for what sets each plan apart. Therefore, communicate how each plan is different to the others. If there are similar elements to your various pricing points, include those at the bottom of the pricing table while leaving distinctly different elements towards the top.

Ensure Your Pricing Stands Out

Potential customers want to see the price of your products when they visit your services page. Many businesses leave out the price when designing their pricing tables. To make your price stand out better you need to choose a different font and perhaps use a different colour. Orange works well as a way to attract the attention of the visitor.

You should place the price at the top of the table so the customer knows what it is prior to reading the product descriptions. If you have a long list of elements to your products, you can always include the price at the bottom of the table again, as a way to remind the customer.

Limit Visual Aids And Colour

Many designers think using a variety of colours on their pricing table will attract visitors. Often this is wrong because too much colour is used and in the wrong places. This can confuse customers and lower the conversion rate of the pricing table.

The most common mistake is placing red crosses and green ticks upon the page. Although this design makes the product elements stick out, they also make the pricing table too crowded and distract from the main message.

Use Illustrations To Demonstrate Differences

Some of the best pricing tables have images to demonstrate the differences between plans. For instance, different size boxes to represent the various levels of service offered.

One of the things to be careful of with this is to make the illustrations too complicated. Keep them clean, simple and easy.

Consistent Design

Your entire website should have a consistent overall design. The same should apply for your pricing tables.

Highlighting

You want to highlight your best plan for your customers. The highlighted plan could be in a different colour, bolded or ‘pop out’ when the cursor hovers over the plan. The plan you want to highlight could simply be the one that the visitors’ cursor hovers over or a particular plan that you feel is the best because it is more popular or offers the highest savings.

The one thing to avoid is highlighting the most expensive or cheapest plan. This can seem biased to your visitors and lower the conversion rate.

Conclusion

Using the above best practices, you should be able to create an excellent pricing table that can communicate the differences for your products and be easy to understand for your visitors. Then, with this implemented so it matches the basic design of your website you can start to see an increase in your visitor conversions.

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 Often Should You Update Your Subscription Pricing?

Image courtesy of jscreationzs at FreeDigitalPhotos.net

Image courtesy of jscreationzs at FreeDigitalPhotos.net

There are often times that you will need to update your subscription service prices. The reason for these adjustments might include changes in costs or attempting to reduce / increase demand for your services.

Most clients expect prices to increase over the longer term. This is often due to costs such as new government legislation which has forced you to implement new controls. These costs should be passed on to your customers.

However, there are times when fees can decrease. For example, you might introduce a new sales process or technology within your company that significantly reduces your customer acquisition cost.

In either of the above cases, the costs would change significantly and quickly. It would be fairly easy to know that these are good times to update your pricing strategy. Changing the prices at these times though might make new customers unhappy, especially if they have missed a saving. You might also have unhappy existing customers, who would need to be told carefully about any price change.

Slow Changes In Cost

In most cases, prices changes happen very slowly. You might struggle to know when to update your subscription prices in this case.

There are also logistical problems with changing your prices. The first problem is failing to change your fees quickly enough. Waiting too long can significantly impact your profits.

Likewise, when changing your fees, you might have significant marketing materials advertising old prices. These would need to be changed; which will be expensive.

So how often should you change the prices for your subscription business?

Weekly

This is an extreme frequency to change prices. However, this would allow your business to maintain a good profit margin and suffer limited losses.

If you were to implement a weekly change in the prices, then you would have expensive weekly changes to your physical marketing materials and likely other processes in order to implement the changes.

There could also be issues with your subscription management and customer services. Unless you change all existing customer’s fees at the same time, numerous clients on different payment plans will make it harder for your customer service team. If you did change everyone’s fees, you could anger clients very quickly and lower your retention rate.

Monthly

Monthly might be an option if your suppliers have regular fluctuations in their prices.

Changes at this level are easier to manage but customers may feel unhappy if they cannot rely on a regular monthly price for your services.

Quarterly

Many big brands do reviews based on their previous quarterly results. Changes every three months are easy to implement and limit profit loss.

However, quarterly changes might again prove to be too much for your customers who might complain about your frequent changes. If you wanted to implement quarterly changes, it might be best to consider how you are going to communicate the changes with your clients before you commit to this frequency.

Annual

Annual is often used by small to medium businesses that have a limited new customer generation and rely on the long retention of current clients. Annual is a good way to manage your price strategy and if you inform customers in advance of when you do price reviews, they will be ready for any changes.

Annual changes also allow you to better prepare your customer service team, marketing materials and other requirements needed to implement the changes.

Conclusion

Changing the price for your subscription service is not a decision to be taken lightly. How often you make those changes can have a significant impact on your business and its clients. Ensure you are doing it right by considering the costs of changing your subscription fees.

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.

5 Ways To Encourage Clients To Use Auto-Billing

Image courtesy of Boians Cho Joo Young at FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young at FreeDigitalPhotos.net

Auto-billing is one of the best ways to ensure you are continuously receiving subscription fees from your clients. It allows you to cut costs on your billing system which can be funnelled into other areas of the business to improve products and services.

There is evidence to suggest that a good auto-billing process will increase the trust between you and your clients in the long term. As the trust grows, your client may buy additional products or services from your business or become a powerful marketing tool to sign up their friends and family.

For the client, there are also significant benefits. Firstly they will know exactly when their payments are due and how much their invoice will be. Secondly, it saves time for them to be able to trust their credit card company or bank and your business to automatically process the payment. Thirdly, auto-billed clients can receive better customer service as these clients are classed as high priority by many businesses and are therefore are given preferential treatment.

Despite these advantages, there is sometimes resistance by clients to being placed on an auto-billing system. Some don’t initially trust companies, believing that once they are on an auto-billing contract the prices will increase without warning.

So how do you confront this resistance and encourage your clients to use your auto-billing system? Here are five ways:

Offer A Discount

Many energy companies use this as a way to encourage their clients to pay for fuel consumption on a monthly auto-bill process. Normally, the average savings clients make for signing up to the auto-billing system is about 5%. Savings are a particularly powerful tool for clients who are always looking to cut down on expenses and this way is great if you have a system that has a regular cost.

Offer A Fixed Term – Fixed Cost Deal

One of the major concerns for clients is a change in price just after they have signed on to an auto-billing system. You can alleviate these worries by offering a contract that states you will not raise the price of your services for 6 or 12 months. This is very good if you offer a service like telecommunications, software, etc.

During this term you are building trust because you are keeping to the contract. This will increase the chances you will retain that client for the long term.

Offer A Free Gift

Everyone loves receiving a free gift. If you offer them a token gift when clients sign up for auto-billing, they will become more interested in the option. The token gift doesn’t have to be expensive but it does have to be something highly useful and unique to gain any interest from the client.

Classic examples of gifts can be mugs, t-shirts and vouchers. Some of these can be branded so there is a constant reminder of who provided them with the service and can also act as subtle marketing messages to their peers.

Offer An Unique Feature

Sometimes it is good to entice your clients to the auto-billing system to offer them something that those on a pay-per-use system will not get. This makes them think they are getting a better deal for the same price – increasing the likelihood they will sign-up for your services.

Only Offer Auto-Billing

For some businesses, it is preferential to only offer their clients auto-billing as a method to make payments. In this case your clients have no choice and although it can sometimes have a negative impact at the beginning of the relationship, with good customer service you can turn create a positive relationship by the end of the first contract term.

Conclusion

There is sometimes resistance from your clients to sign up to an auto-billing system. However, there are significant benefits for both your business and customers in using an auto-billing system. You can encourage sign-up using one of the five tactics from the list above.

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.