Author Archives: fusebill

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.

Traditional Businesses That Can Move To A Subscription Model

Image courtesy of patpitchaya at FreeDigitalPhotos.net

Image courtesy of patpitchaya at FreeDigitalPhotos.net

Businesses across numerous industries are starting to realise the benefits of a subscription model and are making the switch. A recent example of this would be Adobe who recently changed their products from a ‘pay once – use forever’ model to a subscription based service. This transition has allowed numerous customers to use the product who before couldn’t afford the initial outlay of the software.

Another industry moving from a pay-per-use to subscription model is the UK grocery delivery sector. Some of their big name brands like Asda, Tesco, etc have moved to allow customers to book in their favourite spot during the week for a set monthly fee.

These industries aren’t the only ones who can switch their pricing models to gain the benefits of the subscription model. Here are some traditional businesses that can make such a move.

Food Service

It isn’t just the deliveries which can be paid for on a subscription basis. There are numerous businesses which provide boxes of food on a subscription model. This can include raw ingredients for cooking pre-planned meals or just items for the customer to create their own meal plans.

There are some good benefits to this model; for instance, you only need to acquire enough of your products to meet the demand of your subscribers. Therefore you are limiting product waste which can be very costly to your business.

Photo Printing

Photo printing is often done on a pay-per-order basis. However, with the rise of digital photos, online ordering and other technologies, this is one industry which could make the switch.

A service could be established where customers pay a monthly fee to upload photos for printing and delivering. The number of photos offered to the customer could be different depending on the price of the package.

Bank Services

There has already been a move by some financial institutions to move their account holding services from free to a pay monthly scheme. In some cases, the subscription fee can be reclaimed when a minimum amount is deposited.

Financial services are perfect for the subscription model. For one, businesses cannot tell how often a customer will need to use the bank’s services and it is likely any use of the bank’s time will be concentrated in a few interactions across the year rather than evenly spread out. It is even possible some consumers will not need the majority of services for years then use them heavily in a short period of time.

Leisure Services

There are a number of leisure services which already offer their customers the opportunity to use their facilities for a regular fixed sum. Some of the traditional models include gyms and health clubs. However, other leisure services could provide their entertainment on a subscription basis.

For example cinema, swimming pools and local attractions could offer customers a subscription to gain access to their services. This is particular good for those attractions that have fixed costs and need to know how much their monthly income is going to be.

Copywriting

Copywriting is not a business many would think could use the subscription model. Yet a subscription model could work very well in this industry. For example, a copywriting professional could offer clients a set number of articles or words per month for a set fee. This could help stabilise the income of the copywriter and offer the client a chance to become one of the higher value customers.

Conclusion

There are a number of businesses who are capable of changing their traditional pricing structures to become subscription based. All it requires is the right pricing points and the tools to implement the changes.

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 Surprising Industries That Use Subscription Business Models

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

There are a number of industries, like software and publishing, where a subscription business can be expected. These industries suit the model well as there is a definite demand for their products on a regular and consistent basis.

Yet a subscription model is not just limited to these industries and innovative business leaders across the world have found ways to provide their products on a subscription model.

Examining these industries can be a great inspiration for your own business ventures. Look at these five surprising industries that use a subscription business model and see what ideas you can think of.

Shaving Products

Shaving products are one of the classic examples of how a traditionally over the counter product can be turned into a successful online subscription business. One of the best known subscription shaving businesses is the Dollar Shave Club. They launched their business with the premise of giving customers new blades every month for just one dollar; the handle for the blades is sent when the customer begins their subscription. Since they started they have added on two more levels of subscription for different models.

Dollar Shave Club isn’t the only subscription shaving business; there is also King of Shaves (UK) and Razwar (Europe).

Kids Entertainment

Normally kids’ entertainment on a subscription is thought of as being magazines or television subscriptions. However, across the world there are several businesses that provide entertainment boxes, toys, arts and crafts and other products on subscription.

Box of Awesome in the UK is one such example. They send out boxes to their subscribers containing books, sweets and toys. Many of the products are yet to be released in the stores. The interesting aspect of this business is that they have a free subscription service where those signed up on this plan are placed in a lottery to receive a box. Alternatively, buyers can pay £4.99 ($7.50) for each box.

Little Pnuts in the US is another example. This company sends out non-battery toys for young children. The deliveries of toys are made every three months and customers are charged either on an annual or monthly basis.

Food

There is a huge variety of food subscription services. They can be as small as chocolate being delivered once a month to daily snack boxes delivered to a customer’s door or office. Some services even deliver the ingredients for a week’s worth of meals.

Food can be a very expensive but but there are a lot of options to differentiate your business from your competitors. For instance, you could provide local organic food or food from across the globe at an affordable price.

Household products

For those who like to have the hassle of purchasing household products taken away, there are many options. Amazon is one of the biggest suppliers in this market with everything from toilet paper to washing liquid available on subscription. Amazon makes it easy to set up shipments with users selecting the product and the frequency of deliveries. They even offer a 15% discount, the option to skip some deliveries and cancellation at any time.

Men’s Clothes

Men are notorious for being bad at shopping for clothes. That is why there are several businesses established to make the process easier for them. One of the most well known is TrunkShop. This is not just clothes sent to the customer; it includes a personal stylist who will interview customers, look through their Facebook photos and then select clothes likely to suit their style and look.

Customers will receive a trunk of options and only pay for what they like, sending the rest back. There is no charge on shipping either for this service.

Conclusion

When it comes to creating a subscription business there are few industries that can’t convert with imagination and careful planning.

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.

What Frequency Works Best For Subscription Business Billing?

Image courtesy of digitalart at FreeDigitalPhotos.net

Image courtesy of digitalart at FreeDigitalPhotos.net

When you are building your subscription business or looking to see if your model is as effective as it could be; you need to check your billing frequency is optimal. There are many different considerations to make when you are looking at the frequency. Here are some of your options with the advantages and disadvantages.

Daily

This is probably one of the extreme options you have for frequency billing. However, it can also be one of the best if you are in a market with a short customer lifespan.

The advantages of this frequency is you have a regular daily income that you can clearly manage and you can see on a day to day basis the net effect of your marketing efforts based just on the income.

The disadvantages of this model could be very serious. For instance, daily invoicing requires significant management of the subscriptions and most auto-billing platforms charge per transaction and sometimes a percentage of the transactions (N.B. Fusebill charges on subscriber per month basis). If you don’t have a significantly high subscription charge, you could find that profit margins are too low for this to be financially feasible.

Weekly

This model is probably still for those who have a short customer lifespan or have regular deliveries of their product (i.e. food, magazines / newspapers). This is more feasible than daily payments but the cost of managing the subscriptions can still be expensive. Also, the regularity of these payments can make the payments seem high to the customer, even if the same rate could be offered on a monthly or yearly basis (i.e $1 a week would be $52 per year). Therefore weekly payments have a higher chance of being cancelled.

On a positive note, customers can often manage weekly payments very effectively so you are likely to have few subscribers default on their payments. Although, the end of the month can be a tricky financial time and this would be when you are likely to have higher defaults.

Fortnightly

Having your billing set so your payments go out every two weeks is an unusual method to set your billing schedule to. One of the biggest problems with this is that not every month would have the same number of payment dates. This can make planning difficult for customers who manage their finances monthly. It can also be hard for you to justify the billing schedule if you have an evenly distributed product (i.e. software) as payments on a month to month basis would be uneven.

A big advantage of this however is that you can distribute your bill processing across a wider range of dates making billing management easier.

Monthly

Probably one of the most commonly used frequencies. Monthly billing is very easy to manage both from your business’ point of view and your subscribers’. There is also the added bonus that you could separate your billing dates into different groups to spread out your workload. For instance you could split your subscribers into four groups; each pay on a different date i.e. 1st of the month, the 10th of the month, the 15th of the month and the last day of the month.

This is a great model for those who are providing a consistent service over the longer periods, like software, publications and membership sites. However, if the size of the payments per month is too high, some customers may be dissuaded from buying your product whereas a weekly schedule would have suited them much better.

Annually

Once a year payments are an extreme case and are often used by businesses that are confident their customer lifespan is significantly long. There are some advantages such as less management is necessary for the payments. This means businesses can offer discounts to tempt new customers into signing up for annual plans.

The problem with this model is your subscribers may forget about renewal and therefore not have the funds available when the time comes. This can lead to you having poor retention. To combat this, ensure you are informing your customer in advance of when their renewal is due.

Conclusion

Having the balance between your customers needs and desires and your own is important when it comes to deciding what frequency your business needs to bill your clients. You also need to consider your product and how often it is delivered when coming up with the billing model. With these thoughts in mind you should come to a conclusion of which billing frequency is best 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.