Category Archives: Subscription Billing

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.

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.

How To Sell The Convenience Of Auto-Renewal

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

When you have a subscription business you need a method to collect the membership fees from your community. You could attempt to do this by sending out a manual invoice at the start of every billing period. This can be expensive and a waste of time that can be put to better use.

Instead, you could use an auto-renewal system to collect payments automatically from your customers. There are several benefits for your business when usin

g an auto-renewal payment scheme. For example:

  • It reduces the amount of administration you and your team have to do.
  • There is a higher retention of subscribers for your business.
  • You know exactly when payments are going to be made by your customers.
  • Reports can be auto-generated to inform you when payments have failed or been cancelled.

While these benefits are a good reason for your business to use an auto-renewal subscription model, your customers will need to be sold as to why they should auto-renew their subscriptions.

The Convenience For Your Customers

The major benefit for your customers is the convenience an auto-renewal subscription model offers. It takes time for your customers to receive, check and pay a manually issued invoice. Having the process automatically completed each period allows them not to be disrupted in their daily lives.

In addition, the process can have financial benefits. As you will not have to process the payments manually you might be able to offer a discount. Energy companies commonly sign up customers to an auto-renewal system by offering a small discount, often between 5 and 10%.

These benefits are especially good if your members are paying a standard flat fee for membership. It allows them to confidently know exactly when and how much the payment will be. This can support their financial planning and management.

Calming The Concerns

One of the major concerns customers may have is cancelling their subscription. It is likely that at some point some of your customer will want to leave the business. They may feel they have to go through significant processes to cancel their subscription including speaking to your customer service team or sending emails to your cancellation team. This may worry them.

In reality the process is much easier. A customer only needs to cancel the payment instructions which exist between them and you. This can be done through their online banking dashboard. This means the payments can be stopped immediately, instead of waiting for your administration team to process the cancellation.

At the same time your online system can be informed immediately and access restricted at the next ‘end of period’. Or if you send out physical products, your distribution team can be informed of the change and they can remove them from the mailing list.

Another benefit for the auto-renewal is your customers will never miss out on a product or period because they have forgotten to make the next payment. This can be particularly useful for physical products such as magazines.

Conclusion

Auto-renewal is one of the most popular methods for subscription businesses to sign up customers. While they have significant benefits for the business, customers are sometimes unaware of the advantages they can gain from signing up to an auto-renewal system. By selling the benefits such as never missing out, the ease of payment and cancellation should they want to leave your business you can increase the uptake of auto-renewals.

This allows you to save costs in manually sending and processing invoices. This can lead you to invest the funds elsewhere in the business or offer your customers a more competitive price.

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.

Key Subscription Business Metrics To Monitor Each Month

"Image courtesy of jscreationzs / FreeDigitalPhotos.net"

“Image courtesy of jscreationzs / FreeDigitalPhotos.net”

To run the most effective operations in your business you need ensure you are monitoring your business’ metrics very carefully. Metrics are the indicators which demonstrate not only if there is a problem within your business, but where it is and how you might be able to solve it.

Here are some of the key metrics, what they mean and how you can improve the results:

1. Net Subscriber Change

This is where you are comparing the number of subscribers from the beginning of the month to the end. This metric is displayed as a percentage and can be positive or negative. It is worked out by dividing the number of subscribers at the end of month by the number at the start of the month and multiplying by 100.

You’ll always want this figure to be positive. A negative figure will state that your subscriber numbers are shrinking. If your figure is negative you have to look at several aspects of your business. Firstly is your promise before the customer’s signup matching the service you are offering? Not matching your promise can result in customers leaving quickly.

2. Customer Lifetime Value

One of the most important aspects of having a subscription business is to ensure your customer’s lifetime value is high. This allows you to offset the costs to bring in the customers and supply them with your product over a longer period, increasing the profit you make per month. To calculate this metric you need to take the average amount earned from the customers who have left during the month.

A low value can be a sign of a number of different problems including poor customer service, a mismatch of promise and delivery and your customers’ poor valuation of your product. Therefore addressing these issues is an essential task.

3. Customer Acquisition Cost

The main issue with a subscription business is that one month’s subscription does not usual cover what it costs to gain new customers. Knowing how much it costs to acquire the customer and their lifetime value, can help you determine if you are running an effective business.

A high customer acquisition cost specifically refers to your marketing tactics. Therefore you need to consider whether you are utilising the best avenues for your market. PPC and display advertisements cost a significant amount. You may not need to remove them from your marketing mix, but you should adjust them so that your audience is more targeted or the copy is more persuasive.

You should also consider your checkout process ensuring there are as few barriers to buying as possible and your landing pages are optimised. Consider running split testing to test different landing page designs and how effective they are at securing new customers and leads.

As another option you could consider increasing your marketing on other avenues such as blogging and social media, both of which help increase your search engine page rank and are inexpensive. Search engines can contribute up to 70% of your web traffic.

Having a good marketing mix which encourages good page rank can lower your customer acquisition cost.

4. Customer Conversion Time

Not all customers convert instantly upon learning about your brand. Sometimes it takes time for them to do further research or to look around the market for other options. They may subscribe to your mailing list which further down the line will support their conversion. The length of your conversion time is indicates how persuasive your marketing content is.

A long time from the first interaction to converting into a customer means you need to look at your brands’ messaging. Are you being persuasive enough, are you selling features rather than the benefits? These can make a significant difference and lower the time it takes for your audience to covert, the acquisition cost and increase lifetime value.

Conclusion

Getting the most from your marketing is all about understanding the statistics of your business. The above four are highly important if you want to maximise your customer acquisitions and their value. From there you can make adjustments to create a successful, high earning 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.

5 Ways To Close New Customers Without Offering An Introductory Discount

"Image courtesy of iosphere / FreeDigitalPhotos.net"

“Image courtesy of iosphere / FreeDigitalPhotos.net”

Part of bringing on new customers is about closing the deals with them. There are many ways around this and often offering an introductory discount is the most popular. But this strategy often lowers profits and doesn’t guarantee long term clientele as once the discount has gone, so might the customer.

Therefore you have to think of other routes which you can take to ensure you are able to close the sale. Here are five high performing methods you could implement today.

1. The Balance Sheet Technique

Whether a business client or individual, a buying decision is an emotional decision based on a list of the pros and cons of the purchase. The balance sheet technique is about influencing the list by offering arguments on both sides.

A good sales person will always have pros which outnumber and outweigh the cons and it is always important to ensure you end the spiel on a positive. You should also ask your potential customer of their thoughts before you make the list. That way you can tailor your pros to combat their negatives.

2. Negative Assumptions

‘Negative assumptions’ is about having the potential client confirm their interest or intent to buy the product by giving a negative response to a question. Asking the client: “Is there anything which is stopping you from buying this product today?” or “Are there any concerns you have about the service?” are great examples of this approach.

This way you are making the customer reject their barriers to purchasing.

Though there is a problem that if they do come back with a negative reason you need to be prepared with a response.

3. Time Sensitive Issue

Nothing works better at closing a deal than giving the impression that what is on offer will only be available for a limited time. This works really well with products but can also be used with services. You can always tell potential customers you are only signing up a certain number of clients to your products, or that with demand as it is, prices may increase in the near future.

The fear of losing out because they have not completed the deal on time might backfire should your reasons for the limited time never occur. For example, if you say prices may increase and they never do, consumers may feel cheated and leave your service.

4. Provide Life Changing Advice

If you want to go for the long term consider signing up your potential customers for your emailing list. Then send them articles and useful tips which can help solve their problems. This is the best method to establish your business as an authority in the industry. The more knowledgeable and the more influence you have in their lives the higher the chance your audience is going to come and buy from you.

This is a rather long route approach and it could cost you in the short term. But email marketing is the third best sales performer after organic and direct searches.

5. The Workflow Option

If you have a potential customer who has a c

ertain deadline but they are not favourable to the deal you can use a workflow system to close the deal. This is when you get them to confirm the date at which they would like the work to be completed and then demonstrate how your product / service can help them achieve this.

You need to make clear that your timeframe only works because you have started the process at that moment (also using the time sensitive approach) and you should ask what will happen if they don’t meet those deadlines.

Closing a sale needn’t mean that you are offering lower cost prices. There are many options for closing a sale, many of which will not cost you anything. But whatever the outcome you must always consider the impression you leave on the customer. After all they might not buy today, but they could do in the future.

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.