Customers aren’t always concerned with the price of a service when making a purchasing decision for brands they know well. Startups don’t have this luxury and have to attract customers with a pricing scheme that is highly competitive and designed to attract the ideal customer. Then, once the brand has established itself and has a stable brand valuation within the market, it can start to offer the same product at a more profitable rate.
The churn rate is one of the most important metrics for a subscription business to measure. It allows you to determine if there is a problem with your business’ processes, pushing customers away from your business. It also affects the other three primary metrics your SaaS business should be monitoring:
When it comes to growing your business, one of the best ways to do so is to sell to your existing customers. You have already built up a strong trust between you and them to a point that they trust your judgement and know you will provide good service. With this benefit comes reduced marketing and sales costs, which lead to greater profits per unit.
Word of mouth marketing is very powerful. Friends and colleagues of your customers will trust their peers more than they are likely to trust you. Customers are also cost effective in developing new leads and business. The only problem you have is to work out how you can encourage your current clients to refer new business to you.
The lifetime value of your business is an important, if not the most critical metric, that your subscription based SaaS business should be monitoring. While the monthly income of your business is vital, the subscription model makes it hard to determine whether the acquisition of customers is cost effective.
When it comes to subscription based business models, many question whether or not discounts should be offered to those committing to long term agreements. For some, it makes sense to offer a reward for those willing to agree to a long term contract. Others believe that these offers shouldn’t be available.
If you want your online business to be a success, whether or not you are using the subscription model, your website must be good. There are several aspects of businesses websites which have a negative impact on their results; here is our run down of them and what to implement instead.
When it comes to attracting subscribers to your Monthly Recurring Revenue (MRR) SaaS business, pricing is an important consideration. There are probably numerous other organisations that are out there offering similar or substitute products to your own. While price isn’t always a factor in the purchasing decision of recurring customers, for new customers it can be high on their priority list.
The auto-renew billing model is a time saver when it comes to generating revenue from your subscription business. However, when it comes to increasing the price of your subscription service, there are several issues that can arise.