Tag Archives: pricing plans

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.

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 Tell Your Customers That You’re Increasing Subscriber Fees

"Image courtesy of zirconicusso / FreeDigitalPhotos.net".

“Image courtesy of zirconicusso / FreeDigitalPhotos.net”.

Customers like signing up with subscription based businesses because they enjoy the consistent price. However, chances are at some point you will need to increase the price. The reasons for a price increase might include:

  • You want to earn more revenue.
  • Your costs have increased.
  • You want to reposition yourself and appeal to a different target audience.
  • Demand for your service is too high and you want to encourage fewer subscriptions.
  • You have increased your expertness or have a higher brand value.
  • You offer more services or products and wish to incorporate their costs into your pricing.

Whatever the reason, you have to inform your subscribers the reason why prices are increasing. Without the right strategy to inform your customers you could lose a significant percentage of your customers. Here are some tips to maximise your customer retention during a price increase.

Tip One: Terms And Conditions

Include in your terms and conditions a clause clearly stating you hold the right to increase the price. This way your clients cannot claim a price increase doesn’t apply to them.

It also allows you not to state a clear reason why you are increasing prices. However, not stating the reason is likely to cause several customers to leave.

Tip Two: Give Plenty Of Notice

Always give your customers plenty of notice of a price increase. This notice should be at least 2 months. This gives plenty of time for your clients to find the funds necessary for the price increase. It also supports the trust between you and your customer.

During this notice inform you customers exactly when the price will increase and how the increase will be collected.

One subscription based business which rarely gives notice of price increases are energy firms. Though they tend to announce some changes in the news, they rarely write to customers informing them of when the price increase will come into effect.

Tip Three: Don’t Give Too Much Notice

A big mistake on the other hand is to give too much notice. Some companies can give up to six months notice of a price increase. This is too much time and it is likely your customers would have forgotten about the increase by the time it comes in effect.

Tip Four: Give A Reason Why You Are Increasing The Price

Customers like to know exactly why you are increasing the price and how it will benefit them. This will increase the acceptance of your price increase amongst your customers. Ensure that this reason is passed onto your customer service team so customers can be told the same thing when they call to discuss the change.

Tip Five: Present The Price Increase Right

Present the price increase as a percentage. This has less impact in the minds of the customer, especially if the percentage is less than 5% or the price increase has a significant monetary value.

Tip Six: Repackage Product Bundles

If your service includes groups of products or services, re-organise them. Each new package should offer slightly more than it did before but be priced higher than its predecessor. This way you can increase the price while providing a better service to your customers. Something they will appreciate.

To support this, if you are offering a physical product and you have old stock left over, offer this at a discounted price until the stock has run out.

Conclusion

There are always going to be times when you need to increase the price of your subscription. By ensuring you have the right method to announce your price increase you can minimise the loss of customers and maintain strong customer relations.

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.