Tag Archives: pricing plans

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.

How To Use Comparative Selling To Sell Your Subscription Software

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Before making a purchase, many decision makers like to have a firm grasp of what they are buying. Normally this can involve some kind of interaction with the product. With subscription software this can be difficult. A free trial may be a good way to attract customers, but it might not be the best way to convert those who take up your offer.

Therefore, other methods have to be utilised to encourage your target market to purchase a subscription. Another method is to compare your software. Comparative selling can happen on a subconscious and conscious level for the customer and there are several methods to exploit this effective selling tool.

1. Comparing Price To Everyday Purchases

Your pricing may be very reasonable, but without a tangible product for the customer to see, they may find it hard to value the offer. Comparing the product’s price to common purchases creates an impression of product value in the mind of the customer. A common comparison for a subscription is coffee.

Be careful in your choice and the frequency. Four cups of coffee a month is ideal because many people consume more than that.

2. Original Price Compared To Sale Price

To achieve great sales, stating an original price for a product and then offering a reduced price will entice visitors to convert. Often these new customers are ‘bargain hunters’ who want to find a good deal online. This works so effectively it even outperforms the rule of 9 – that is any price which ends with 9 has a higher conversion rate than that of a price point which is rounded up or down.

Therefore it is important to consider demonstrating a higher starting price and then showing a discounted price, preferably ending with a 9 for double effect.

3. Comparing To Useless Price Point

How you price different subscription plans will greatly affect your customer’s perceived value of your product. This in turn will change how they convince themselves of which plan to purchase. Research by Dan Ariely on the pricing strategy of The Economist shows this to great effect.

In the Economist’s subscription options they had three price points.

Subscription Offer One: A web only subscription at $59

Subscription Offer Two: A print only subscription at $125

Subscription Offer Three: A web and print subscription at $125.

Subscription offers two and three don’t make sense being the same but option three offers more. In the consumer’s mind, the second option becomes a ‘useless’ price point and they would be better off selecting offer three. In the study, option three had a high uptake even though there was a cheaper option available. This is because when faced with this type of scenario, consumers become value seekers rather than bargain hunters and will always seek the most value for their money.

This was further demonstrated in further research. The Economist tested what would happen if they took away option two. In this scenario consumers were more likely to purchase option one as they convinced themselves they didn’t need the upgrade.

Therefore having three options with the second option at the same price point as the most expensive option may increase your revenue.

4. Comparing Compared To Competitors

If you are in a highly competitive market you may be tempted to highlight your services or prices against that of your major rivals. This could work in theory, yet research has shown that at times, lower cost products do not always perform well against higher priced branded products.

This is because there is a consumer perception of value on the branded product. Instead you should concentrate on comparing your product’s features and benefits to that of your competitors. Consumers are more likely to buy a product which has favourable benefits rather than a favourable price.

Conclusion

There are several options when you want to use comparative marketing to convert your customers. The above four options are used regularly by many organisations to sell products and subscriptions. Consider what methods you can exploit in your sales process to increase conversions, income and profits of your subscription based 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 Increase Your Prices Without Upsetting Customers

Image courtesy of Kittisak / FreeDigitalPhotos.net

Image courtesy of Kittisak / FreeDigitalPhotos.net

It is a simple fact of business life that as you continue to grow and expand – costs rise. This is a natural process that can occur from increases in numbers of employees, increases in wages and suppliers raising their prices to name a few reasons.

At some point you will have to consider whether or not to raise your own prices, yet this can be met with some resistance by your customers.

Some previously loyal customers may leave your business in order to find other service providers. Others could be speaking more to your customer services, taking up valuable employee time. This is probably why many businesses decide to absorb rising costs themselves rather than face the wrath of their customers.

Increasing your prices without upsetting all your customers is possible. However, it requires a significant amount of planning and skill to achieve. Here are some of the methods you can use in order to raise prices and still maintain the majority of your customer base.

1. Surprise And Delight Your Customers

The first trick starts long before you need to increase your prices. If you are able to satisfy the needs of your customers and excel their expectations they are likely to tolerate the odd price rise. On the other hand, should you only just be managing to support them and they are often finding mistakes or problems with your service, they are not going to want to pay more.

This doesn’t mean the odd mistake should prevent you from increasing your prices as long as you are quick at dealing with any problems to the customer’s satisfaction.

2. Communication

You need to ensure you are explaining when and why you are going to raise the price of your services. Customers like to know in advance for their own financial planning and providing a solid reason for the price increase can help them be more understanding.

Giving at least two months warning is probably the best time frame, enough time to plan for the increase yet close enough that it is not forgotten when the new price on the invoice comes in.
Avoid using the excuse of rising costs. This may be a primary reason, yet some businesses using this model come under heavy scrutiny. Some organisations have increased their prices, blamed on higher costs of resources, only weeks before they announce an even larger increase in profits.

As a business you have to make money but customers will not be kind if they see your wealth increase when you’ve told them you’re facing increased pricing.

Instead time your price increases to coincide with other positive changes to the company, perhaps new infrastructure, i.e. new technology being implemented or something else which will benefit your clients. If they see they will gain from the price increase then it will be received more favourably.

3. Add Extra Benefits

Follow the example of Amazon Prime or magazine subscriptions. When they increase the prices they offer customers more features. In Amazon’s case they add more content to their service, giving customers more choice. Magazines will often become larger or decrease the number of advertisements in their publication.

If you can find a way to add features to your service during your price increase you can be sure customers will not mind so much.

4. Do Smaller Amounts More Frequently

Probably one of the biggest mistakes is that companies do not raise their prices soon enough or do it in too big a jump. Customers are going to be more resistant should you increase your price by $5 every two or three years than if you do it $0.50-$0.75 every year.

Many companies do this because they are fearful of losing customers with a price increase. Yet with good communication and an excellent service, a smaller amount is more likely to be overlooked by customers.

5. Restructure / Redesign Your Products

One way of increasing prices is to restructure your products and hide the increase amongst the bigger changes. Sky TV and other satellite TV providers do this frequently by rebranding and renaming their channel bundles.

In these circumstances it can be tough for your clients to see the price increase. Instead they are likely to be studying the new features and structure and comparing it to the old. This may cause some customer service problems, but your agents could be trained to deflect concerns with explaining how the new structure improves the service.

Increasing your prices is a natural part of being in business. Ensure you inform your customers with a good reason and in a timely manner. Also remind them of the benefits of your service at this time and often the majority of your customers will stay with 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.

 

Swimming in SKUs? Keep Agile with Subscription Pricing

Swimming in SKUsDealing with changes in pricing is a significant challenge in any business. The rise of subscription based retailing magnifies the complexity – pricing plans and paradigms proliferate, while individual customers require specific charges and adjustments to their accounts. The result? Vast lists of SKUs, ordering complexity, and confusion.

To understand the value of agility in a subscription billing environment, let’s examine a billing lifecycle from two perspectives. First, we’ll look at the lifecycle of a pricing plan – initiated by a marketing program, introduced for sale, and eventually retired. Then we’ll look at the typical customer lifecycle events that create their own pricing challenges.

As a specific example that is easy to relate to, we’ll use a fictional men’s hygiene subscription box with some a la carte options:

  • Razor Blade service $10/month
  • Shaving Cream service $10 / month
  • Premium Skin Creams $20/month
  • Razor handle: $20 one time
  • Premium Razor Set: $50 one time

Now, the marketing team goes to work:

  • Let’s bundle Blades and Shaving Cream together and give a discount to $15
  • Can we sell Skin Creams at a lower price to encourage people to try? Just for those with the bundles?
  • There should be more incentive to sign up for an annual contract. Let’s make Razor 1 free with an annual subscription.
  • What about the Premium Razor – ok, it should be $30 for an annual plan.
  • We should test the bundle at $18 as well.

There are now 96 separate variations of what is, all-in-all, a reasonably simple packaging idea. A customer can order the blade service, or not; the shaving cream service, or not; the extra premium creams, or not; choose one, both or neither razor; commit to an annual plan. Some customers will see one price test, some will be at a higher price point. Over time, more variations are created for further promotions; some are retired; some are grandfathered.

A traditional approach is to translate each one of these variations into a separately identifiable ‘part number’ or SKU. This makes it: difficult to order, track results, and analyze what is working. While it’s easy to tell which individual variant is performing well, even simple questions like “how many customers chose Razor 2” requires aggregating data from multiple SKUs.

Now consider a typical customer experience as seen through the eyes of a CSR (Customer Service Rep)

Typical Customer/CSR experience

In coming weeks, a typical customer might upgrade their package; change razors; upgrade to an annual plan, and receive a free month of service to compensate for a service problem. Each transaction involves removing and replacing SKUs, generating a string of confusing entries on the bill that may generate more questions. Manual attempts to pro rate charges to align with the billing cycle are error prone.

This simple example illustrates how complex it can be to implement even straightforward bundles of products and service. This complexity complicates ordering, customer service and reporting. Further on, accounting groups must also decipher events to apply appropriate revenue recognition policies.

A subscription billing system provides agility by structuring pricing catalogs to minimize the proliferation of products, plans and variations, and automated tools for dealing with common customer service issues.

This article is a taste of what Fusebill CEO Steve Adams will be covering in a new, live webcast on March 20th. If you’d like to know more about this topic, register today:

usebill Webinar RegistrationSwimming in SKUs? Keeping Agile with Subscription Pricing
When: 2:00 PM, March 20th, 2014
Cost: Free
Presenter: Steve Adams, CEO Fusebill

Please Note: This webcast is being presented in partnership with CPA academy and is worth 1.0 CPA credits.
Bonus: As a thanks for attending you’ll get a copy of our popular whitepaper The Impact of Billing on a Subscription World absolutely free!
REGISTER NOW!