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?
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 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.
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 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.
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.