Offering subscription services can potentially be a very lucrative business model. If you can get enough people to sign up for them, then you can rake in profit. That is assuming, of course, that the money you’re bringing in amounts to more than your overall operating costs.
If you decide to get into a business venture like we’re describing, then you’ll need to focus on several areas. For instance, you might have to look into various online subscription payment processing options. You will need to think about how to keep someone as a customer once they’ve decided to give you the initial payment.
You’ll also need to think about how to price your subscription service. How can you do that, though? Let’s take a moment and break down the answer.
What is a Subscription Service, Anyway?
Let’s start by briefly defining a subscription service. A subscription service is something a business offers customers that they essentially lease rather than buy. In other words, rather than the customer paying for something and then owning it from that point forward, they pay a fee to have access to it for a limited amount of time, such as a month.
Examples include software as a service, or SaaS. Something like Grammarly would be an example. SEO software like SEMrush or Ahrefs are other examples.
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Why Are People Willing to Pay for a Subscription Service?
As for why people are willing to pay for subscription services, it’s normally because they find value in what a company is offering. Maybe that means paying a monthly fee to Netflix to watch their original programming. It could mean paying for a subscription to a music streaming service like Spotify.
To keep people engaged, you often need to produce new content for the service for which your customers are paying. It’s either that or to make the service seem so essential that the customer feels like they can’t do without it.
How Do You Go About Pricing One?
This leads us back to the question of how you would price a subscription service. There’s a straightforward answer to that: you charge the customer as much as you feel they would reasonably pay.
That might seem ridiculously simplistic, but it’s really no more complicated than that. You want to get as much money out of the customer as possible, and that means putting the service at a price point the target audience feels is reasonable.
One easy way to start to develop a pricing model is to look at how much similar services are charging. If you know that your closest competitors are charging a specific amount, then pricing a comparable service close to that is only logical. You may charge a little less to see if you can beat your competitors if you feel your business can still be solvent that way.
A little trial and error must usually happen with subscription services. If you attempt to charge what the market will bear, though, you should do fine.
