Pay-as-you-go software is the new norm from retail
Membership greed Pricing is a guarantee of recurring revenue for your business. After the customer flips the switch to turn on your subscription, it’s easy money:
- It is easy to identify your revenue.
- Determining your margin and profits is easy.
- It is easy to grow your product and increase that revenue for months, even years.
While this is true, converting a subscription customer is not as easy as flipping a switch. You can build a platform to attract potential customers, launch with pomp, give all kinds of incentives and tests to attract potential customers – and see that they are broken. And have missed the organ.
Contrary to popular belief, the subscription price does not work due to the low price that the monthly installment allows.
This is the real guarantee that comes with membership pricing, which will happen until you cultivate a funnel that catches potential customers as soon as they learn about your product and their final sign-in. Follow
I made my first subscription-model product in 1999. I’m currently arriving early on my latest, and I’ve launched a bunch more along the way.
While the customer dynamic has changed over the last 20 years, the conversion process has not. In fact, it is easy to convert and retain customers through subscription funnels.
Here’s what I learned.
Why membership price works
Subscription pricing is a hot trend in just about every business in every industry. Pay-as-you-go is the new normal for service from software to retail.
To my mind, the major change occurred when mobile phones started pricing unlimited usage per period instead of fixed or cost per minute. Once usage limits were lifted, use cases exploded and the promise of a truly mobile computer was realized.
Makers of all stripes learned that lesson: From razor to video streaming to accounting software, pricing models have emerged that focus on time periods rather than units.
But contrary to popular belief, the subscription price does not work due to the low price that the monthly installment allows. This is effective because a subscription reproduces each customer’s mind from a product function to a value proposition.
I don’t care what kind of German engineering went into my razor blade, The blade is working as long as I need to.
As an entrepreneur, you probably use at least one digital subscription service to build your own product and company, if not many. In fact, just to get into the MVP of my new project, I subscribed to AWS, MailChimp, Zapier and Bubble. I am still on the free tier of some more services for some lower-priority features. There is nothing else I have left or ever tried.
Thus, you know that the price prop plays a large part of the customer and whether the customer will pay. Therefore strengthening your value proposition should play a big role in every level of your customer funnel.
You must capture and track customers to be effective
A subscription-pricing model without the ability to track steps in the conversion funnel would create all the headaches of subscription pricing to no avail.