In the third part of our series, we delve into subscription pricing and how understanding customer perception of the value, is vital.
Building block 3: Value-based pricing
Value-based pricing is finding out what customers are willing to pay for, based on their perception of value. This approach can identify groups of customers who are poised to spend more money with you.
Use the following questions as a basic diagnostic to help figure out your gaps. The more you answer ‘Yes’, the better your position. Think about your next step to take to close the gap on subscription excellence.
1. Do you review your pricing at least once a year?
2. Do you have controls in place to avoid big discounts?
3. Do you increase pricing over time to reach your target price (and minimise discounts)?
4. Do you base your pricing on what your customers value?
5. Do you test for pricing early on in product development?
Customers don’t care how much something cost you to make, or your competitors, they care how much value they’re receiving at a particular price.”Price Intelligently
When subscriptions are optimised, both the business and customer will be substantially better off. To achieve high performance, companies must transition to being a customer-centred business, by continually growing key subscription capabilities.
The cost of acquiring long-term customers is a fraction of the profits that can be achieved from customer lifetime value. But the building blocks of a successful subscription business need to be in place to realise the return on investment.
If you’d like to find out how Substribe can help you implement any of these strategies, please do get in touch now.
Building Block Four: Time to value
In case you missed any related content, you can access posts here:
How to optimise your subscription business for customer success and value
Building block 1: Purposeful organisation
Building block 2: Customer obsession
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