You can sell practically anything using subscription plans – electricity, internet & TV, shaving kits, or even baby shoes.
Subscription prices are complex. Let’s spend some time learning about them. A subscription product’s cost can be a combination of a one-time fee, recurring price, and consumption-based prices.
You can see examples of all three below.
There are several different pricing methods used by subscription companies:
Tiered – various packages that offer different levels of service.
Usage-based – price based on how much product is consumed.
Many businesses selling subscriptions implement a tiered subscription model, which offers a few different subscription options with various features and pricing levels.
It is also quite common to define different billing cycles – monthly and annual. As nothing is better than cash upfront, the yearly price offers some savings to customers.
You can define each plan as the main product, add the billing cycle as an attribute, and create two variants, plan-monthly-billing & plan-annual-billing, with different prices.
It is also a good practice to use price tiering to offer discounts for first billing cycle.
As if multi-tiered subscription prices were not complicated enough, many businesses are also using consumption-based pricing. The consumption-based pricing model charges customers per usage unit rather than a fixed recurring rate. The amount charged is determined based on the amount of service or product consumed. Per-usage pricing is quite often used in combination with recurring prices.
It works well for utility companies, ridesharing, SaaS companies, and others.
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