What is the future of subscriptions?
Sanjay Somashekar
9 replies
Is pay as you go sustainable model?
Replies
Kathleen Smith@kathleen_smith2
Paying a sum every month or year is now quite a common practice. It might be with your phone or electricity bill, or even charities. Subscription payments are much more convenient than making one-off payments. The convenience of subscriptions is one of the main reasons why they are becoming more and more popular.
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Subscriptions are not only a great way to monetize your product, it is also a great retention tool. Once a subscriber is hooked to a service, he rarely cancels it. If a user has a subscription, they are more likely to trust you, which will make them a more valuable customer.
Subscriptions are here to stay. No doubts about that.
I see a move towards micro-subscriptions or true pay per use coming soon. Want to make just one video? Want to write just one ad copy? Want to run just one email campaign? No problem. pay 50 c and get it done, no need for paying 15$ to do 10 a month.
The big challenge here is the payment gateway fees. most have a fixed fee per transaction of around 50 c. Once some gateway offers a no fixed fee, only variable fee, then micro subscriptions is not too far off
@kkumarkg this is interesting, but wouldn't this affect the business if there are multiple competitors in the same space. Users will start moving from one platform to another for their every need. Even though it pushes companies to innovate better, this will still push their time period of breaking even, further than the current pricing models.
@sanjay_somashekar Good question. There are multiple competitors in every space, even in office suits and taxi hailing. So, yes, customer will move to where they get a better price or where there is a feature that is required at the particular moment. It is up to the business to have an offering that will make a one time customer a repeat customer. Afterall, customer is king, right?
I feel that true pay per use will actually drive revenues up, not down. Anyone who has a one time need can now pay a small fee and use the service one time.
From a market side, I don't see customers wanting to make a huge shift away from it.
The fact that subscriptions allow them to keep their upfront costs low and arguably only pay for products they are actively using and seeing value from works very much in their favour.
From a business side, I wouldn't be surprised if more products shift away from it. Not all product can provide enough 'continuous value' to keep users paying, or the upfront costs of providing the service presents too much of a risk having to hope someone sticks around for X years to break even.
@stevenbirchall yes this totally makes sense, there will be a change in the pattern of payments in the near future. Looking forward to see how this shapes up!
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