After thinking it over and analyzing the benefits, your company has decided to create a subscription offering. Congratulations! Now, a follow-up: How exactly will you price your new subscription? As tempting as it might be to “go with your gut,” that approach will likely prove a less-than-optimal strategy for monetization, as well as for customer acquisition and retention.
Instead, the pricing question becomes multi-pronged:
- Which pricing model should we use?
- Which pricing strategies can we implement to attract and retain customers?
- Which pricing method should we use to calculate the price of our product or service?
- How do we pull all those components together into a comprehensive pricing approach?
Pricing is a complex process that is difficult to get right. But by addressing each component formulaically, businesses can create the right price for their new recurring revenue stream that brings in the customers and the profit.