How can you use subscription pricing to create recurring revenue?

1 Define your value proposition

The first step to use subscription pricing is to define your value proposition . This means identifying the core problem that your product or service solves for your customers, and how it delivers value over time. You need to communicate clearly why your customers should subscribe to your offer, and what benefits they will get from it. For example, if you are offering a software-as-a-service (SaaS) solution, you might emphasize the features, functionality, security, and updates that your customers will enjoy.

3 Test and optimize your pricing

The third step is to test and optimize your pricing. You need to validate your assumptions and hypotheses about your customers' willingness to pay, their preferences, and their behavior. You can use various methods and tools to test and optimize your pricing, such as surveys, experiments, analytics, and feedback. You need to monitor and measure your key metrics, such as conversion rate, churn rate, retention rate, customer lifetime value, and revenue growth. For example, if you are offering a fitness app, you might test different price points, features, and incentives to see what works best.

4 Provide value and support

The fourth step is to provide value and support to your subscribers. You need to deliver on your promise and exceed your customers' expectations. You need to provide a high-quality product or service that solves their problem and adds value to their lives. You also need to provide excellent customer service and support that builds trust and loyalty. You need to engage and communicate with your customers regularly, and offer them relevant and useful content, tips, and updates. For example, if you are offering a subscription box, you might provide personalized and curated products, free shipping, and flexible cancellation options.

5 Increase retention and loyalty

The fifth step is to increase retention and loyalty among your subscribers. You need to reduce your churn rate and increase your customer lifetime value. You need to understand why your customers stay or leave, and what you can do to improve their satisfaction and loyalty. You can use various strategies and tactics to increase retention and loyalty, such as rewarding referrals, offering discounts, creating a community, providing feedback channels, and launching new features. For example, if you are offering a online learning platform, you might reward referrals with free courses, offer discounts for longer subscriptions, create a community forum, provide feedback surveys, and launch new courses regularly.

6 Explore new opportunities

The sixth and final step is to explore new opportunities to grow your recurring revenue. You need to identify and pursue new markets, segments, channels, and partners that can help you reach more potential customers and increase your market share. You also need to innovate and iterate on your product or service, and add new value propositions, features, and benefits that can attract and retain more customers. You need to keep an eye on the trends, challenges, and opportunities in your industry and niche, and adapt and evolve accordingly. For example, if you are offering a cloud storage service, you might explore new markets in emerging regions, segments in different industries, channels in social media, and partners in complementary services. You might also innovate and iterate on your product or service, and add new value propositions, features, and benefits, such as encryption, backup, collaboration, and integration.