25 Pricing Strategies for Subscription and Online Commerce

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Download ebook at: http://goo.gl/hd4w52

As more and more companies transform their business to a subscription model, there is one important strategic element that is largely overlooked: PRICING STRATEGY.

This 25-page e-book offers:

* Creative ways of offering pricing models with examples
* Inspire you to try one or more or combination of many to suit your business
* Learn the importance of pricing strategy to increase customer base and revenue
* Adopt a subscription platform approach for running your subscription billing automation than just sending recurring invoices to your customers.

Download ebook at: http://goo.gl/hd4w52

Published in: Business

25 Pricing Strategies for Subscription and Online Commerce

  1. 1. OneBill Subscription Commerce Platform e-Book 25 Pricing Strategies for Cloud Subscription Business A publication of OneBillwww.onebillsoftware.com
  2. 2. Top 25 pricing strategies Recurring Variant Tiered One-Time Frequency Just-In-Time Pricing Pricing Purchase 1 2 4 5 3 Featured Usage Loyalty Time of The Based Bundle Pricing Metering Day 7 9 10 6 8 Preferred Partner Discount Rule-Based Term Based Customer Pricing 11 13 14 12 15 Threshold Overage Elastic based billing Trials Freemium Pricing Subscriptions 16 17 19 20 18 Early Bird Price Go Social Terminations Coupons Personalization 22 24 25 21 23 A publication of OneBillwww.onebillsoftware.com
  3. 3. 1 Recurring Frequency Recurring Pricing or frequency based pricing is probably the common pricing model for any subscription business! This form is often used because of simplicity in sales model and limitations in the subscription platform or service. “Pay as you go - $10 per user per month” The core strength of a platform as OneBill - is you can define any frequency modes like daily, monthly, quarterly and annually virtually, with no programming, in support of customer acquisition and retention objectives.www.onebillsoftware.com Top 25 PricingStrategies
  4. 4. 2 Variant Pricing “Different strokes for different folks” Variant pricing implies that you can customize the products / services to suit the customer’s budget / requirement. For example, you can offer a simple - low cost plan for basic business users to encourage them to experience your service - and a progressive pricing plan for additional features to lock them into to increase revenue - via pricing personalization and automation.www.onebillsoftware.com Top 25 PricingStrategies
  5. 5. 3 Just-in-time pricing What is just-in-time pricing ? Just-in-time pricing is a new idea making waves in the subscription world. In this model, the price for the product / service is derived dynamically at the time of purchase based on different attributes. For example, in the publication and media world, the hottest news article will cost $1.00, but if the same article was read after a week, it will cost few cents or even free. “ No fixed price, dynamically fetched at the time of purchase based on business rules defined.www.onebillsoftware.comStrategies ” Top 25 Pricing
  6. 6. 4 Tiered Pricing Buy more to save more Tiered pricing or Volume pricing is a strategy to price the service based on the volume of purchase. The idea is to encourage bulk purchase so that better discounts are applied to orders that has volume. Check out the different patterns of tier pricing: Volume Price Threshold Threshold Pricing Volume Based (Appropriate charge for quantity). For 15 0-100 $10 qty, the slab rate is $9 and so the entire Q15 will be 101-500 $9 charged @ = $9. = $9 x Q15 = $135 501-1000 $7 1001-5000 $5 Volume Tier Price Volume Based Pricing Charge based on the step the quantity falls in: For 15 qty, 0-100 $10 the charge will be calculated as : 101-500 $9 [1-10] @ $10 x Q10 = $100 + [11-20] @ $9 x Q5 = $45 501-1000 $7 Total = $145 1001-5000 $5www.onebillsoftware.com Top 25 PricingStrategies
  7. 7. 5 One-Time purchase “Price for service / product charged just once” One-time pricing is the simplest pricing strategy that the subscription business has inherited from e-commerce world. For some of your customers, you may have a need for one-off sales. OneBill gives the ability to either add one item or load in an entire catalog to sell to your customer base. For example, pay for installation charges just once!www.onebillsoftware.com Top 25 PricingStrategies
  8. 8. 6 Feature Based Pricing Let your customers chose how they want to pay - dynamically Feature based pricing is a revolutionary strategy based on price personalization of a product. This pricing model allows customers to pay for the specific features they use. This essentially means that charges will be based on features within a service that a customer choose. For example, customers can select the IaaS server requirement by entering the parameters listed in the image. By choosing the appropriate values for the requirements – Memory, OS, number of monthly Hours, Storage and Bandwidth, the price per server is dynamically calculated to give an estimate charges for monthly subscription.www.onebillsoftware.com Top 25 PricingStrategies
  9. 9. 7 Usage Metering Pay per Use! Usage metering is the way of computing charges based on actual usage of any service. The service usage unit can be in any form, for example – storage kilobytes, MB, GB, calls, minutes, licenses, features, software usage, data, messages sent , bandwidth etc. Usage metering most importantly is a framework tracking use of any unit type thus calculating charges for customers invoice. “ Usage metering example: pay for number of SMS used, minutes you spoke. ”www.onebillsoftware.com Top 25 PricingStrategies
  10. 10. 8 Bundles “Bundle offers include two or more services that are creatively pre-packaged as one single offering” Bundling is an offer that includes two or more services . A creative way of combining offers so that customers buy them as a collection, not possible otherwise. Of course, BUNDLE offer price advantage to customers because they buy more than just one of your service together. But @ OneBill, creating a bundle is as cool as select, group and price!!!! Now that’s pretty cool!!!www.onebillsoftware.com Top 25 PricingStrategies
  11. 11. 9 Loyalty Pricing “We value your continued business. Here is our token of appreciation” Loyalty Pricing is a way to consider the loyalty points accumulated by the customer at the time of purchase. OneBill has unlocked the secret to accumulating rewards points for customer redemption. Just turn on the feature and track your customers loyalty points accumulate based on our corporate policy. “ Example: Customers earning loyalty points based on the social behavior for promoting the product to other fans. ”www.onebillsoftware.com Top 25 PricingStrategies
  12. 12. 10 Time of the Day “Telco like pricing – Price of the service depends on when the service was used” TIME of the DAY – Pricing model that is based on the time of the day when the service was used / purchased. You can create rules to specify the day and time and give away special offers. “ Example: Video streaming during peak hours can be slightly more expensive when the traffic is high than on non-peak hours.. ”www.onebillsoftware.com Top 25 PricingStrategies
  13. 13. 11 Discounts Discounts – There are different ways to offer discounts • Discount offered for a particular service • Special discount for specific customers • Order time discount – based on certain rules • Bill time discount – based on certain rules during billing “ Focus on how to acquire customers, not build a discount module for your billing engine! ”www.onebillsoftware.com Top 25 PricingStrategies
  14. 14. 12 Rule-Based Pricing That’s right! any pricing idea under the sun!!! Rule Based Pricing is a way of defining the price of a product based on various attributes during the shopping flow. The price of the product is dynamic and based on various attributes that gets calculated during the transaction. For example, the product can get an discount of 10%, based on the region of the customer. “ You think of a pricing concept and be assured that it can be created and implemented using OneBill Pricing Designer ”www.onebillsoftware.com Top 25 PricingStrategies
  15. 15. 13 Preferred Customer You define who your preferred customers are! Preferred Pricing is a way of defining certain categories of customers within the business and offering special pricing to them, thus making them feel special and ensuring loyalty. For example, returning customers or existing customers can get special discount than a new customer who sign-ups for service.www.onebillsoftware.com Top 25 PricingStrategies
  16. 16. 14 Partner Pricing Create a channel network 1+1 = 3 Partner Pricing is one of the complex tasks in subscription business, because it involves defining pricing at various levels for all the products. Keeping track of price points, making price changes, promotions and managing them all can become a settlement nightmare. A subscription platform approach that has support for robust partner management features helps to create an effective channel network of partners and also easily manage the price changes at various levels. “ Create pricing at various hierarchies of channel strategy and have complete control of price changes at any level!www.onebillsoftware.com ” Top 25 PricingStrategies
  17. 17. 15 Term Based “Get 30% discount on a one year contract” Term based pricing allows recurring pricing that is fixed for a term. The price points for the product remains unchanged irrespective of the market / price fluctuations as long as the customer is within the term period. Term pricing helps businesses to get long-term commitment and loyalty from the customer.www.onebillsoftware.com Top 25 PricingStrategies
  18. 18. 16 Threshold based billing Generate bills automatically when the service reaches a threshold limit! In case of Threshold based billing, the service providers set a threshold limit that is custom for each subscriber. When the subscriber’s account reaches the threshold limit, the billing system generates OnDemand bill and charges the customer to the next pre-defined charge limit. For example, in case of Skype VOIP service, $10 Skype credit can be used for making calls until the set limit. Skype billing system will automatically charge customers account for next $10 credit limit when the customer exceeds the $10 limit.www.onebillsoftware.com Top 25 PricingStrategies
  19. 19. 17 Overage Pricing Dealing with excess usage beyond entitlement Overage Pricing is a typical Telco style of treating a charge when the user goes over the service limited for the plan. For example in case of cell phone providers, the cell phone users get a monthly quota of minutes. When a user goes over the minutes allowed under the particular pre- paid / post-paid plan, he is charged separately for the extra minutes. This fee for the extra minutes is called overage fees or overage charges. Overage pricing are typically useful for services that has usage component like minutes, bandwidth, storage space, licenses etc.www.onebillsoftware.com Top 25 PricingStrategies
  20. 20. 18 Elastic Subscription Manage your subscriptions the way you want Subscribers are on a lookout for the flexibility to increase / decrease licenses, upgrade / downgrade, suspend/resume licenses and manage their renewals constantly. A platform that helps manage the operations of a subscription business efficiently is the key to increase customer retention. We call it “Elastic Subscription” – flexibility offered to customers to manage their subscriptions the way they want to. “ Increase / Decrease, Upgrade/Downgrade, Renewals, Suspend/Resume, Cancel – DIY anytime!www.onebillsoftware.com ” Top 25 PricingStrategies
  21. 21. 19 Trials Try me out first…. Trials are the most effective ways of converting free user to paid subscriber. B2C businesses heavily depends on this pricing model to attract their prospects to paid customers. Example: 30 days free trialwww.onebillsoftware.com Top 25 PricingStrategies
  22. 22. 20 Freemium Give away basic features for FREE and CHARGE on premium features FREEMIUM works for businesses that thrives on volume of customers. Offer service for free, pay for premium features. For example, LinkedIn offers free service for anyone to register their profile. Pay for premium featurewww.onebillsoftware.com Top 25 PricingStrategies
  23. 23. 21 Go Social Go viral with your social presence Social Commerce - Cloud service providers can now automate and measure social media campaigns. OneBill’s Subscription Commerce Platform that has extended traditional system offer functionality via interaction with social commerce: Facebook, Google+, LinkedIn, Twitter, FourSquare, and others. A provider can monetize social media efforts by a process of: Create – unlimited offers and promote into social media Influence – encourage fan / influencer endorsement of specials, offers, and services Reward – instantly update influencer profiles with discounts for future purchases “ What is needed are new approaches that recognize and leverage the best social aspects of social media and combine them with efficient commerce practices directly within the social networking environmentwww.onebillsoftware.com ” Top 25 PricingStrategies
  24. 24. 22 Termination Remember termination in your pricing strategy Think of Termination policies when you define pricing strategies for your products. Termination clauses needs to be transparent for subscribers so that they have the flexibility to opt-out and opt-in anytime they wish. Termination policies include the use cases for CANCEL, Renew, Change Plans, Upgrades / Downgrades where cancellation may become applicable.www.onebillsoftware.com Top 25 PricingStrategies
  25. 25. 23 Coupons Coupons as an Online Marketing Strategy? We got you covered! COUPONS are experiencing an explosion in popularity—among consumers and marketers alike. For the customers, the attraction is clear: coupons are a quick and simple way to save money; if they are available, there is no reason not to put them to use. For the latter, it can be a little more complicated. Coupons offer a juicy incentive for new customers, but coupon-based promotion campaigns can be risky business – Ella Davidson of Coupons.org. With the integration of promotion modules and coupons to the core subscription platform, coupons can be easily managed and offered – Think of increasing your business using coupons as a strategy and not worry about complications!www.onebillsoftware.com Top 25 PricingStrategies
  26. 26. 24 Early bird offers “50% off for first 500 customers” Early bird offers are a way to appreciate the first users who sign up. The early sign-ups are generally rewarded with discounts, trials, freebies, free usage, etc so that businesses get maximum customers signed-up for the services. Effective billing system keeps track of the customers, calculate and bill after adjusting the offer, and helps publish the offer to the products catalog seamlessly. The complex tasks are automated, while the business focus on acquiring early bird customers.www.onebillsoftware.com Top 25 PricingStrategies
  27. 27. 25 Price Personalization “One-Size fits all PRICE offering is the 90’s approach. Customer centric pricing is the latest trend in Subscription world!” Price Personalization gives you the ability to deliver dynamic and individualized customer pricing to align with your solutions – while maximizing your operating margins. Personalization is the evolving trend now. + on-demand: when + where + how + at the best pricewww.onebillsoftware.com Top 25 PricingStrategies
  28. 28. Leverage Pricing Strategies to transform your business! “Thank you for joining us in exploring 25 pricing strategies. “Thank you for joining us in exploring 25 pricing strategies. We believe that these ideas will inspire you to aim for We believe that these ideas will inspire you to aim formore in your subscription business and take it to new heights”more in your subscription business and take it to new heights” We hope that you’ll get inspired by these We hope that you’ll get inspired by these 25 creative pricing strategies to add innovation and 25 creative pricing strategies to add innovation and freshness your business. IfIfyou’d like to share ideas freshness your business. you’d like to share ideas that you have used, we’d love to hear from you. that you have used, we’d love to hear from you. Feel free to write to us: sales@onebillsoftware.com or Call: +1 (855) 411-5629 Feel free to write to us: sales@onebillsoftware.com or Call: +1 (855) 411-5629 A publication of OneBillwww.onebillsoftware.com

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