How Startups Lose Money With Subscription Pricing

From two-sided-marketplaces to on-demand models, there’s a lot of misunderstanding about how subscriptions work

Launching a subscription-based product or service sounds so easy. It’s like instant Monthly Recurring Revenue, just add subscribers.

There’s a problem with subscription pricing models though. A lot of problems, actually.

It’s no secret that consumers are rapidly adopting subscriber models for products and services they used to request on demand. These days, Amazon will sell you a subscription to your coffee pods at a discount to full price. Or you can drive the Porsche of your choice for just $3,100 a month.

On the startup side, service subscription companies are springing up everywhere, sometimes under the two-sided marketplace model, other times as an alternative to traditional service offerings with a no-frills approach to offset the cost and increase the demand.

I’ve got a long history with launching subscription services, from my very first self-founded startup to my most recent self-founded startup, and a few more-well-funded plays in between. A few months ago, I wrote a post detailing how to do a subscription pricing model right. None of that experience came overnight…