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

Subscription pricing doesn’t work for traditional products and services

If you didn’t click on the link to the post above, let me TL;DR it for you.

Subscription pricing doesn’t work when it underserves demand

Far too many subscription startups are founded on an idea similar to this:

Subscription pricing doesn’t work when it over-serves supply

One of the reasons Teaching Startup works as a subscription model is that it doesn’t matter if you use the product immediately or not. This is why subscription models have always worked for content. If the customer glances at the cover of an issue and it’s something they want to consume right now, it makes them happy. If not, they put the issue in their pile to read later, which makes them happy later.

Subscription models don’t work when they don’t remove friction

The key selling point of a subscription is so both sides can set-and-forget. But on the customer side, the subscription can’t just be a product or service that becomes easy when you set and forget, it has to be something that removes pain and friction when you set and forget.

Subscription models don’t work when they don’t define value

A free trial is a great way to get customers to understand and conform to the subscription model. It could be a free estimate, a free evaluation, or just free limited use of the product or service.

Subscription models don’t work when they don’t provide value

That may seem like an obvious statement. Here’s when it’s not.

I’m a multi-exit, multi-failure entrepreneur. Sold ExitEvent. Building TeachingStartup.com & GetSpiffy. Former Automated Insights. More info at joeprocopio.com

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