How Startups Make Money With Subscription Pricing
It’s about fixing leaky pipes, not replacing exploding toilets
Why do some subscription-based products and services take off while others struggle and fail?
The move from standard pricing to a subscription model is tempting for any business. Your customers sign up, put in their credit card, and you get paid every month. Who wouldn’t want to do that?
But while generating revenue with a subscription pricing model is easy, profiting from that same model is incredibly difficult. To make the economics of subscription pricing work, the model has to balance customer needs very carefully against what your company can offer at a static price. If that price is too low, you’ll lose money. If the price is too high, you’ll turn away customers.
I offered my first subscription-based product in 1999 and I launched my most recent subscription-based product two months ago. In every case, I had to reshape my offering to conform to a subscription model that would not only generate revenue, but profits as well.
Here’s how to do that.
