25 pricing strategies for subscription and online commerce - onebill software

A publica*on of OneBill www.onebillso2ware.com

OneBill Subscrip*on Commerce Pla:orm

e-‐Book

Pricing Strategies 25

for Cloud Subscrip*on Business


Top 25 pricing strategies

Recurring Frequency

1

Variant Pricing

2

Just-In-Time

3

Tiered Pricing

4

One-Time Purchase

5

Featured Based

6

Usage Metering

7

Bundle

8

Loyalty Pricing

9

Time of The Day 10

Discount

11

Rule-Based

12

Preferred Customer

13

Partner Pricing

14

Term Based

15

Threshold based billing

16

Overage Pricing

17

Elastic Subscriptions

18

Trials 19

Freemium

20

Go Social

21

Terminations 22

Coupons

23

Price Personalization

25

Early Bird

24

www.onebillso2ware.com Top 25 Pricing Strategies

Recurring Frequency

1

Recurring Pricing or frequency based pricing is probably the common pricing model for any subscrip*on business! This form is o2en used because of simplicity in sales model and limita*ons in the subscrip*on pla:orm or service.

“Pay as you go -‐ $10 per user per month” The core strength of a pla:orm as OneBill -‐ is you can define any frequency modes like daily, monthly, quarterly and annually virtually, with no programming, in support of customer acquisi*on and reten*on objec*ves.


“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 addi*onal features to lock them into to increase revenue -‐ via pricing personaliza*on and automa*on.

Variant Pricing

2


Just-in-time pricing

3

What is just-‐in-‐*me pricing ? Just-‐in-‐*me pricing is a new idea making waves in the subscrip*on world. In this model, the price for the product / service is derived dynamically at the *me of purchase based on different aZributes. For example, in the publica*on and media world, the hoZest news ar*cle will cost $1.00, but if the same ar*cle was read a2er a week, it will cost few cents or even free.

No fixed price, dynamically fetched at the 5me of purchase based on business rules defined. “ ”


Tiered Pricing

4

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 beZer discounts are applied to orders that has volume. Check out the different paZerns of *er pricing:

Volume Threshold Price

0-100 101-500 501-1000 1001-5000

$10 $9 $7 $5

Threshold Pricing Volume Based (Appropriate charge for quan*ty). For 15 qty, the slab rate is $9 and so the en*re Q15 will be charged @ = $9. = $9 x Q15 = $135

Volume Tier Price

0-100 101-500 501-1000 1001-5000

$10 $9 $7 $5

Volume Based Pricing Charge based on the step the quan*ty falls in: For 15 qty, the charge will be calculated as : [1-‐10] @ $10 x Q10 = $100 + [11-‐20] @ $9 x Q5 = $45 Total = $145


One-Time purchase

5

“Price for service / product charged just once” One-‐*me pricing is the simplest pricing strategy that the subscrip*on 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 en*re catalog to sell to your customer base. For example, pay for installa*on charges just once!


Feature Based Pricing

6

Let your customers chose how they want to pay -‐ dynamically Feature based pricing is a revolu*onary strategy based on price personaliza*on of a product. This pricing model allows customers to pay for the specific features they use. This essen*ally 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 es*mate charges for monthly subscrip*on.


Usage Metering

7

Pay per Use! Usage metering is the way of compu*ng 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, so2ware usage, data, messages sent , bandwidth etc. Usage metering most importantly is a framework tracking use of any unit type thus calcula*ng charges for customers invoice.

Usage metering example: pay for number of SMS used, minutes you spoke. “ ”


Bundles 8

“Bundle offers include two or more services that are crea*vely pre-‐packaged as one single offering” Bundling is an offer that includes two or more services . A crea*ve way of combining offers so that customers buy them as a collec*on, not possible otherwise. Of course, BUNDLE offer price advantage to customers because they buy more than just one of your service together. But @ OneBill, crea*ng a bundle is as cool as select, group and price!!!! Now that’s preZy cool!!!


“We value your con*nued business. Here is our token of apprecia*on” Loyalty Pricing is a way to consider the loyalty points accumulated by the customer at the *me of purchase. OneBill has unlocked the secret to accumula*ng rewards points for customer redemp*on. Just turn on the feature and track your customers loyalty points accumulate based on our corporate policy.

Loyalty Pricing

9

Example: Customers earning loyalty points based on the social behavior for promo5ng the product to other fans. “ ”


Time of the Day

10

“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 *me of the day when the service was used / purchased. You can create rules to specify the day and *me 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.. “

”


Discounts 11

Discounts – There are different ways to offer discounts •  Discount offered for a par*cular service •  Special discount for specific customers •  Order *me discount – based on certain rules •  Bill *me discount – based on certain rules during billing

Focus on how to acquire customers, not build a discount module for your billing engine! “ ”


Rule-Based Pricing

12

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 aZributes during the shopping flow. The price of the product is dynamic and based on various aZributes that gets calculated during the transac*on. 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 “

”


Preferred Customer

13

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 exis*ng customers can get special discount than a new customer who sign-‐ups for service.


Create a channel network 1+1 = 3 Partner Pricing is one of the complex tasks in subscrip*on business, because it involves defining pricing at various levels for all the products. Keeping track of price points, making price changes, promo*ons and managing them all can become a seZlement nightmare. A subscrip*on pla:orm approach that has support for robust partner management features helps to create an effec*ve channel network of partners and also easily manage the price changes at various levels.

Partner Pricing

14

Create pricing at various hierarchies of channel strategy and have complete control of price changes at any level! “

”


Term Based 15

“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 irrespec*ve of the market / price fluctua*ons as long as the customer is within the term period. Term pricing helps businesses to get long-‐term commitment and loyalty from the customer.


Threshold based billing

16

Generate bills automa*cally 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 un*l the set limit. Skype billing system will automa*cally charge customer's account for next $10 credit limit when the customer exceeds the $10 limit.


Dealing with excess usage beyond en*tlement Overage Pricing is a typical Telco style of trea*ng 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 par*cular 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.

Overage Pricing

17


Elastic Subscription

18

Manage your subscrip*ons 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 pla:orm that helps manage the opera*ons of a subscrip*on business efficiently is the key to increase customer reten*on. We call it “Elas*c Subscrip*on” – flexibility offered to customers to manage their subscrip*ons the way they want to.

Increase / Decrease, Upgrade/Downgrade, Renewals, Suspend/Resume, Cancel – DIY any*me! “ ”


Trials 19

Try me out first…. Trials are the most effec*ve ways of conver*ng free user to paid subscriber. B2C businesses heavily depends on this pricing model to aZract their prospects to paid customers. Example: 30 days free trial


Freemium 20

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 feature


Go Social 21

Social Commerce -‐ Cloud service providers can now automate and measure social media campaigns. OneBill’s Subscrip*on Commerce Pla:orm that has extended tradi*onal system offer func*onality via interac*on with social commerce: Facebook, Google+, LinkedIn, TwiZer, FourSquare, and others. A provider can mone*ze 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 prac5ces directly within the social networking environment “

”

Go viral with your social presence


Termination 22

Remember termina*on in your pricing strategy Think of Termina*on policies when you define pricing strategies for your products. Termina*on clauses needs to be transparent for subscribers so that they have the flexibility to opt-‐out and opt-‐in any*me they wish. Termina*on policies include the use cases for CANCEL, Renew, Change Plans, Upgrades / Downgrades where cancella*on may become applicable.


Coupons 23

Coupons as an Online Marke*ng Strategy? We got you covered!

COUPONS are experiencing an explosion in popularity—among consumers and marketers alike. For the customers, the aRrac5on 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 laRer, it can be a liRle more complicated. Coupons offer a juicy incen5ve for new customers, but coupon-‐based promo5on campaigns can be risky business – Ella Davidson of Coupons.org. With the integra*on of promo*on modules and coupons to the core subscrip*on pla:orm, coupons can be easily managed and offered – Think of increasing your business using coupons as a strategy and not worry about complica*ons!


Early bird offers

24

“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. Effec*ve billing system keeps track of the customers, calculate and bill a2er adjus*ng 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.


“One-‐Size fits all PRICE offering is the 90’s approach. Customer centric pricing is the latest trend in Subscrip*on world!” Price Personaliza*on gives you the ability to deliver dynamic and individualized customer pricing to align with your solu*ons – while maximizing your opera*ng margins. Personaliza*on is the evolving trend now. + on-‐demand: when + where + how + at the best price

Price Personalization

25

“Thank you for joining us in exploring 25 pricing strategies.

We believe that these ideas will inspire you to aim for more in your subscription business and take it to new heights”

We hope that you’ll get inspired by these 25 crea*ve pricing strategies to add innova*on and freshness your business. If you’d like to share ideas that you have used, we’d love to hear from you.

Feel free to write to us: [email protected] or Call: +1 (855) 411-‐5629

Leverage Pricing Strategies to transform your business!


25 pricing strategies for subscription and online commerce - onebill software

Documents

volume pricing

recurring pricing

time pricing

overage pricing

loyalty pricing

partner pricing

pricing personaliza

threshold pricing volume