Is a Subscription Model Suitable For My Business?

Is a Subscription Model Suitable For My Business?

Can you imagine waking up on the 1st of every month and £10k dropping into your business' bank account?

During today's episodes Robin Waite, Founder of Fearless Business talks through all of the pros and cons around building a subscription model into your business.

What we will be discussing today

  • Avoid hourly pricing models: Charging by the hour is not recommended, as it can be considered unethical and may not be the most effective pricing strategy.
  • Consider a subscription-based pricing model alongside a core product: Offer clients a core product for which they pay upfront, then give them the option to subscribe for additional services or features.
  • Use tools to streamline your subscription model: Tools like Xero, Quickbooks, and Freeagent can help manage subscription-based pricing models and reduce administrative tasks.
  • Customer Lifetime Value (CLV) is essential: CLV represents the total worth of a customer's business over the course of their relationship with your company. Subscription models can increase CLV by committing customers to your services over a longer period.
  • Pros of a subscription model: Regular, sustainable income, a proven business model (e.g., Netflix, Amazon), less pressure on clients who can cancel anytime, and opportunities to create loyal fans and generate referrals.
  • Cons of a subscription model: Churn (when clients leave), slower business growth, and the need for a large audience to make it work effectively.

To determine if a subscription-based pricing model is suitable for your business, listen to the full podcast episode or reach out to the podcast host for more information

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Listen to the Full Episode

In this episode of The Fearless Business Podcast, business coach and host Robin Waite answers one of the most common questions he gets asked in Fearless Business, is a subscription model suitable for my business?

Throughout the episode, Robin delves into choosing the suitable pricing model for your business and how to maintain clientele even after you have provided your services.

What Are The Different Ways Entrepreneurs Can Charge For Their Businesses?

Of course, any Fearless Podcast fan knows by now that the worst thing an entrepreneur can do when choosing a pricing model is deciding on one which involves charging hourly. Across the Fearless Business Website, you can find multiple reasons why charging by the hour is simply unethical.

With that in mind, what is the best pricing models and tools to utilise, especially where service-based businesses are concerned?

Robin believes that the best subscription-based pricing model primarily involves a core product where clients pay upfront and then. A subscription model which they can opt into if they wish to have any extras.

The best tools to involve (in our humble opinion) when it comes to running subscription-based pricing models are as follows:

These tools help limit the amount of admin involved when it comes to maintaining your pricing model.

How Does This Work?

To reiterate, Robin believes that the best way to ensure that a subscription-based model is successful is to run it alongside a core product. Examples of this can be found with Web Design Services.

For Example: you could go to a web design company and ask them to rebrand your website to increase traffic and help put your business on the map. As a client, you pay a fee upfront, and they provide the service for you there and then. Once completed, they may offer a subscription-based model for you to opt into. This could involve added extras such as SEO and 24/7 troubleshooting support for a fixed fee per month.

By doing this, the web design company not only gets to generate some profit off of you from you investing in their initial product, but they also get to keep you as a lifetime customer whilst earning some secondary income.

What is Customer Lifetime Value? and Why is it Important?

Customer lifetime value is arguably where entrepreneurs make the most money, yet it’s constantly overlooked!

In a nutshell, customer lifetime value is the total worth of a customer’s business over the whole period of their relationship. Subscription-based pricing models serve as an excellent gateway for introducing customer lifetime value into your business as the customer makes a financial commitment to your services over an extended period of time.

Pros and Cons of a Subscription Model Business

Understandably when making decisions about the suitable pricing models for their business, entrepreneurs need to understand the pros and cons they will incur fully. For subscription-based business models, the pros and cons are as follows:

Pros

  • Regular, sustainable income
  • A popular business model with notable success (Netflix, Sky, HelloFresh, Amazon)
  • Not as much pressure for paying clients - they can choose to stop at any time.
  • Multiple opportunities to create raving fans of your business which consequentially generates referrals!

Cons

  • Churn (when a client decides to leave and move on)
  • Business growth can be slow - not the best option for entrepreneurs looking to scale quickly.
  • It only works best when business owners have a large audience to utilise in the first place.

To find out more about whether a subscription-based pricing model is suitable for your business, check out the full episode above or reach out using the links below!

To find out more about Fearless Business:

Join our amazing community of Coaches, Consultants and Freelancers on Facebook:
>> https://facebook.com/groups/ChargeMore

And check out the Fearless Business website:
>> https://fearless.biz

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