By Moritz Zimmermann & Michael Vax
One of the authors of this post was involved long time ago in a partially successful attempt to build a subscription billing system for an Internet start-up in the early days of web business. This experience left him convinced that free model won on Internet as nobody had either time or expertise to deal with subscription billing.
This is not the case anymore. When you decide to start offering a subscription to your services there is a variety of companies who offer convenient cloud based recurring billing solution.
At the beginning, you may prefer to go with a simple subscription model and select a set of features and a price point that would be attractive to the biggest customer segment.
While this is a good point to start growing the business, it leaves a lot of money on the table. Some of your customers are ready to pay extra for advanced features.
There are also price sensitive customers who would love to use your service if you can offer them either a cheaper plan or a pay-as-you-go option.
As industry develops, subscriptions plans become more complex. Netflix has started with a single plan and is moving now to multiple options Netflix tests new pricing options.
Telco industry is an example of how complex subscription offering can be in a mature and highly competitive market.
To maximize revenue potential you should be able to define complex subscription plans that cater to different segments of your market and offer a flexible combination of recurring and one time prices as well as a number of additional services with pay per usage charges. In addition, you will need a robust entitlement and metering solution to control access to your services and generate per usage charges.
Subscription business model offers a lot of ways to define flexible offerings that fit needs and budgets of your customers.
Moritz Zimmermann co-founded hybris in 1997 with an idea for a highly innovative packaged e-commerce application that has now evolved into a leading platform for multichannel communication and sales. With his team, he develops innovative products for hybris clients and supports their e-commerce and PIM multichannel strategies. Moritz holds an MBA from Munich School of Management and a bachelor’s degree from the University of St. Gallen.
Michael Vax is an accomplished leader and entrepreneur with many years of experience in developing highly scalable web applications since the dawn of the Internet. For last six years he has specialized in digital Ecommerce, first working as the CTO of Elasticpath, then as the Vice President Engineering of Partnerpedia, a provider of hosted Enterprise App Stores and Marketplaces. At hybris Michael is responsible for developing innovative solutions that address commerce needs of enterprise companies in publishing, software, and telecommunication industries.