It’s already been established that the “subscription economy” is upon us. Younger consumers, accustomed to subscribing to the services they need rather than purchasing them (up to and including cars, it seems), are looking for more ways to pay for only what they need. As companies switch to subscription billing, however, it’s worth taking some time to determine what your customers want in a subscription. Do they want to pay monthly? Annually? Quarterly? Or a la carte?
What Are the Pros and Cons of Different Billing Frequency?
There are benefits to a business with every subscription frequency. Annual recurring payment plans provide a full year of revenue upfront, easing cash flow concerns for the business. This is particularly important for a startup business. Annual billing guarantees customer retention for at least one year, and it eliminates the costs associated with monthly invoicing or collection issues. This is good for the business.
You do, however, need to consider what’s going to attract the most customers and keep them happy. Monthly recurring payment plans offer less risk to customers who may be skeptical of an upfront commitment, particularly with a new or high-risk product or service. The monthly model also provides a lower barrier to entry, which should increase customer acquisition, and makes the sales process shorter and more cost-effective.
If you’re selling products or services popular with young consumers, weekly, daily and even a la carte payments could encourage more spending.
Flexibility Is Easy with a Flexible Subscription Management Platform
As you can see, there are pros and cons to every model, so it’s important to evaluate the best fit for your business and your customers. To do so, you need to ensure you have a strong subscription management solution in place that will give you the flexibility you need to offer flexible subscription plans. This way, you can offer customers a choice in how they want to be billed.
Once you decide which types of subscriptions plan to offer, it is easy to set them up in a full-service, cloud-based subscription management solution like Subscription DNA. With our robust tools, you can administer all aspects of your subscription business. You can not only build your subscription billing process the way you want it but also communicate with target user groups, quickly mine and analyze numerous reports, view transactions, send customizable email auto responses, engage in marketing, track member login usage and statistics and more.