Running a business is hard, and it gets even more challenging when you are unable to deal with payment delays. As a result, you might notice that your organisation is not growing consistently.
In such a case, a subscription-based business model might help build a long-lasting relationship between the client and the company end. Additionally, it has been proven that 78% of adults internationally are using subscription services.
Subscription payments provide multiple benefits like lowering the entry price barrier and increasing cross-selling numbers. Here are 5 reasons why subscription-based pricing models are the future of the Australian economy.
Attracts More Customers
Charging $500 annually for your service subscription at once steers away most of the consumer base. But if you start recurring plans for $30 a month, you are more likely to get more conversions.
Even though the customer ends up paying more in the long run, the lower entry price reduces the decision-making time. As a result, the user gets instant access to your service and contributes to your monthly recurring revenue.
Predicts Revenue and Sales
For any business to thrive, the finance team needs to anticipate revenues on a weekly, monthly, or quarterly basis. Doing so can help the operations team develop new growth strategies and implement them accordingly.
Some businesses also sign up customers for a pre-defined period. In such cases, subscription plans also allow you to depend on recurring payments for that particular duration.
Eliminates Any Security Concerns
It is not uncommon for some consumers to back out of online payment plans due to potential security breaches. As a result, you might face trouble convincing people to sign up for your services.
However, subscription-based pricing companies take data breaches very seriously. As a result, you benefit from internal network security and complete confidentiality in terms of linked data objects.
Integrates Trial Periods and Promotions
Customers look for exciting discounts and trial periods when purchasing online. After setting up subscription payments, you can easily offer plan upgrades, trial months, and volume discounts.
Using the predictable revenue model, you can conveniently pan out the incurred costs and the profit it stands to bring in. Therefore, you can attract more target audiences and scale faster.
Facilitates Up and Cross-Selling
Upselling helps your organisation as the consumer switches to a higher level of service, and cross-selling allows for the sale of more complementary products. After initiating continuous contact with your customers, it is easier to market and sell other features.
After setting up a recurring payment system, users consider it a part of their monthly budget. As a result, they are more likely to view the additional features as affordable and think of upgrading soon.
There is little doubt in the fact that not all business organisations can connect with their customers. With the pay-once model, it can be hard for you to maintain continuous contact with the consumer base.
In such a case, a system facilitating subscription payments can help solve the issue by strengthening the user-client bond. Additionally, you also get other benefits like the ease of setting up trial periods and offering seasonal discounts.
What makes subscription-based payments work is how it mutually benefits both businesses and consumers.
Such payment systems can also help you predict monthly revenue in advance, thus allowing for the implementation of better marketing campaigns.