What is Subscription Pricing?

A subscription-based pricing model is a payment structure that allows a customer or organization to purchase or subscribe to a service for a specific period of time for a set price.

Subscribers typically commit to the services on a monthly, annual or seasonal basis.

Rather than selling products individually, a subscription sells periodic use or access to a product or service, or, in the case of non-profit organizations such as opera companies or symphony orchestras, it sells tickets to all of the scheduled performances for the whole season.

Thus, a one-off sale of a product can become a recurring sale and can build brand loyalty.

Subscription-based pricing is increasingly being used for cloud computing. In a subscription-based model, cloud customers typically pay upfront, prior to receiving access to cloud services.

Prices are often based on the subscription's length and a longer subscription often means a lower cost.

As long as the pricing structure isn’t too complex (and make sure it's transparent), a company can use both monthly and annual subscription plans to boost revenue.

Monthly payments may become the lifeblood of your business, but annual subscriptions secure you more business upfront, increase cash flow, and reduce losing customers (churn).

The flexibility will ensure you can cater to different buyers at different stages in their business life cycles.

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