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Advantages Of Implementing a Subscription-Based Pricing Model

Choosing the right partner can make or break your company’s logistics, customer service, and repeat purchases. Using a fulfillment center like Shipfusion frees you from navigating the fulfillment landscape with zero stress. Below are some insights on how Shipfusion can take your business to the next level.

Looking to keep customer-retention and increase sales? Then its time to look into a subscription model. Subscription-based businesses are on the rise, there are several advantages to billing customers on a recurring basis. With a recurring billing model, your business could see substantial and sustained growth as well as increase revenues. 

Advantages of Subscription-based pricing: 

Recurring payment offers foreseeable revenue:  When your eCommerce business is operating at a pay-as-you-go model, you are consistently trying to attract and convert customers to keep earning revenue. This can be stressful and expensive– one poorly performing month or two could set you back and it can be harder to recover the investment towards the initial customer acquisition. Adding a subscription-based business model guarantees payments on a regular basis, helping your business predict revenue growth each month. Another great incentive of offering a subscription-model is being able to predict inventory levels and stock each month. 

Subscription-based pricing models help attract potential customers: When you think about customer price points,$50 dollars a month is more enticing than charging them an upfront fee of $500. Charging a higher price point creates a barrier to entry for customers to purchase your products. Subscription payments lower that barrier and allow more potential customers to buy your products since you are not impacted by the cost of shipping items by signing on to a fulfillment center like Shipfusion.

Upselling and cross-product selling:  Through a subscription-model gaining customer trust and brand loyalty is easier due to the constant contact you keep, this makes it much easier to market and sell additional services. Upsells to customers are easier with a subscription- model since the customer has a prior relationship with you and your company. Once subscription fees have become a routine part of the consumers’ monthly expenses, it becomes easier for them to see features as more affordable. There are several different types of pricing models like: tiered pricing, volume pricing, frequency pricing, etc… that can allow customers to upgrade easily when they feel ready without a pressured sales push. 

Popular subscription-based companies 

Whatever kind of eCommerce company you are, the first step to better understanding pricing subscription models is by taking a look at successful subscription companies across the eCommerce space. 

Streaming: Online content streaming services are the most popular examples of a subscription business model. Companies like Netflix, Hulu, Apple Music and Spotify have all built incredible successful subscription-models. These are great examples of value-based pricing and Spotify’s free plan helps users get acquainted with your platform. 

Monthly subscription boxes: Subscription boxes like Bite and FabFit Fun built their businesses by streamlining the process of shopping for consumer goods like clothing and beauty products. The subscription pricing works because it monetizes convenience for their consumers. This model is combined with data and customer personalization to help develop strong customer relationships that drive their growth, most often customers are willing to pay an extra premium to have consistent delivery. 

Food Services:  Meal-kit services like HelloFresh and Chefs Plate are an example of companies that use a convenience-based subscription model– much like subscription boxes they add value by providing access to specialized products catered towards diet trends. You can also add revenue boosters like add-on items and up-sales to your boxes like a keto box, gluten-free box or vegan box subscription, increasing the initial cost of the subscription user. 

How to Start a Subscription Box Business in 8 Simple Steps

  • Start with a great subscription box idea.
  • Price your subscription box.
  • Put together a prototype subscription box.
  • Begin your prelaunch phase
  • Set up your website, Marketplace listing, or both.
  • Start taking orders and ship your subscription boxes.
  • Success!

Shipfusion sets your business on autopilot and combines flexible, reliable fulfillment with powerful, real-time technology. Shipfusion has multiple fulfillment centers across the US and Canada– making it easy to manage your eCommerce business. For more information on how to set your business on autopilot, contact one of our fulfillment specialists today.

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