Subscription models have been on the rise for the past few years. The fact that these subscription businesses are customer centric models is what makes them so appealing. Knowing what impacts your pricing strategy is all based in data and analytics gathered at the different stages of the customer’s journey, and this is what is being used to create customized packages with prices that make sense to your target group.
One of the best examples of a successful subscription model-based business is BoxyCharm. BoxyCharm makes revenue by having margin in the boxes sold, they also have an upgrade option for those that are true make-up fans with limited-edition boxes that are exclusive to those who are members and of course, they make money by partnering with big make-up companies, where they charge a base off marketing price to be featured in the box but can always be boosted by paying additional dollars in your partnership.
Customers are realizing that the Lifetime Value for a product needs to be extremely high in order for them to make an investment in buying the product. A recurring revenue stream is the present and the future of business models.