Flexible pricing – simple subscriptions are not quite enough

Written by on November 27, 2015 in BillingViews, Features with 0 Comments

The concept of flexible pricing and subscriptions as the foundation of modern business is catching on, according to a survey by Cloud billing specialist Cerillion.

69 percent of respondents to the survey are already embracing subscriptions in some form, and three quarters of the respondents will be there in three years’ time.

The segment that has embraced subscriptions most successfully is medium sized business. This could be, argues the report because medium sized businesses are actively looking for solid, predictable cash flow, while retaining the flexibility and agility seen most often in smaller businesses.

Cerillion DownloadWhilst 69 percent of the respondents (a cross section of industries) are employing subscriptions to some extent, there is also a definite need to offer a variety of payment methods. 43 percent of companies apply discounts as part of a flexible pricing strategy and slightly more than a third see the need for ‘one-off’ product sales as well.

The need to be flexible is clear from the results. While it is easy to grasp the benefits of the recurring revenues generated from subscriptions, it is not that simple. Over half the respondents use more than one pricing model and a quarter use four or more.

This flexibility needs to be reflected in payment methods. And flexibility in payment methods has a clear effect on customer engagement and loyalty.

According to the paper, ‘74 percent of businesses offer more than one payment method, and 38 percent use four or more, showing that offering a choice of payment methods is crucial for many businesses.’

There is a way to go in offering innovative payments channels however.

Bank transfer is still the most popular option (63 percent of respondents), followed by cash, at 57 percent, and debit/credit card at 47 percent.

Offering the flexibility of both pricing and payment methods means that companies can appeal to a greater range of prospects and improve the customer experience (benefits highlighted by 38 percent and 33 percent respectively).

The problem, though, is that while the majority of companies surveyed can see the benefits of flexible pricing and payments, there are (as one might expect) barriers. Over half the respondents see drawbacks with their existing systems and almost a third said that they were too slow to implement change. No change there, then.

It does seem that there is significant progress in the move towards a flexible pricing strategy, or at least a growing acknowledgement that the move must happen. As Louis Hall, CEO of Cerillion says, “whereas in the past billing has proved to be a barrier to progress, now it is being used to enable innovation and quickly respond to shifting markets, even when competitors are biting at the heels.”

With a raft of subscription billers appearing, it seems that a company with a telecoms heritage and an understanding of complex pricing is in pole position to support this transition.

The white paper is free and can be downloaded here (a short registration is required.) A worthwhile read.

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About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .


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