As someone who has value-priced for the past decade, learning of Ron Baker (pricing god) deep-diving into subscriptions or what he calls Value-Pricing 2.0 has boggled my mind these past couple of months.
Learning about it I’ve come to terms that John Warrillow had cleared up what types we should be focusing on in his book ‘The Automatic Customer’. Go buy it.
The Network Model
The model where the service gets better where more people join. You can offer a remarkable experience that people feel compelled to share. (If your product is only somewhat better than the alternative, this is not the best model.)
The Network Model is best suited for companies that have a lot of capital, or enterpreneurs that are good at raising it
The Surprise Box Model
Deeply discounted for a very specific customer.
A big part of the reason people subscribe is the excitement of always finding something new. Consider how you’ll keep surprising subscribers with new products, month after month.
The All-You-Can-Eat Library Model
All access model, usually accompanied with a freemium product as a taster.
To prevent subscribers from “cherry picking,” it may be
necessary to give customers an ultimatum: subscribe to the
entire library or lose access.
The Private Club Model
A limited supply, usually paired with premium product.
The secret to making a private club work is not offering a la carte access. You force customers to make a decision: if they want access to something truly rare, the only way they can have it is by entering into a long-term relationship.
The Front-of-the-Line Subscription Model
Selling priority access, usually through some form of waiting in line to get your product offering.
The Front-of-the-Line Subscription Model can be used in conjunction with other subscription models to add an additional annuity stream of recurring revenue.
The Membership Website Model
A tightly defined customer based on education and the ability to level up in an area.
Sometimes related to products or services you can sell to your customers.
The Simplifier Model
This subscription model works well for personal services. Everyone wants to simplify their life.
A service that your customers need on an ongoing basis. The ability to sell to relatively affluent, busy consumers. A personal service business like pet grooming, massage, tutoring, swimming pool care, window cleaning, etc.
The Consumables Model
To compete with Amazon and the other Big Box retailers, you need to brand what you sell as your own. Name the product yourself even if you’re buying it from a supplier.
Ensure you have a steady flow of supply. Either take control of the manufacturing process or ensure you can find enough supply when you need it. Don’t underestimate the logistical challenge of fulfilling a physical product or service for thousands of subscribers.
The Peace of Mind Model
The serenity of knowing you’re covered in the event of a catastrophe. Can anyone say insurance?
Limit your risk. Premiums may look like free money, but you need to ensure you have the resources and infrastructure to honor your commitment if your customer calls.