Questions

What are the best practices when converting an annual membership model to a per use transactional model?

Currently sell annual memberships for £89 which gives unlimited use to the platform. Considering moving to pushing consumers to transact on a per usage basis (price point tbc). Would doing this help meet our objectives to: - Increase annual revenue p/member - Increase conversion rate by reducing barrier to entry.

3answers

Probably not enough information to answer this question here, but...
1. the new pricing models sounds like the monthly charge will be variable and unknown. Some buyers won't like this (eg if you're B2B, they won't be able to budget for your costs)
2. Have customers asked for this? Therein, may lie the answer to your conversion rate question
3. There is no rule that says you have to have one pricing model. Launch a secondary model and let the customer choose. You could even consider framing one as a decoy?
Have to chat further if you're interested
Jon Manning


Answered 2 years ago

Hi,

interesting problem for sure. As Jon eluded to in his response, you probably want to ask yourself the following question: "How well do I really know our customers". I would recommend that you think about your ideal customers and answer the following questions:
- what value they're looking to gain
- what features they think are most important
- what they're most willing to pay

Without knowing what your ideal buyer needs and wants, it is difficult to set the right pricing strategy or understand their willingness to pay for your product. You may find different buyer segment by doing this research, and that's ok. This data will help you create a tiered approach to your pricing where you package the features that are the most important to our buyer personas (and that they would be willing to pay for)

Once you know this, one thing you may consider is doing a small user testing experiment on your new packaging, then A/B test it on your website.

This whole process is called 'value-based pricing' and this how you get to increase your average ARR per client.

Happy to talk to you more about this.
- Loic


Answered 2 years ago

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