As subscription products become more complex and consumers demand more customization options, businesses face a new challenge: the ability to quickly adapt and deliver the flexibility that prospects demand. 

So, Matt Lindsay, CEO of Mather Economics, and I, Niraj Naik, VP of Product Management at Recurly, wanted to equip you with all the insights and make it happen. Watch our Subscription pricing & packaging: How to optimize and implement virtual event now, or keep reading to get a recap of the sessions.

How to test and optimize pricing models that maximize revenue

We started off strong: Matt Lindsay, CEO of Mather Economics, delved into the intricacies of subscription pricing strategies during a groundbreaking session. This session provided insights into key turning points throughout the customer lifecycle, current pricing trends, and the calculation of the all-important price elasticity.

In his opening remarks, Lindsay highlighted three essential stages in the customer lifecycle that inform pricing strategies: acquisition pricing, the transitory phase from promotional offers to regular rates, and the management of ongoing pricing.

Conversion challenges and churn rate projections

Today's subscription landscape sees a prevalent use of introductory offers to attract new subscribers. Strategies have shifted towards securing full rates from customers instead of using retention offers. 

An attractive approach involves lowering the price point to increase conversions and new starts; however, this could provoke higher churn rates. Interestingly, customers who remain subscribed after a substantial price increase exhibit less price elasticity.

Having a deep understanding of price elasticity assists in optimizing revenue and volume, as it mirrors the percentage variation between volume and price. Deploying this knowledge helps businesses maximize their introductory price and terms, leading to more effective acquisition strategies.

Honing in on customer churn with a realistic perspective, our speaker emphasized the need to monitor additional factors like customer service calls and product changes, which are essential for estimating the net effect on business volume and revenue.

In foreseeing the engagement process, Lindsay addressed the use of data collection on pricing, customers, and technology for the purpose of current state assessment. Such data is crucial for measuring price elasticity with different models, creating a product-specific demand curve, formulating quick revenue-generating strategies, and developing long-term pricing plans.

Now, onto the action–my favorite part.

How to deliver pricing flexibility through your product and tech stack

I was honored to share how Recurly can help brands like yours build a billing and payment experience that delivers pricing flexibility and customization opportunities:

Offering personalized experiences through billing flexibility

Flexible billing models are crucial to further enhancing customer acquisition and retention–diverse pricing models, add-ons, and assorted payment methods can enrich the customer experience.

Scaling subscription billing with effective data management

Building an efficient subscription billing system that is scalable should be a top priority for businesses. An API-first billing solution can enable a personalized customer experience and promote efficient data management.

Analytics and reporting: Deciphering Customer Lifetime Value (LTV)

Leveraging reporting and analytics to understand the overall impact of different pricing strategies on the customer's lifetime value (LTV). Understanding subscribers' preferences and behavior can help businesses tailor their offerings based on customer needs.

The omnipresence of technology in the subscriber lifecycle plays a pivotal role in customer acquisition and retention–it's key in offering personalized prices, visitor identification, and tracking behavior, all contributing to acquisition and conversion. Technology helps track usage, design upgrade and downgrade paths, and automate cancellation flows, saving customers.

Exciting, right? Get way more insights and interesting best practices to enable subscription-based pricing and packaging offers that cater to consumers’ unique needs and preferences. Watch it on demand now!