Are You Getting the Right Price? Determining Pricing Strategy for Ecommerce --

There is no shortage of options in the area of price.

It's good to know that establishing a profitable pricing strategy isn't nearly quite as difficult as you think! Let us break down the advantages and disadvantages of annual and monthly subscriptions. In addition we'll help you with one-time charges, add-on pricing, and how it all works with the business you work for.

 The Annual Subscription Advantage

The larger companies might additionally have a process for procurement that is difficult to complete every month. The annual subscription will ensure that the often complex experience of going through a payment approval process is completed only once a year - protecting your customers from unnecessary headaches related to the procurement process.

 An Annual Subscription Advantage

A factor to take into consideration prior to choosing to provide an annual membership is that it's more of a commitment to the client. The larger price tag can cause customers to spend more time considering the purchase, and this can lead to a longer sales process.

There are many ways in which your business can work with customers who may be hesitant to commit to an annual payment. As an example, you could give them a trial of your service or product. This trial gives them the chance to experience your product before they sign up for a whole year. As an added incentive it is possible to offer special promotions or discounts to convince those who receive trial customers to sign up for the annual plan.

 The Monthly Subscription Advantage

Implementing monthly subscriptions makes it much easier to gain new users. Forcing customers to pay a hefty price upfront can deter customers from even considering your product. This isn't the case with the monthly subscriptions. Because these contracts typically last for a specific time that is, digital items on the monthly model can be less expensive than comparable product that is sold on a single-time sales model.

Likewise, hesitant buyers might prefer the greater flexibility of a monthly plan because they allow customers the ability to purchase only the things they require and only that! Monthly payments that are recurring give buyers peace of mind knowing that they can unsubscribe at any moment.

 A Monthly Subscription Disadvantage

A disadvantage of a monthly subscription is that you have less time to engage with your customer and demonstrate your worth. Your customer has the potential to cancel at any point during the subscription rather than being locked in for an entire year. This is a reason to focus your efforts and efforts on the first touchpoints with your customers. Delighting your customers through a friendly website, engaging welcome emails, and excellent customer service is the key for building long-lasting relationship with them.

 Why not offer both?

 Beyond the Subscription

However, the monthly and annual options may not include all options and services your company has to offer. You may have a single-time setup fee, or additional features that can be added to your subscription costs.

One-Time Fees. This kind of fee is straightforward. Businesses charge a single cost for each additional item or service. The charge is not repeated during the term of the subscription. As an example, certain SaaS services include a single cost to pay for the time and resources required in order to support the customer during the process of setting up.

The Add-On Advantage.
If your company has a range of features and tools, it is worth adding add-on charges as a way to maximize the revenue you can earn. The add-ons offer a reason to potential customers to pay extra for more features. Some customers prefer the "a at-a-la carte" option since it lets them design a solution that is customized with the exact tools and features they need to run their business.

The Add-On Disadvantage.
It can be difficult to understand exactly what kind of services your clients want as well as how much they'll appreciate specific features. In the process of creating an add-on plan, be sure to be clear about the features that your customers can expect to benefit from an additional purchase.

It's also a fantastic idea to help educate customers on what features and capabilities they require to make the most value for the money they spend. A brief description of what other customers have bought can inspire a customer to opt-in for additional features and services.

 Incorporating Complex Pricing into Your Ecommerce Solution

Because your choices are typically much more complicated than just the annual or monthly plans Your e-commerce system should be set up to deal with the complexity. In particular, if you are changing from a monthly subscription to an annual subscription and/or adding unlimited plans or is required to use a discount code. These are some of the things to think about when you are setting up and adjust the pricing structure in your ecommerce platform:

• You need the ability to alter existing subscriptions like altering the billing cycle, upgrading or downgrading the subscription plan, or cancelling or pausing an active subscription.
• Your ecommerce platform needs to include the ability to offer discounts, utilize trials, define amounts, and even add tax.
• Users can alter or cancel their subscription at any time during the billing period. To make sure that the user is charged or refunded in full, a portion of the subscription cost will have to be reflected as a fractional use. A user, for instance, could change plans which has a base price that is different, or to one with an additional billing period.

We hope that this helps you to get started toward an effective pricing plan for your company! Interested in learning more tips to maximize the value of your subscriptions? Get our ebook for free: 8 Essential Features For Every Subscription Management System now.