Is it time to ditch recurring billing for your subscription business? As we’re entering 2013, the small business is more nimble than ever before. As companies increasingly hire independent contractors on a project basis instead of long-term permanent hires and executives opt out of having assistants, it’s apparent that business is changing rapidly.
Disruptive technology entrepreneur Ray Sobol recently argued in TechCrunch that SAAS companies should display the same level of flexibility and roll out pay-as-you-go plans. While his controversial stance sparked discussion, thought leaders are increasingly emerging in favor of keeping your subscription business on a monthly payment plan. There’s no way to switch to a more flexible billing plan without sacrificing client relationships, a factor that experts believe matters more than ever in 2013.
Client Relationships Matter
Jason Rushforth recently reported in Financial Services Technology magazine that client relationship management isn’t an optional focus in our modern economy. Consumers are increasingly connected and savvy. If they feel their needs aren’t being met or lines of communication have been fractured, a quick Google search can reveal pages of contact information for your competition. Companies that thrive make a habit of listening to their consumers’ individual needs, responding quickly and continuing to differentiate themselves from competition.
Maintain Competitive Pricing
For most owners of a subscription business, developing competitive pricing is a crucial component of their go-to-market strategy. Blindly switching to a pay-as-you-go business model can hurt your ability to offer pricing within the budget of your average small business owner. According to Tien Tzuo in TechCrunch, being able to predict revenue is critical. Maintaining a monthly or annual subscription model allows you to plan better and allocate resources towards maintaining a competitive edge in other areas that matter to staying ahead.
Your Clients Want Predictability
Predictability as a concept is an essential selling point for products across industries in 2013. In a world where privacy is a significant concern for many consumers, mobile phone companies who’ve moved towards unlimited options are thriving. While pay-as-you-go plans may have worked a decade ago for consumers who could anticipate needing 1000 minutes of talk time, it’s less relevant today for consumers who don’t want to feel that their phone usage is “on the clock”. Even if they don’t take full advantage of their unlimited data options, having the freedom to utilize the phone heavily, if needed, is a major selling point.
You Can Customize
The client is still king, and a key to remaining better than other companies in your niche is being able to flexibly provide your clients what you want. Establishing the systems to bill on a weekly, monthly or annual basis could be important to providing your loyal clients with what they want or need. It’s not really a matter of whether the monthly billing model is dead for SAAS companies, even though all evidence indicates that it’s clearly not. It’s about maintaining a business model that allows you to plan revenue and continue to improve, and maintain client relationships every time.