by Are you tired of always going from feast to famine? There will inevitably be slow financial months for creative firms. On the other hand, business owners in the agency sector may take steps to secure a reliable revenue source.
One of the latest episodes of the Harvard Business Review Podcast, titled “Every Business Can Be a Subscription Business,” featured strategy consultant Robbie Kellman Baxter. He discussed the numerous positive aspects of offering a subscription service. Baxter argued that subscription models are superior to one-time sales because they provide stable income, allow for more accurate budgeting and forecasting, and increase the value of a business.
The trend toward charging on a recurring subscription basis is widespread. As the Global Banking and Finance Review reported, seventy percent of CEOs agree that subscription pricing is essential for attracting and maintaining customers. A whopping 9% of clients leave companies yearly if they don’t provide some contract or subscription service. What is the rate for companies whose recurring revenue accounts for at least 75% of total sales? Only 3%.
Read on to learn how these models function and how to implement them in your subscription service:
What exactly is a subscription model?
The subscription business model is now well-known and widely used. Budgeting a small sum per month has become a daily need, from Netflix streaming to newspaper subscriptions. What makes you think business would be any different?
In its most basic form, a subscription model enables you to repeatedly charge a customer a certain sum in exchange for a defined number of services. It works similarly to a retainer in simplifying and automating the payment and price negotiating process.
What benefit does it provide for creative agencies?
Adding a subscription model or a total switch to one may help creative businesses save time and money without sacrificing quality. First and foremost, with a subscription activation agency, you get consistent income and longer service periods with the same customers. If a customer signs up for one of your packages and stays with you for three, six, or even 12 months, that’s a lot of guaranteed cash flow. You can stop stressing about how many services they’ll use and how much money they’ll have each month. Since there are fewer administrative duties, you may save time and money. This extra time is also useful for focusing on expansion and upselling existing customers.
Methods for launching your subscription service
Saying that subscription models are perfect is simple. Agencies and creative professionals gain greatly from them, but you must bring new customers on board. To help you get your subscription plan up and running, we’ve laid out each step in detail below.
- Examine present services and cash flow
Before moving forward, it’s important to assess where you are financially and in terms of your current procedures. You may improve your recommended packages and make more sales if you keep detailed records of your services, work hours, revenue, costs and objectives.
Probably, you’re making individual estimates for each job and setting up a payment plan with a series of milestones. If you want to go to a subscription-based pricing model, you must first determine where you’re adding the most value and how much time each service will require.
- Plan your essential subscriptions
Making subscription plans is the next logical step. Beginning with this step, you will assemble a package of services tailored to your customer’s specific requirements. A UX design firm, for instance, may provide bundles that include site maintenance to ensure that even when software is updated, the design doesn’t break. Alternatively, you might provide maintenance graphic design services to customers who have already paid for a one-time branding identity or website revamp.
You need to make sure that you have an exact estimation of the worth of your time and how you’ll be able to manage various tasks, irrespective of how you established your core and supplementary services.
- Perform a price analysis
It would help if you then did market research to verify the price you’ve set. Neither scaring away nor losing prospective clients should be your priority.
In an email, you may achieve this by proposing the new model and its anticipated price to your existing clientele. If you get so much praise that all your potential customers join up, you may consider raising your rates. Your packages are probably too expensive if you’re not receiving much feedback or plenty of discount requests.
- Upsell and scale
After releasing your products to the public, you should consider expanding your operations. If your income is more stable, you’ll know whether to buy time-saving computer programs or start contracting out more of your work. Alternatively, you might consider offering your members more expensive or time-sensitive products, such as yearly website audits.
- Make the necessary changes
At the end of three months of employing the model, you should know what you need to change in the model or the marketing. Get some testimonials and comments as well. You may use these to demonstrate the value of your model to prospective clients.
The recurring income from subscription models is the finest aspect for creative company owners. Tailoring subscription offerings to your needs may anticipate revenue and make more informed business and personal choices.
