You need to be selling subscription services

Published in

The Startup

5 min readFeb 6, 2018

Not too long ago, software was almost always sold as a piece of software you purchased at a store and installed on your computer to run. Today almost all software is sold as a subscription service on the cloud.

It hasn’t stopped with software, everything is now available as a subscription service.

From Forbes

In the month of April 2017, subscription company websites had about 37 million visitors. Since 2014, that number has grown by over 800%.

If you are a business owner you should look at moving to this model or risk losing out on major benefits that can be gained from selling your services as subscriptions.

The Subscription model gives you more predictable income, more value out of your customers, and more opportunities to upsell on premium packages.

Why should you be selling your services as a subscription?

Businesses who switch to a subscription model generally see three main benefits right away.

Predictable Income Stream

One of the biggest complaints of people trying to start service-based businesses is the unpredictability of income. They aren’t always sure when the next project will come and can go periods of time without making any money.

When they move to a subscription model, a lot of this instability goes away as you are guaranteed a certain amount each month. This is not only a great way to give yourself peace of mind but is also a good indicator of what your workload is going to look like at any given time, allowing you to allocate resources optimally.

You also stop chasing down clients to pay their invoices as the money gets deducted from their accounts automatically each month, putting payment responsibility on the customer’s shoulders instead of your own, saving you time.

Increased Upselling potential

When a customer subscribes to your service, you get an opportunity to show them your quality. One of the biggest barriers to people pulling the trigger on expensive services is trust, they do not trust they are going to get the value being promised to them. As a business selling cheap subscriptions, you can show your customers they can trust you with more expensive items by being given the opportunity to build great relationships with them.

A few tips on how to upsell customers while using a subscription model:

Give current customers free trials of premium services to give them a sample of your more expensive solutions
Inform your customers on related services they may be interested in.
Put gates on your tiers so when your customers are doing well, they will need to upgrade, for example a SaaS company may price their subscription options based on number of paying customers.
Give customers a large discount for purchasing annual subscriptions, a year commitment is a very valuable asset.

Data driven business

One of the best things about selling subscriptions is the amount of data you can utilize to make decisions. You can accurately gauge marketing efforts immediate through the number of subscribers gained as well as how your decisions impact the services you provide by looking at the churn rate.

The more information you arm yourself with the better decisions you will be able to make.

When using subscription data to make decisions:

Keep track of your MRR (Monthly recurring revenue) and ARR (annual recurring revenue)
Make sure paid advertising is netting you more than you are spending, pay close attention to the conversion rate
Ask customers for feedback on what they like and dislike about your service to reduce churn.

How do you get started selling subscriptions?

If you want to sell subscription services but don’t know how to start,

Find a platform to sell your services

Not everyone’s website will support the “ideal” set of features needed to start selling subscription services, be sure that you can get the following features for the best experience for both you and your potential customers.

Automatic billing — This is a must, being able to put in a credit card and be charged on a monthly basis is the core of any subscription business.
Advanced forms — Depending on your business model, the data which your potential customers need to input could get quite complex, especially if they impact billing.
Free trials — Giving customers a trial of your service is a good way to gain the trust of your clients, if you want to get people in the door, giving something out for free almost always works.

If you don’t have all of these features with your current website, check out ServiceBot, a platform which makes selling subscription services extremely easy.

Design your services

The first step to selling a service as a subscription is to design a “productized” version of your service. This boils down to coming up with a standardized package of features to be delivered each payment cycle.

This will give the customer a good idea of what will be delivered and will also keep your workload predictable due to having standardized the amount of work (eliminating scope creep)

Here are a couple of tips to keep in mind

Offer options for any budget
Offer free trials, especially when just starting out, to encourage early adopters and build trust.
Show your commitment to quality early and often, happy customers will stay with you and spend more money in the future

The results speak for themselves

In the US, 40% of revenue comes from returning or repeat purchasers, who represent only 8% of all visitors

Moving to a subscription model is good for your business by tapping into the growing subscription economy. It’s good for you by giving you a predictable revenue stream and workload. It’s also good for your customers, by giving them more control over how they spend money and gives them a chance to build trust with businesses before pulling the trigger on more expensive engagements.

Looking to start selling subscription services? Try out ServiceBot