Choosing the Right Subscription Duration

The most important factor that adds to the significance of the subscription business model is the subscription duration which is the time period during which the subscription remains effective under agreed-upon terms and conditions.

Subscription duration is important because it directly links with the subscription renewal rate. Also, the subscription renewal rate is directly proportional to the customer retention rate. So, what we want our readers to do is strategize before setting subscription duration for your targeted customers.

For instance, if there is a Chinese restaurant, it cannot run its subscriptions successfully with a subscription duration of a year. No one wants to eat Chinese or the same food for a year long.

Thereby, you need to study the market and above all your customers to decide the right subscription duration.

Factors to Consider While Deciding the Subscription Duration

Our team of experts can help you with listing the factors that must be considered before deciding on a subscription duration for your business.

1. Usage Pattern

Automated subscription management tools enable retailers to continuously monitor the usage patterns of their products or services. If your product is frequently used, then you can opt for long subscription durations. For instance, people need newspapers daily and magazines weekly or monthly. Thereby, many magazines and newspapers offer annual subscriptions or subscriptions for six months as they know the frequency of purchase from the reader’s side.

Also Read: The Billing Frequency That Suits Your SaaS Subscription Business

However, as mentioned earlier, a short subscription duration is suitable for restaurants, but also, some restaurants, offer seasonal subscriptions. Many ingredients are available in specific seasons and some kind of food items give their flavor in a specific season.

2. Value Proposition

The second most important factor to decide the subscription duration is the value proposition. You need to see the value that your product or services offer. Some subscription products and services do not offer immediate value rather they take time. For instance, Salesforce and SugarCRM are huge platforms offering a suite of applications. However, not all customers are tech-savvy. Whenever customers get integrations for these CRMs, they need enough time to get hands-on experience with such platforms.

Time is needed to understand the value of these SaaS platforms. So, the ideal SaaS subscription duration can be longer. It can be even a biennial. Also, these days, the focus of many SaaS platforms is product value. So, if your SaaS product offers more product value, then you can even opt for short subscription durations. The point is to keep product value and subscription duration side by side while you are deciding the subscription duration.

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Also Read: Why Value-Based Pricing Approach Is Important For Your SaaS Business

3. Pricing Structure or Pricing Plans

Your subscription duration will also be dependent on the pricing structure. In the subscription business world, there are different pricing plans that businesses opt for. However, most businesses are opting for a hybrid billing model as it allows them to improvise the pricing plan at any time as per the business needs and changes in the market trends.

Review your pricing model and how it aligns with different subscription durations. Longer subscriptions can often be incentivized with discounted rates or additional perks to encourage customer commitment. Consider the financial implications of offering different durations and ensure that the pricing structure remains sustainable for your business.

4. Competitive Landscape

The subscription business market is staggeringly competitive, we all know this. This time, use this competition for your benefit. Analyze the subscription durations and your competitors offer and analyze how productive these subscriptions turn out to be for them.

However, once again, the one-size-fits-all approach cannot help you. So, you can offer the same subscription duration to your subscribers, but if it does not work for you. Improvise the subscription duration instantly. You also need to understand the sensitivity of subscription duration. If it is set wrong, it will have a direct impact on the customer retention rate, revenue stream, and pricing plan as well. So, analyze competitors and stay vigilant to decide the right subscription duration for your subscribers.

5. Customer Acquisition Rate

Other than retention, customer acquisition rate is the KPI that you need to keep in consideration while deciding the subscription duration. If you decide to go for a longer subscription duration, then the upfront cost for the acquisition of the customer will be high. However, once you onboard the customer, it will potentially lead to stronger customer loyalty and reduced churn.

On the other hand, a short subscription duration can make it easier for customers to try your offering and may attract a larger customer base.

Also Read: Maximize Customer Acquisition & Revenue Generation with Gift Subscriptions

6. Flexibility & Upgrades

Subscription businesses can also go for offering multiple subscription durations, and many retailers in the market are doing this. Customer satisfaction is the key to customer retention. and to make customers satisfied, you need to offer subscription plans, pricing plans, and the subscription duration of their choice. Why is the focus so much on customer satisfaction?

Today, customers are educated, and they demand improvisation in pricing plans and subscription durations. And the reasons for such demands are varying. However, to cater to such demands, subscription retailers need to keep their subscription durations flexible enough so that they can make changes accordingly.

In conclusion, finding the right subscription duration involves a balance between meeting customer needs, aligning with your business goals, and creating a sustainable revenue model. It’s often helpful to test different durations, gather customer feedback, and iterate based on the insights you gain.

However, to implement your subscription duration and monitor its results, you need a robust subscription management platform that we offer. A rightly planned subscription duration and an efficient subscription management software like SubscriptionFlow can do wonders for your business. To see how, schedule a demo today!