In The Subscription Pricing Guide Part 2 – we discussed:
- How to analyze your current profits, Average Revenue Per Client, strategic value, and client roster size.
- We also gave you a free calculator so you could see how a subscription pricing option could help you achieve your cash flow goals.
In Part-3 we’ll discuss what makes subscription pricing fail and what makes it successful. You’ll know what to avoid and what to execute if you decide to add a subscription pricing option to your menu.
Part 3 | What causes subscription packages to fail or succeed
Regardless of where your practice is geographically or how large your client roster size is, Subscription Pricing Packages fail for the same main reasons.
If you can identify the reasons pricing packages fail, this will act as a final “gut-check” to see if having a subscription option will be right for you. Understanding the failings will also give you a powerful key to success because once you eliminate everything that could cause your pricing packages to fail, the only option left is success.
Your pricing package is focused on the wrong value.
- Offering packages based solely on low-value compliance work.
- Not defining what the client wants before enrolling them into a package.
- Tying the package value to you personally instead of to a defined process to help the client achieve their objectives.
- Bottom Line | If you don’t tie your packages to helping clients achieve the things they care about most, they won’t be interested in paying you monthly.
The specific price points of your packages are unrealistic.
- Not balancing affordable fees with your required margins to ensure your presenting the right price for each client.
- Saying “yes” to every client instead of only the ones that are profitable.
- Not believing you deserve to get paid for your help. Even if you’re new to offering strategic advice to clients, with available training you can, and people in your practice need the help.
- Pricing your fees for “whales” or “unicorns”, not the real businesses and individuals that want a year-round relationship.
- Bottom Line | The pricing for your packages must be optimized and focused on the right elements for each client you enroll.
There’s no defined process to deliver the value the client signed up to receive.
- Firms need a process to follow that delivers the results the client signed up for.
- You don’t have to reinvent the wheel, “there is nothing new under the sun”. There are basic strategies that work when it comes to helping clients – defining goals, analyzing key success indicators, neutralizing threats, and working an action plan.
- The key is to make sure you don’t over complicate your process so you can make progress and focus on the things that matter inside the client’s situation.
- Bottom Line | If you don’t have a process to deliver the value tied to your packages, clients will churn.
The roll-out strategy to clients is fundamentally flawed.
- Offering too many complicated pricing options that are confusing for you to explain, difficult for clients to understand, and impossible for you to manage.
- Trying to hard sell clients instead of simply educating them and allowing them to pick the right engagement level they want.
- Trying to roll-out your packages to too many clients at once.
- Not getting buy-in from your core staff.
- Not taking advantage of the deadline times and thinking you can only educate clients at certain times of year (all year you’re either planting or harvesting or getting ready to plant or harvest). Your roll out strategy needs to naturally align with all times of the year.
- Bottom Line | How you roll-out and educate your clients about your packages, will have a direct affect on your success or failure.
| How can you make your subscription fees option successful?
Plenty of people want to tell you you should update your pricing, but they don’t tell you what to do, in what order, to make your pricing packages really work.
We’ve gathered data from helping over 1,000 firms in the last decade optimize their pricing. Here’s exactly what the data show you need to do, step-by-step.
A successful transition is a 3-step process:
- Tie your subscription fees to strategic help, not just compliance (and have a process to deliver that help).
- Clients have questions and their financial lives, taxes, and their business success – the answer to their question is usually, “it depends”:
- What are the client’s goals?
- What are their current roadblocks stopping them from achieving what they want already?
- What other threats are there they aren’t thinking about?
- What actions need to happen, in what order, by whom, to actually implement a solution that will solve a problem or deliver a result? Not just give a “quick” answer to a “quick” question.
- Basing your year-round process around that simple progression of logic, will allow you to deliver strategic help to any client, in a natural way. And, get you paid monthly for your help!
- Make sure your fees are realistic and not for just “whales” or “unicorns”.
- The average monthly subscription price right now ranges from:
- $50-$500/Month for Individual Clients (non-business owners)
- $100-$5,000/Month for Business Clients (Schedule C, S-Corp, C-Corp, LLC)
- Once you get above the $5,000/month price point for a business, the small business rightfully should compare your subscription fees to hiring a full-time employee. The reason subscription pricing makes so much sense for most businesses and many individuals is the value they’re receiving through your firm is significantly higher than their monthly fee.
- Example: If I own a $250,000 Revenue Construction company and I could potentially pay $500/month to your firm to get Tax Preparation, Tax Planning, Accounting Help, Payroll Management, & CFO Strategies. Conversely, I couldn’t even hire a part-time receptionist for $500/month – so the value proposition for $6k/year makes perfect sense. If that fee all of the sudden became $60k/year, then that’s probably not reasonable for that size of business.
- There are businesses and some individuals out there that can afford and should pay multiple $1,000’s each month for their subscription. But they are less prevalent compared to most “main-street” businesses and wage earners in America. Your pricing should always match the value you’re delivering, but you don’t have to charge thousands every month to offer subscription pricing or strategic help.
- Roll out your subscription pricing packages to a controlled group, don’t try to make this transition at once, overnight.
- Offering a Subscription Pricing option is not a light-switch you can flip overnight and transition every client over to it. It should happen strategically and at a controlled pace so you don’t create chaos or more work than you have the capacity to handle.
- Start with just a small group of clients at a time, we recommend just five. Then you can convert that group, educate them about the value they’re receiving for their monthly fee, and ensure you have the systems and processes in place to deliver that value.
What are the next steps?
After seeing what it takes to successfully add a subscription pricing option to your menu and the key-components that make it not work, you should now have an idea if you need to update your pricing menu or if you’re better off sticking with what you have.
Subscription pricing isn’t for everyone, but if it does fit your firm, the benefits can far outweigh any time, work, or investment needed to add it as an option.
If you look at your current pricing and believe you should add subscription pricing packages, following the three-step process outlined in this guide will naturally address all the things that could cause your subscription pricing to fail.
Don’t over complicate what needs to happen or get hung up on the fail list, just focus on the three things you need to do to be successful.
If you would like a shortcut to adding subscription pricing, you can use the SmartPath Method and access our pre-built pricing packages.
Here are two recommendations:
- Take our free mini-course – How to Launch Pricing Packages that Work and see step-by-step how to add a subscription pricing option in 6 short lessons.
- Schedule a call with us – If you’re ready to get paid for your knowledge and start generating automatic monthly recurring revenue, we can help you roll-out pre-built pricing packages so you don’t have to create them yourself.
To your success,