The principle is that subscribers pay a monthly or a yearly subscription fee in return for access to a service which will not be charged when used. The non-subscribers may also have access to the service but they will have to pay a premium price to use it.
A well-known example is:
- Road recovery services
Before you start
- Assess the value of the service you want to provide to see how essential it is
- Estimate the risk aversion of your target group
- Calculate the amount subscribers are willing to pay
- Evaluate infrastructure and maintenance costs
How to start?
- Provide service at normal price in order to identify different costs and to obtain feedback from users paying for these costs.
What are the key success factors?
- Service identified as highly valuable and necessary
How to cope with the threats?
- Alternatives to the risk which is covered such as public transports for road recovery services
- Cover the alternatives too
- Facilitate the usage of alternatives
- Make subscription dependent on the usage of the main product
- Lower risk aversion from subscription users
- Tell them about the costs in case not covered
- Make usage to coverage mandatory
- Subscribers who overuse the service
- Provide advice to limit the risk of usage
- Lower cost structure offered by competitors
- Provide premium service