You have a premium service package that’s ongoing. It’s a one-time fee of $10,000 and your customer gets the service for as long as they own the product.
You’ve talked about adding a subscription version and now’s the time. It’s $199/mo until the customer chooses to cancel.
Sounds good right?
After all, it’s much easier for your customer to say “yes” to $199/month than to a lump sum payment of $10,000 — especially if they don’t know how long they’ll keep the product.
And at 51 members, you’re bringing in $10,149/mo each and every month without needing to continuously sell.
This is exactly what Tesla announced recently with their “Full Self-Driving Capability” subscription program.
Several things about Tesla’s new subscription program were done well:
- Easy “yes” monthly payments enhance the customer’s experience with a product they already own.
- This service may inspire new customers to purchase the base product (a vehicle).
- Tesla sees predictable and leveraged monthly incoming cash flow for this revenue item.
- If a customer’s car qualifies, can sign-up right from the vehicle, no human required (think leverage here).
- Customer can easily cancel at any time right from their dashboard.
- The FAQ page is written in English, not lawyer-speak.
And a couple could have been done better from a long-term Client Care and retention perspective:
- Only some customers are eligible. Others will need to pay a hardware upgrade fee (and many are complaining).
- Tesla stated it can raise the price anytime and will give customers a one-month advance notice before doing so. This is common with SaaS (Software as a Service — such as QuickBooks Online) subscriptions.
For the above, I’d recommend:
- making the upgrade fee rebatable after X months in the subscription program so customers get a better experience and we extend the recurring revenue
- grandfathering pricing for existing founder/beta members (we’ve done this since inception for our Get It Done Right and Escalate! Programs)
What lessons can you take from the above in creating/running your membership or subscription program?