6 things Tesla did well with their new subscription program and 2 to tweak/avoid

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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?