25 Pricing Strategies for Subscription and Online Commerce

OneBill Subscription Commerce Platform
e-Book

25 Pricing
Strategies
for Cloud Subscription Business

A publication of OneBill
www.onebillsoftware.com

Top 25 pricing strategies

Recurring Variant Tiered One-Time
Frequency Just-In-Time
Pricing Pricing Purchase
1 2
4 5
3

Featured Usage Loyalty Time of The
Based Bundle Pricing
Metering Day
7 9 10
6 8

Preferred Partner
Discount Rule-Based Term Based
Customer Pricing
11 13 14
12 15

Threshold Overage Elastic
based billing Trials Freemium
Pricing Subscriptions
16 17
19 20
18

Early Bird Price
Go Social Terminations Coupons Personalization
22 24 25
21 23


1
Recurring
Frequency

Recurring Pricing or frequency based pricing is probably the common
pricing model for any subscription business! This form is often used
because of simplicity in sales model and limitations in the subscription
platform or service.

“Pay as you go - $10 per user per month”
The core strength of a platform as OneBill - is you can define any frequency
modes like daily, monthly, quarterly and annually virtually, with no
programming, in support of customer acquisition and retention objectives.

www.onebillsoftware.com Top 25 Pricing
Strategies

2
Variant
Pricing

“Different strokes for different folks”
Variant pricing implies that you can customize the products /
services to suit the customer’s budget / requirement.

For example, you can offer a simple - low cost plan for basic
business users to encourage them to experience your service -
and a progressive pricing plan for additional features to lock
them into to increase revenue - via pricing personalization and
automation.

Strategies

3
Just-in-time
pricing

What is just-in-time pricing ?
Just-in-time pricing is a new idea making waves in the subscription
world. In this model, the price for the product / service is derived
dynamically at the time of purchase based on different attributes.

For example, in the publication and media world, the hottest news
article will cost $1.00, but if the same article was read after a week, it
will cost few cents or even free.

“ No fixed price, dynamically fetched at the time of purchase based on
business rules defined.

Strategies
” Top 25 Pricing

4
Tiered
Pricing

Buy more to save more
Tiered pricing or Volume pricing is a strategy to price the service
based on the volume of purchase. The idea is to encourage bulk
purchase so that better discounts are applied to orders that has
volume. Check out the different patterns of tier pricing:

Volume
Price
Threshold Threshold Pricing
Volume Based (Appropriate charge for quantity). For 15
0-100 $10
qty, the slab rate is $9 and so the entire Q15 will be
101-500 $9 charged @ = $9. = $9 x Q15 = $135
501-1000 $7
1001-5000 $5

Volume Tier Price Volume Based Pricing
Charge based on the step the quantity falls in: For 15 qty,
0-100 $10 the charge will be calculated as :
101-500 $9 [1-10] @ $10 x Q10 = $100
+ [11-20] @ $9 x Q5 = $45
501-1000 $7
Total = $145
1001-5000 $5

Strategies

5
One-Time
purchase

“Price for service / product charged just once”
One-time pricing is the simplest pricing strategy that the subscription
business has inherited from e-commerce world. For some of your
customers, you may have a need for one-off sales. OneBill gives the
ability to either add one item or load in an entire catalog to sell to your
customer base.

For example, pay for installation charges just once!

Strategies

6
Feature Based
Pricing

Let your customers chose how they want to
pay - dynamically
Feature based pricing is a revolutionary strategy based on price
personalization of a product. This pricing model allows customers to pay for
the specific features they use. This essentially means that charges will be
based on features within a service that a customer choose.

For example, customers can select the IaaS server
requirement by entering the parameters listed in the image.
By choosing the appropriate values for the requirements –
Memory, OS, number of monthly Hours, Storage and
Bandwidth, the price per server is dynamically calculated to
give an estimate charges for monthly subscription.

Strategies

7 Usage
Metering

Pay per Use!
Usage metering is the way of computing charges based on actual
usage of any service. The service usage unit can be in any form, for
example – storage kilobytes, MB, GB, calls, minutes, licenses,
features, software usage, data, messages sent , bandwidth etc.

Usage metering most importantly is a framework tracking use of any
unit type thus calculating charges for customers invoice.

“ Usage metering example: pay for number of SMS used, minutes you spoke.

”
Strategies

8
Bundles

“Bundle offers include two or more services
that are creatively pre-packaged as one
single offering”
Bundling is an offer that includes two or more services . A creative way of
combining offers so that customers buy them as a collection, not possible
otherwise. Of course, BUNDLE offer price advantage to customers because
they buy more than just one of your service together.

But @ OneBill, creating a bundle is as cool as select, group and price!!!!
Now that’s pretty cool!!!

Strategies

9
Loyalty
Pricing

“We value your continued business. Here
is our token of appreciation”
Loyalty Pricing is a way to consider the loyalty points accumulated by
the customer at the time of purchase. OneBill has unlocked the
secret to accumulating rewards points for customer redemption. Just
turn on the feature and track your customers loyalty points
accumulate based on our corporate policy.

“ Example: Customers earning loyalty points based on the social behavior for
promoting the product to other fans.

”
Strategies

10
Time of
the Day

“Telco like pricing – Price of the service depends
on when the service was used”
TIME of the DAY – Pricing model that is based on the time of the day when the
service was used / purchased. You can create rules to specify the day and time
and give away special offers.

“ Example: Video streaming during peak hours can be slightly more expensive
when the traffic is high than on non-peak hours..

”
Strategies

11
Discounts

Discounts – There are different ways to
offer discounts
• Discount offered for a particular service
• Special discount for specific customers
• Order time discount – based on certain rules
• Bill time discount – based on certain rules during billing

“ Focus on how to acquire customers, not build a discount module for your
billing engine!

”
Strategies

12
Rule-Based
Pricing

That’s right! any pricing idea under the sun!!!
Rule Based Pricing is a way of defining the price of a product based on
various attributes during the shopping flow. The price of the product is
dynamic and based on various attributes that gets calculated during the
transaction.

For example, the product can get an discount of 10%, based on the
region of the customer.

“ You think of a pricing concept and be assured that it can be created and
implemented using OneBill Pricing Designer

”
Strategies

13
Preferred
Customer

You define who your preferred customers are!
Preferred Pricing is a way of defining certain categories of customers within the
business and offering special pricing to them, thus making them feel special and
ensuring loyalty.

For example, returning customers or existing customers can get special
discount than a new customer who sign-ups for service.

Strategies

14
Partner
Pricing

Create a channel network 1+1 = 3
Partner Pricing is one of the complex tasks in subscription business,
because it involves defining pricing at various levels for all the
products. Keeping track of price points, making price changes,
promotions and managing them all can become a settlement
nightmare.

A subscription platform approach that has support for robust partner
management features helps to create an effective channel network
of partners and also easily manage the price changes at various
levels.

“ Create pricing at various hierarchies of channel strategy and
have complete control of price changes at any level!

” Top 25 Pricing
Strategies

15
Term Based

“Get 30% discount
on a one year contract”
Term based pricing allows recurring pricing that is fixed for a term. The price
points for the product remains unchanged irrespective of the market / price
fluctuations as long as the customer is within the term period. Term pricing
helps businesses to get long-term commitment and loyalty from the
customer.

Strategies

16
Threshold
based billing

Generate bills automatically when the
service reaches a threshold limit!
In case of Threshold based billing, the service providers set a threshold limit that is
custom for each subscriber. When the subscriber’s account reaches the threshold
limit, the billing system generates OnDemand bill and charges the customer to the
next pre-defined charge limit.

For example, in case of Skype VOIP service, $10 Skype credit can be used for
making calls until the set limit. Skype billing system will automatically charge
customer's account for next $10 credit limit when the customer exceeds the $10
limit.

Strategies

17
Overage
Pricing

Dealing with excess usage beyond entitlement

Overage Pricing is a typical Telco style of treating a charge when the user
goes over the service limited for the plan. For example in case of cell
phone providers, the cell phone users get a monthly quota of minutes.
When a user goes over the minutes allowed under the particular pre-
paid / post-paid plan, he is charged separately for the extra minutes. This
fee for the extra minutes is called overage fees or overage charges.

Overage pricing are typically useful for services that has usage component
like minutes, bandwidth, storage space, licenses etc.

Strategies

18
Elastic
Subscription

Manage your subscriptions the way you want

Subscribers are on a lookout for the flexibility to increase / decrease licenses,
upgrade / downgrade, suspend/resume licenses and manage their renewals
constantly. A platform that helps manage the operations of a subscription
business efficiently is the key to increase customer retention. We call it “Elastic
Subscription” – flexibility offered to customers to manage their subscriptions the
way they want to.

“ Increase / Decrease, Upgrade/Downgrade, Renewals,
Suspend/Resume, Cancel – DIY anytime!

” Top 25 Pricing
Strategies

19
Trials

Try me out first….
Trials are the most effective ways of converting free user to paid
subscriber. B2C businesses heavily depends on this pricing model to
attract their prospects to paid customers.

Example: 30 days free trial

Strategies

20
Freemium

Give away basic features for FREE and
CHARGE on premium features
FREEMIUM works for businesses that thrives on volume of customers.
Offer service for free, pay for premium features.

For example, LinkedIn offers free service for anyone to register their
profile. Pay for premium feature

Strategies

21
Go Social

Go viral with your social presence
Social Commerce - Cloud service providers can now automate and measure
social media campaigns. OneBill’s Subscription Commerce Platform that has
extended traditional system offer functionality via interaction with social
commerce: Facebook, Google+, LinkedIn, Twitter, FourSquare, and others.

A provider can monetize social media efforts by a process of:
Create – unlimited offers and promote into social media
Influence – encourage fan / influencer endorsement of specials, offers, and
services Reward – instantly update influencer profiles with discounts for future
purchases

“ What is needed are new approaches that recognize and leverage the best
social aspects of social media and combine them with efficient commerce
practices directly within the social networking environment

” Top 25 Pricing
Strategies

22
Termination

Remember termination
in your pricing strategy

Think of Termination policies when you define pricing strategies for
your products. Termination clauses needs to be transparent for
subscribers so that they have the flexibility to opt-out and opt-in
anytime they wish. Termination policies include the use cases for
CANCEL, Renew, Change Plans, Upgrades / Downgrades where
cancellation may become applicable.

Strategies

23
Coupons

Coupons as an Online Marketing Strategy?
We got you covered!

COUPONS are experiencing an explosion in popularity—among consumers and marketers
alike. For the customers, the attraction is clear: coupons are a quick and simple way to
save money; if they are available, there is no reason not to put them to use. For the latter,
it can be a little more complicated. Coupons offer a juicy incentive for new customers, but
coupon-based promotion campaigns can be risky business – Ella Davidson of Coupons.org.

With the integration of promotion modules and coupons to the core subscription
platform, coupons can be easily managed and offered – Think of increasing your business
using coupons as a strategy and not worry about complications!

Strategies

24
Early bird
offers

“50% off for first 500 customers”
Early bird offers are a way to appreciate the first users who sign up. The early
sign-ups are generally rewarded with discounts, trials, freebies, free usage, etc so
that businesses get maximum customers signed-up for the services.

Effective billing system keeps track of the customers, calculate and bill after
adjusting the offer, and helps publish the offer to the products catalog
seamlessly. The complex tasks are automated, while the business focus on
acquiring early bird customers.

Strategies

25
Price
Personalization

“One-Size fits all PRICE offering is the 90’s
approach. Customer centric pricing is the latest
trend in Subscription world!”

Price Personalization gives you the ability to deliver dynamic and
individualized customer pricing to align with your solutions – while
maximizing your operating margins.

Personalization is the evolving trend now. + on-demand: when + where +
how + at the best price

Strategies

Leverage Pricing Strategies
to transform your business!

“Thank you for joining us in exploring 25 pricing strategies.
“Thank you for joining us in exploring 25 pricing strategies.
We believe that these ideas will inspire you to aim for
We believe that these ideas will inspire you to aim for
more in your subscription business and take it to new heights”
more in your subscription business and take it to new heights”

We hope that you’ll get inspired by these
We hope that you’ll get inspired by these
25 creative pricing strategies to add innovation and
25 creative pricing strategies to add innovation and
freshness your business. IfIfyou’d like to share ideas
freshness your business. you’d like to share ideas
that you have used, we’d love to hear from you.
that you have used, we’d love to hear from you.

Feel free to write to us: sales@onebillsoftware.com or Call: +1 (855) 411-5629
Feel free to write to us: sales@onebillsoftware.com or Call: +1 (855) 411-5629


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