Jul 19, 2021
Is The Subscription Based Model Ideal For Your App Idea?
An introduction to the subscription based model along with surveying its advantages to determine whether it is the best pricing strategy for your app idea
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The subscription based model is one of the most commonly used to monetize applications as it ensures a steady stream of revenue for the company. It offers multiple benefits to users as they do not have to face the hassle of paying a lump sum amount and can instead pay a nominal fee at regular intervals which in turn attracts more customers, proving to be beneficial to the company as well. This pricing model also offers app users the benefit of receiving immediate access to the app on payment of the first installation; post which, they can make an informed decision about any future purchase decisions. On the organisational front, using the subscription based model also helps in building loyalty towards the brand as it focuses more on recurring customers rather than a one time purchase. In this article, let's explore the various facets of this model while also arguing its viability for generating revenue for applications:
1. Short Equated Payments
When introducing a product into the market, it is critical to ensure that the price range is attractive for customers. The subscription based pricing model offers customers the financial comfort of making short and equated payments wherein they can try out the application and analyse its features before going through with the next purchase. While it may not be prudent for an organisation to expect customers to buy their product when it is valued at a higher price, this model allows for the company to market the app at the same price while spreading it around a longer duration to make it advantageous to the buyer. This method of generating revenue is also beneficial as it allows for a company to engage with the customer and analyse the marketability and viability of the product while improving it over time and letting them be a part of the process.
2. Facilitates Constant Cash Flow
As the subscription based model is oriented towards recurring payments, this in turn generates a constant flow of revenue for the company from the application. The process of setting up cyclic payments also helps a company to examine the success rate of the app in the market using which they can devise the apt marketing strategy for the long run. When using a one time payment method to monetise applications, it is critical to ensure that the app is meeting all the requirements and is functioning perfectly at all times as even a single bad month can have a negative impact on the revenue generation of the company; whereas the regular pricing method followed by the subscription based model helps to fill any revenue gaps that might arise while assuring constant capital funding for the application.
3. Propagates Customer Retention
The subscription based model allows a company to monitor the lifecycle of a customer as the emphasis is on creating value for the application on a regular basis. This has a significant role to play in the retention and acquisition of customers as the focus of the marketing strategy is to analyse the requirements of the customer on a regular basis to improve the product to align with the latest digital trends. The subscription model also plays a pivotal role in instilling customer loyalty towards the company as it provides confidence in the continuance of the application. As retention and management of customer relationships over time is the crux of this model, this allows for an organisation to build long term customers for their product.
4. Enhanced User Research
Detailed user research always helps in building great applications, but the subscription based model is significantly more customer oriented leading to multiple engagements with the buyer over a period of time. One of the prime concepts of this pricing model is to establish a strong bond with the customer as the engagement is spread over a longer period of time, wherein the number of active customers are identified, feedback is received and the app is improved with time to provide an enhanced experience to the user. This also allows the company to introduce new features to the app based on changing demands which in turn helps in boosting its relevance in the market as per the changing tech trends.
GeekyAnts’ Contribution To The Field
In 2019, we joined forces with Link to create mobile and web apps, along with an admin dashboards, which would moderate the delivery of all essential services which would include taxi facilities, availing of groceries and other essentials based on a predetermined subscription plan. The goal of the applications was to ease the movement of essentials for customers, by bringing it all under one bracket, to prevent them from going through the hassle of making individualistic transactions for each. Post the commencement of the project, which lasted for a period of six months, our partners have lauded us on the quality of work delivered and our dedication to meeting deadlines during the development of the application. The applications that have now been launched, available on both the Play Store and App Store, are doing a great job at keeping customers and vendors connected while providing a safe online marketplace to conduct their transactions.
Conclusion
The subscription based model is an increasingly popular one that has been gaining traction with many giant players choosing this method of regularising cash flow to meet capital requirements for their app. This customer focused approach of monetizing applications not only helps a company to provide affordable applications but also high-quality ones that are improved over time through constant user research. Another prime reason that the subscription based is popular, especially in the software industry, is that it allows alterations to the app by improving on its functionalities by integrating it with the latest digital products to offer a premium product with enhanced features and a better user experience.
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