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  • Writer's pictureJim Payne

Controlling Subscriptions for Higher Profits

The latest great idea in business planning is the Subscription Model. One of the advantages is a steady revenue stream. Why is the model steadier? Because a monthly subscription means the customer has to make fewer buying decisions. Additionally, a monthly fee is significantly smaller than an annual or one-time acquisition cost. Great things for the seller, but not necessarily for us as buyers.

What’s the problem? We tend to keep paying for stuff that is no longer proving any value. The price is small, and it takes time to go to the vendor’s website and get off their automatic payment plan. It’s very easy to justify putting off doing something by thinking “I’ll give it one more month and see how I feel then.” This tendency to let these subscription payments can build up to something significant.

Here is what you can do to control these costs. It starts with a Master Control Subscriptions List which shows every on-going subscription that your business has. You can include the start date and when the next automatic renewal is set to happen. Whenever a new subscription is started, make sure that you add it to your list.

Each month reviews your subscriptions list. Make a column for assigning a value between 1 to 5. Next, sort by the last by the value amounts set a goal of dropping at least one subscription out of the low value subscriptions.

Subscription pricing models are going to continue to grow. Currently its mostly Internet based services providing this approach, but creative minds are already expanding it to big ticket items like automobiles. We need to begin developing cost controls to keep this stuff from getting out of hand.

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