The price of progress: Weighing the pros and cons of subscription models

Change happens slowly at first and then all at once. Look no further than the “cord-cutting” movement. It was so successful in the streaming space that it gave rise to subscription models becoming common for many digital products. But now here we are, buried in subscriptions, and asking ourselves if this is worth it or just the way things are now?

On this week’s episode, Chris and Gina discuss the evolution of pricing models and the key considerations when selecting the right one for your product. Check out the highlights below, then dive into the full episode to learn more.

The price of perceived value

A user’s willingness to pay for a product often boils down to whether or not they perceive value in it. Some users love the product so much that they will pay whatever it costs. Some may believe in the potential of the product and are willing to invest in helping it grow, and others will pay simply to avoid the hassle of switching providers. Regardless, there needs to be a clear incentive for the user in the form of features, convenience, or bang for their buck.

Structuring your strategy

In both paid and ad supported models, you cannot survive unless you have enough users who find value in what you’re offering. With an ad-supported model, you’ll need lots of eyes on your product to make the investment worthwhile for advertisers, while subscription-supported products likely have a minimum number of users needed to sustain the business.

From the product leader’s perspective, you have to grow at all costs to make this work. Having sponsors is going to lead you to make some different decisions, and it takes a very critical eye to maintain the integrity of the product while chasing huge growth. On the subscriber side, you have to think about how to make sure that growth is measured and supported. 

Experience still matters

But growth should not come at the cost of user experience. Regardless of the pricing structure you choose, both the day-to-day experience and the experience users have when they run into an issue, go to pay their subscription fees, or decide to cancel their subscription matter. While handling payments and customer service may feel like minutiae in the grander scheme, they are critically important aspects to consider as you think about expanding.

Overcoming subscription fatigue

The key when considering a subscription model is to remain focused on the kind of user that you're looking to attract, retain, and build around them. Develop and launch an MVP product, find your product-market fit, and give people a reason to want to use it. If the value is there, revenue will follow.

As always, don’t forget to subscribe to Catalyst wherever you get your podcasts. We release a new episode every Tuesday, jam-packed with expert advice and actionable insights for creating digital experiences that move millions.