Subscription pricing: New frontiers

With the prevalence of Software-as-a-Service, subscription pricing has become familiar to most of us.

These days Microsoft office is also available as subscription through Office 365. Similarly, we see subscription pricing in cable TV, streaming movie & music services and online magazines.

Benefits of Subscription Pricing: A subscription pricing brings predictable revenue to the businesses. It reduces the sales effort per customer. It also gives a peace of mind to the buyer as the outflow is small and regular and there is minimal shock of price increase. So, a key question is:

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Off late many new businesses have begun using subscription pricing. Here are two examples on adoption of subscription pricing in new industries.

#1. Airlines: When all the airlines are fighting for the price sensitive customer, SurfAir has introduced a subscription pricing for flyers. Under this plan, the users pay $1,950 per month which allows them to take unlimited flights. The members can fly to any SurfAir destination as per published schedule. The members who fly regularly have predictable cash outflow and are able to avoid the lengthy boarding process at the airports.

#2. Healthcare: The company One Medical has pioneered subscription pricing in health care. As a part of the plan a member pays $199  per year. In return the company helps the patients get same day bookings in a location near them. The patients also get facilities like onsite lab tests and email consultations.

Subscription pricing has just begun to make its presence felt. We should be ready to see some more innovative use of this price model. 

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