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Ask YC: Anyone have any subscription service tips/experience?

20 pointsby matthover 16 years ago
I've developed a tool that I think could be valuable to a select audience, and may be a nice niche/lifestyle business.

5 comments

webwrightover 16 years ago
Sure! Overall advice-- think more about sales/marketing/distribution than you do right now. How do you get in front of potential customers? Some specific advice along those lines:<p>1) Get good at SEO. SEOmoz.org is the best place to start. 2) First, prove that you can bring in 100 people and have some meaningful percentage turn into customers. Might take a lot of design/wording iteration-- might not. Depends on the product simplicity/value prop. 3) Price it in such a way that you can afford marketing. If you can convert 3-5% of your visitors into customers and you have a reasonable high price point, you can afford adwords, which is a huge win. 4) Understand the "lifetime value of a customer". What's the average customer worth? How long do they stay with you? This will tell you how much you can spend per user on marketing efforts.<p>Let's see... Other generic advice:<p>1) Don't offer a free plan unless free users provide some other value. 2) DO offer a free trial. It seems standard practice to ask for the credit card # at the time of the trial... If your service is sticky enough, you might consider doing it the other way. 3) Use BrainTree payment services. They've treated us pretty well. 4) Price it high, but offer a "seasonal discount" so that people feel like they have a bargain if they strike now. 5) Measure like crazy. Understand your funnel REALLY well.
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zackolaover 16 years ago
This is the part of the post where you give out a few free beta accounts to hacker news readers and ask them politely to judge your product/ask for recommendations about pricing and business model.
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answerlyover 16 years ago
The three main levers in a subscription business are:<p>1) the premium: this is the enticement which gets people to try out your product. Most typically it is a free trial period.<p>2) the fees: what does the service cost the user. My experience has been that if your price point is under about $10 per month, you are better off charging a quarterly or annual subscription.<p>3)the features: what does the user "get" for a monthly/annual fee. The best features have a high perceived value to the user but a low delivery cost to the provider. The worst subscription business focus on the wrong features which are very high cost to deliver but have a very low perceived value to the user.<p>Some other things to think about: 1) You need to test like crazy on each of these levers. I have seen examples where a $14.95 price point has performed 30% better than a $15 price point. Make basic assumptions about the different elements you want to test, but make sure to let the data make decisions for you.<p>2) If you offer a free trial, make sure to get the credit card number up front.<p>3) Be very upfront with disclosures on your billing process and have a very liberal refund process. Anyone can request a charge back from their credit card company for any reason and too many charge backs will sink your income stream. Make it easier for someone to get a refund from you and you can prevent these types of issues.<p>4) be very focused on retention. Retaining existing users is much easier than acquiring new ones.
rarrrrrrover 16 years ago
A common combination is to give some useful part of the subscription away for free (especially if this has little cost for you) and promote it. Getting traction for a free service is usually easier. Then charge something for more functionality. There's much to be said for high volume, low conversion models. If only 0.5% of your users convert to paid, but your free product is so good that you have a huge community, it's clearly worth it. An example might be AVG. Whatever you think of their virus scanner, the business model is working well.
bisiover 16 years ago
Is it B to B or B to C ? What type of biz is your site ? Do you have beta testers ?