Subscription Model, continued
By Jason Moriber • Jan 26th, 2009 • Category: Insight & AnalysisI found this link via @howardweaver, one of the people I follow on Twitter. It’s a NYTimes article on a “pay-what-you-want” model buffet restaurant. In general the article points to it’s success; even though the prices are down they are gaining more users and increasing revenues.
If you did this with your business could you survive? What if you offered an “annual fee” and then users could pay what they want?
Jason Moriber is a veteran product/project/marketing manager, underground artist/musician, and online community developer, Jason expertly builds/produces/manages clients' projects, programs, and campaigns.
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I’ve always found the best pricing models are the ones where customers stop thinking about it — where your fee becomes embedded in a regular service that customers see value in and come to expect. Examples include magazine subscriptions that ping credit cards quietly, utilities that move to monthly budget payments, agencies that embed commissions into broader work flow. The goal is to convince the customer of value — above the price — in the first decision point and then to become invisible.
Thus I’m not sure “pay what you want” works, on two levels. First, it creates an opt-in vs. and opt-out profit model, meaning unlike subscriptions, in which someone has to decide to stop giving you your revenue and margins, you wait hoping that value comes on the back end. And second, it creates a series of decision-points, never a good thing; think of NPR begging you for a donation every year, and every year you have to rethink your commitment.
If we pan out to the macro level, organizations like NYT are in deep trouble because the supply of good content has grown swiftly, while demand is falling (because consumers are spending less time consuming content and more time creating it themselves). The supply-and-demand curve is moving in the wrong direction for publishers, creating huge surpluses of news/editorial/opinions and few willing to pay for it — both in subscription fees and in putting up with the psychological cost of unwanted advertising. The only solution, if demand can’t be restored, is to shift the supply curve — by clearly differentiating the product in a new way. This would move, say, NYT away from the content substitutions and into a separate supply-demand field where the price might be justified.
I’m thinking swimsuit editions, but that’s just me.