Subscription Businesses Test New Pricing Models to Curb Membership Churn

The flexibility of the platform subscription model is being put to the test.

And to staunch churn and keep new customers coming on board, tweaking the pricing of what’s on offer is both art and science — and a work in progress.

Several companies are testing, and in some cases implementing, different pricing plans. Dating apps, for example, are moving to broaden their subscriptions.

Match is mulling a $500-a-month version of its service. Bumble is testing both premium and discount iterations. Grindr is also examining premium and cheaper levels of service.

Elsewhere, Planet Fitness is expanding a pricing pilot to multiple states, where there’s a $15 monthly no-commitment plan, and there’s still a $10 per month plan, tied to a 12-month commitment, extant as well, Seeking Alpha reported Tuesday (Aug. 29).

Keeping Interest and Commitment

It should be no surprise that pricing is one of the key levers that firms are pulling on to keep customers interested and engaged. PYMNTS research, in collaboration with sticky.io, found that headed into the summer, that cost drove more than half of all retail subscription cancellations. And there’s value in finding the right mix of pricing and features to keep consumers happy as separate data showed that roughly 30% of subscribers account for about 80% of subscription merchants’ top lines.

There’s evidence that optionality and plan choices are key drivers of success for merchants, regardless of the vertical. For the “top 30” echelon of merchants, plan options are key.

Elsewhere, surveys of consumers show that there’s some allegiance to membership subscriptions, although less so for media and other types of subscriptions, even when there’s pressure on the proverbial pocketbook. PYMNTS data showed that a relatively tame 10.9% of individuals had opted to make a partial payment for their membership subscriptions (rather than pay the monthly obligation), which was outpaced by the 12.4% seen with streaming subscriptions, and nearly 16% for retail subscriptions.

The read-across is that consumers are finding the money, in most cases, to keep up with the obligations depending on the services rendered. About 10% of membership subscribers skipped a payment entirely, trounced by the roughly 13% for subscriptions tied to specific retail products.

In an interview this month with Karen Webster, Brian Bogosian, CEO of sticky.io, said a personalized bundling of offerings would prove essential to keeping subscribers in place.

“Being able to swap out products or add products and bundles — or putting things on pause — all relate to what’s generated in terms of customer lifetime value,” said Bogosian.