Recently I read an article in the New York Times by Shira Ovide called, “The subscription buffet may be over.” In it, she nicely summarized how consumer content companies such as Disney and Spotify are charging more in new premium subscription offerings for additional content or charging less in new entry level subscriptions for less content and/or added advertisements for the user.
This evolution in subscriptions makes a lot of sense for consumer businesses and also for enterprise and other businesses.
I remember when I took over pricing as a product manager for one of Microsoft’s server products two decades ago. We offered the following “editions”:
- Personal Edition
- Developer Edition
- Mobile Edition
- Standard Edition
- Enterprise Edition
Each product offering was different and served a different use case or purpose.
While the world has confidently and largely moved to subscriptions as a business model, in many cases offerings were simplified with a single offering to start. It makes good sense for many organizations to evolve over time to a set of offerings per product just as we had at Microsoft earlier on for non-subscription products (and later our subscription products).
Two or three subscription levels (or editions) per product can perhaps be ideal unless your product or market is unusually large in scope or your business is quite large.
As I’ve written about before, consumption pricing is becoming more popular and hybrid pricing (subscription+consumption in one) follows from that. You can combine different models here by having multiple hybrid pricing levels, for example.
At Ubersmith, we’ve had one subscription level for the past many years for our hybrid pricing model, with a recurring base fee per month which includes a certain amount of consumption and additional consumption available on demand. I think going forward, there will be a good opportunity for us to consider having multiple subscription levels. For now, our customers can enjoy the simplicity.
I know our customers and partners commonly offer simple subscriptions, consumption pricing, or a combination for their products and services. I’d love to learn more about the levels you are using, if any, to better serve the markets in which you are participating.
Kurt Daniel, CEO