Thursday, February 6, 2014

The Key Factor is Recurring Revenues

It is much easier to stay in business when you have a recurring stream of revenue to rely on. When customers buy a subscription, they are obligated to make payments for a specific period of time.

For example, if a customer were to sign up for year long subscription, you will have payments coming in for the next 12 months.

The best part about recurring payments is that most people don't notice the fact that the payment is being taken out of their account. This means that you could charge a subscriber's credit card for $10 a month without that person putting up much resistance against making that payment for months or years.

Breaking down the payments so that they come out on a daily basis could yield even more money for your company. Instead of charging $10 a month, you could ask customers to pay 50 cents a day. In some cases, you could get customers to pay $15 a month because they think that paying 50 cents a day is more cost effective than making a $10 payment each month.

The best way to determine how you subscription program is working is to look at the attrition rate. As long as customers are renewing their subscriptions at a reasonable rate, you should continue to offer the subscription option.

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