You might be starting a new marketplace business or attempting to introduce a subscription offering to your existing marketplace users where they pay some monthly fee or bi-annual / annual fee for better experience / perks / what have you. So, the question is, how do you price your subscription service?
Relevant Template:
Every business is unique, but here are some points to explore:
- Flat rate pricing: This is a simple pricing strategy where customers pay a fixed amount for the subscription, regardless of the number of items they buy or the frequency of their purchases. That subscription may reduce transaction fees as well.
- Tiered pricing: With this strategy, the price of the subscription increases as the customer buys more items. For example, a customer might pay $5 per month for up to 10 purchases, but then pay $10 per month for up to 25 purchases. The idea behind this is that maybe the bulk discounts are better when you buy more or the higher priced tier gives access to more types of products. It could even be that the more you pay per month, the more things you get access to for free (maybe 0% transaction fees or free shipping even).
- Freemium pricing: This is a popular pricing strategy in which the basic subscription is free, but additional features and benefits are available for a fee. This can help attract customers to the platform and incentivize them to upgrade to a paid subscription. The financial model linked above has assumptions for both subscribing and non-subscribing users and their volume activities / fees.
- Dynamic pricing: With this strategy, the price of the subscription is adjusted based on market demand or other factors. For example, during peak buying seasons, the price of the subscription might increase to reflect increased demand. This type of seasonality logic is often found in real estate with hotels and short-term rental pricing per day.
- Pay-per-use pricing: This strategy involves charging customers for each individual purchase they make on the marketplace, rather than charging a monthly subscription fee. This can be appealing to customers who only make occasional purchases on the platform. Note, you may also charge a fee for transactions as well as subscription fees on top of that.
The modeled linked above allows for up to 3 pricing tiers and each tier can have varying pricing, contract terms (monthly or any arbitrary length), and retention rates.
