How Prepaid Subscriptions will Boost Your Pricing Strategy

Pricing is one of the most underrated tools in a company’s business strategy. Yet, it can be one of the most powerful to increase profit and even brand loyalty.

Team Maxio

Team Maxio

October 27, 2020

Pricing is one of the most underrated tools in a company’s business strategy. Yet, it can be one of the most powerful to increase profit, customer satisfaction, and even brand loyalty.

Of course, pricing strategy is always evolving. In just the last couple of years, several new models (such as usage-based billing, events-based billing, and value-based pricing—to name a few) have dominated the industry. While these models are all impactful to growth in the B2B SaaS market, none of them offer the monumental benefits prepaid subscriptions bring to the table. Prepaid subscriptions allow you to continue using your current, flexible pricing models while lowering your risk of churn and unpredictable revenue.

What are Prepaid Subscriptions?

Prepaid subscriptions allow customers to pay up front for your product then draw down against that balance over time. As your customers consume, their prepaid balance is updated in real time. This way, they (and you) always know where they stand. When your customer gets close to depleting their total prepayment amount, or approaches the “threshold” amount you have set for them, you have 3 options.

  1. Allow your customer to deplete their prepayment entirely, ending their engagement to your product and service.
  2. Automatically top up your customers’ prepaid balance to a previously agreed upon amount so they can keep consuming without interruption.
  3. Be notified of prepaid levels, so your sales or customer success teams can contact customers individually for a personalized customer experience.

3 Ways Prepaid Subscriptions Boost Your Pricing Strategy

Combining prepaid subscriptions with whatever pricing model you already have is a surefire way to level up your pricing strategy. (Yes, the flexibility even extends to usage-based billing.)

Prepaid subscriptions allow your business to:

Reduce risk

Collecting money upfront reduces risk to your business. With accurate forecasting and predictable revenue, you’re empowered to seamlessly plan and execute your business strategy.

Increase customer value

Prepaid subscriptions can also increase customer value by 94%. Think about it: these customers are committing to long-term engagements, not month-to-month subscriptions that they can cancel at any time. This simple fact makes these customers far more valuable to B2B SaaS businesses.

Offer customized service packages

By dynamically calculating your customers’ prior consumption, you can even predict future usage and form a prepaid subscription offering to fit each of your customers’ unique needs. This allows you to provide a customer-centric approach to those clients that prefer to pay up front for a prepaid subscription offering.

With prepaid subscriptions, everyone wins.

The benefits of prepaid subscriptions are’t limited to businesses. After all, consumers want to forecast their expenses too. Allowing your customers to select a prepaid model gives them the opportunity to lock-in their pricing and strategically plan around it. Plus, prepaid billing enables the seamless customer experience they desire by offering the ability to automatically refill low balances.

Prepaid subscriptions are on the rise amongst B2B SaaS businesses for a reason. They offer clear benefits to not only your company, but also your customers’ lives. It’s time to level up your pricing strategy with prepaid subscriptions and give everyone the stability they lack in these uncertain times.

Liked this post? You might also enjoy 4 Ways to Succeed at Usage-Based Billing.

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