Introducing subscription-based video products into your business is an excellent way to engage, delight, and monetize your existing customers. Additionally, SVOD (subscription video on demand) offerings have the power to support growth initiatives through new customer acquisition and drive profits through continued customer retention. However, SVOD products are only effective and lucrative if customers subscribe and continually pay to use your new materials each month. So how do you know when the price is right?
To attract and retain loyal subscribers, your products must be priced in a way that reflects not only their worth, but their value to your customers. Fortunately, there are some best practices for determining the perfect pricing for your subscription products that will help you effectively optimize product value and profit.
Why is proper pricing for subscription video products so important?
Subscription video product pricing should accurately balance your product creation costs with the value you provide to your customers each month. Ideally, you will want to select pricing that covers your costs, pads your profits, and provides real value to your customers. While the first two elements are easier to quantify, the perceived value of your product tends to be a bit trickier to determine because it can vary widely across customer segments. Different audiences value content and price points differently. The more insight you have into your customers, what they value, and how you meet their needs, the better prepared you'll be to optimize your pricing accordingly.
Pricing Too Low
Typically, the lower the price of a product, the higher volume of customers and vice versa. However, this does not mean you should start at a low price point or even discount your products. Pricing your video subscription products too low may initially drive up your sales, but customer retention may wane early on in the subscription life cycle. To stay motivated and committed to a product, a customer needs to feel adequately invested. and their financial commitment is a big part of that. Additionally, many customers who complain about price do not adequately see the value in your offering, and can consume your time with cancelations and refunds or customer support issues. Not all customers are created equal.
Pricing Too High
If you've got a high sticker price on your SVOD offering, make sure the value you're adding measures up. Pricing your products too high may discourage initial sales and diminish the opportunity to secure loyal, profitable monthly customers. While premium pricing can be very effective in the long run, it typically takes longer to aquire a solid customer base as there's a smaller market for high priced products. Prospects will look for more targeted marketing that's laser-focused on addressing their pain points, reviews that prove the offering is excellent, and social proof indicating that many others have received great value. These elements take time, and an existing customer base to develop.
The Sweet Spot
While prices for digital products can range from pennies a day to 5 figures a month, there is a sweet spot for every customer segment. Finding the right price will ensure you're maximizing revenues from committed customers, while limiting the number of deal seekers and test drivers who are often the ones who end up canceling and refunding. This magic amount is different for every business and customer segment. The most important things to remember about pricing is that you have to pick a number and start somewhere, it's better to start high and drop your prices later if need be, and TEST, TEST, TEST.
Do my SVOD offerings meet the needs of my various target audiences?
As you attempt to predict where your customers will exist most profitably on the value spectrum, aim for pricing that best fosters long-term customer retention and satisfaction with your target audience. Some customer segments are more price sensitive than others. Additionally, in some markets competitor and/or complementary products may have already set a pricing anchor in customers’ minds, so be sure to take that into consideration.
If your video subscription products serve varying audiences (trainers and workout participants for example), it is important to determine the very best offer and pricing for each exclusive audience you serve. To begin, you can build several subscription levels and test the various pricing levels to determine what is most appealing for your audience segments. Testing will also help you identify areas where you can customize your offerings and build incentives into your subscription video product plans. A common methodology is to implement tiered pricing with low, medium, and high options. The middle option is often the most popular, however, the higher priced option provides more value, while the lowest priced option can be a pared down version of the middle offering.
SVOD Pricing in Health and Fitness
In the health and fitness world, designing subscription video on demand offers with special, discounted pricing for trainers can incentivize those experts to teach according to your methods, and you can build your brand and grow revenues as a result. Additionally, you’ll be providing these trainers with the resources they need to successfully help you scale your business.
Furthermore, streaming video products can help you reach new channels of customers, including those who are intimidated by gyms or group fitness and would rather work out at home. This group is accustomed to monthly gym membership fees, and would likely be happy paying 30% of their gym membership fee for the added convenience of having access to your classes anytime, anywhere, from any device.
Each audience you aim to impact through your subscription video products should have an offering that fits their needs and desires, for a price that makes the best sense for that particular model. Taking the time to differentiate your audiences’ needs and customizing a perfectly priced offer that is meaningful to each audience will multiply your subscription video product profits through loyal, happy customers.
Does my content work together to provide value and justify my pricing?
Once you’ve determined how your subscription video offerings fulfill the needs of various audiences and have priced them in a way that is profitable to your business and valuable to your customers, it’s time to create new and optimize your existing content. To retain your customers it’s important to provide ongoing content that is relevant, meaningful, and worth the price they are paying.
To accomplish these goals and ensure continued success, put yourself in the position of each of your customer segments by asking yourself the following questions:
- Why does this customer subscribe to my subscription video channel?
- What motivates my subscribers to remain loyal to my brand month after month?
- What makes this monthly video content relevant, meaningful, and valuable to this customer?
- Looking at the data, which product are customers most engaged with and least engaged with, and why?
Thinking in-depth about the perceived value of your subscription video products from the consumer standpoint will help you continually make each offering better tailored to your audience. This level of insight into your business can also help shape and deliver continuous value with your products.
Proving Your Value
As a digital content creator a key aspect of your marketing efforts should be to provide value to your audience before they ever make a purchase. Doing so will help build trust and loyalty in your prospects' minds. Make sure you have a compelling messaging that addresses their pain points. Additionally, give as much away for free as you possibly can, so that your viewers learn to rely on you for great content. Giving your viewers videos that they engage with keeps them hungry for more, and is a great opportunity to direct them to your paid content.
The longevity of your success with subscription video products depends largely upon choosing prices that quantify your value for a competitive monthly fee your customers can afford. As you carefully consider the best pricing for your subscription video offers, make sure that you have confident, accurate answers for these important questions designed to help you ensure the validity and success of your product pricing.