If you’re considering moving from selling custom scope work to a subscription-based model, these are some practical insights to guide you through the transition.
Some of my clients are shifting towards offering subscription-based services. While its NOT for everyone here are 3 strategies that are supporting this transition:
1 – Anchoring Proposals for Recurring Payments
We’ve already set the foundation by structuring existing proposals around a monthly subscription, even if the total project amount is $150,000 or $75,000. The payment terms are broken down into manageable monthly fees, helping clients get used to this model. Essentially, we’ve been priming them (and transparently, us as providers) to think in terms of recurring payments.
2 – Defining Strategy vs. Execution
In subscription services, providers usually sell the output of their work (the execution). However, many of my clients also offer strategy development to ensure their clients’ success. So we bake in strategy at every tiered level (with limitations) but the level of execution varies depending on the client’s needs. We make it crystal clear where strategy ends and execution begins, tailoring the payment plans based on how much execution is involved.
3 – Incentivizing Long-Term Commitments
We’re encouraging clients to commit to 3 or 6 month engagements instead of opting for a month-to-month subscription. The results they seek usually take more than a single month to materialize, and they know this. By offering lower rates for longer commitments, we’re incentivizing them to stay engaged long enough to see meaningful outcomes, while also reducing the risk on our end of clients leaving too soon. This doesn’t mean we limit our LTV, we just focus on renewing at the term of the agreement (i.e. renew at 3 months, 6 months or 12 months)
Not every service is primed for subscription but if you’re considering that route, these tips should help frame your thinking to get started.