model for subscription sales?

Hi! I am looking for some advice from someone who has experience selling subscription services.

How do we structure the pricing of our product so that we can not only sell it ourselves directly and on our website, but also allow others to sell our product for comission? This also includes renewals.

Is there a name for a common sales model for subscriptions?

Thanks in advance!

-steve

Quote:

Originally Posted by scout

Hi! I am looking for some advice from someone who has experience selling subscription services.

How do we structure the pricing of our product.... ?
Is there a name for a common sales model for subscriptions?
-steve

There could be some adaptive models. What is the product? "Subscription" has taken on new meanings over recent times.

You are right about subscriptions, but I want to keept the description of our product and service generic in order to focus the discussion on the sales model. Others who have consulted with us have gotten distracted by the technology or the market segment.

This is a call for the sales gurus out there who can think in abstract terms. Can you do it?

We have a specialized athletic training process which is actually performed on personal computer in a number of 'sessions.' Our product is purchased by individual athletes or by training facilities and is sold in packages with the disc and a number of sessions. We also sell additional sessions to be loaded in the system when the initial package sessions have been used.

This is why I use the term 'subscription' as I see an analogy to magazine subscriptions or even gym memberships.

We have been selling this for several years now and our primary sales outlet is our website. We receive a lot of national press attention and traffic from sites which advocate our product. We also sell it to our existing clients out of our offices or site visits.

So, we have been selling primarily direct to consumer but would like to add distributors and individual sales reps. We have received inquiries from training facilities and retail sporting goods outlets who want to sell this product as well as individuals who want to sell it on a commission basis.

One dilemma we are trying to solve is pricing structure. Our product is currently priced for our profit needs which doesn't leave a lot of room for wholesale prices or commissions.

Another problem is keeping balance on the price offered by distributors or reps with the price offered on our website. We don't want to find ourselves being outpriced by our distributors. Similarly, they need to have enough of a cushion that potential consumers don't go around them to buy it cheaper from us on our website.

A third dilemma involves handling renewals. Should we pay commission on renewals?

We have been looking for example pricing structures which outline direct, commissioned and distributed pricing levels to use a basis for the specific product our product. I figure subscriptions may be the closest related structure.

What do you think?

Quote:

Originally Posted by scout

I figure subscriptions may be the closest related structure.

What do you think?

Actually, there is very helpful information available on this topic. I believe subscriptions are the wrong model.

The model that you are looking for comes under the heading of "multi-component profitability". In a nutshell it consists of selling a product through various distribution venues at prices that vary considerably. The most often cited example is the beverage business.

Research everything you can (on the web) about Adrian Slywotzky who who is a foremost expert on this.

Thanks Gary!

Anyone else have any input?

-steve

Quote:

Originally Posted by scout

A third dilemma involves handling renewals. Should we pay commission on renewals?

Steve, I have a product I sell by subscription, but it is too early on in the process to offer any meaningful advice to you on your complex issues. I will note, however, that my experience with hiring sales reps was that they were very receceptive to renewal income. Many were tired of pounding the pavement for a buck. They wanted to see the opportuntity to build an income stream that brought the opportunity to make good money down the road without total burn out.

I struggled with pricing and commissions (and still do). I made the strategic decision to take a hit on the commission (as opposed to marking up the product) because I am more interested in building my customer base. I make good money on renewals (for very little work).

If the first renewal cycle costs me money, I consider it an advertising expense.

model for subscription sales?

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