What are the most common subscription pricing models?

There are many different kinds of subscription pricing models to choose from, but some of the most common ones are below. No one model is better than the others; each one is designed to support specific product/service types and customer needs. Here’s how they work:

  1. Flat fee pricing: A flat fee price is used for each product, as defined in your product catalog.
  2. Usage (or consumption) pricing: A price is based on usage. For example, an internet provider might offer 2GB of data for $10/month and 5GB for $15/month.
  3. Per unit pricing: A pre-negotiated price per license. This pricing model is important for self-service because it doesn’t require negotiations with sales reps to purchase more.
  4. Volume pricing: Similar to tiered pricing, a user has a number of licenses that fall into a pricing band. For example, add-on support is offered based on the number of licenses as they fall into a given band. 1-10 users may be $5.00 License where as 11-50 may be priced at $4.95 per license. If the user has 12 licenses, their price would be $4.95*12.
  5. Tiered pricing: A price based on quantity bands or tiers. For example, a company selling enterprise software might charge $200 for 1 to 5 licenses, $150 for 6 to 10, and $100 for over 11. Unlike volume pricing, tiered is cumulative. If the user had 6 licenses, their price would be $200*5+$150*1.

Some companies — like software-as-a service (SaaS) companies — have subscriptions in their lifeblood. (We’re one of them.) But don’t let that fool you into thinking that subscriptions aren’t right for you, too. In fact, subscription pricing has touched every B2B industry.