In recent years, more and more companies are understanding that when it comes to business models, subscription is the ultimate win-win. Everywhere you look, businesses are either transitioning to subscription billing or creating new subscription-based offerings.
Consumers love its simplicity, and businesses love the recurring revenue it produces. Yet even within this well-known model, there’s lots of variation. Check out these six companies that are experiencing huge growth thanks to their interesting and creative applications of the subscription model.
Zendesk – Taking Subscription Model Billing to the Next Level
Zendesk is a leading customer support software program used by everyone from small businesses to large enterprises. As experts in customer satisfaction, it's no surprise that they use subscription-model billing to keep their own customers happy.
So how does Zendesk take its pricing one step further?
Unlike many other SaaS companies, Zendesk doesn't use the freemium model. Instead, they offer a 30-day free trial, after which all users pay for the Zendesk service. Zendesk can bypass the subscribe-for-free option because they know their product is highly valuable, and they are confident in their approachable, flexible pricing. The Zendesk build-your-own-solution lets users create tailored packages with only those features their unique business requires. Depending on the package each customer builds, the price ranges from $5 to $199 per month, per agent. For companies that don't want to be bombarded by options, Zendesk also offers The Zendesk Suite, which includes all of the top features for a flat monthly rate of $89.
Canva – Finding Success with a Freemium Pricing Model
In direct contrast to Zendesk, Canva hinges most of its success on its freemium service. Canva is a template-based design platform that allows anyone to create beautiful, shareable graphics. But as CEO Melanie Perkins mused, people who have never designed something aren't going to have confidence until they experience success, so the on-boarding experience must be effortless. It needs to lead to quick, happy results.
Here, the free subscription model reigns supreme. Canva uses the freemium pricing model to give users the opportunity to create endless quantities of beautiful designs without paying a penny. Only after users are hooked does Canva look to more advanced pricing tiers to increase customer value and make a profit.
And users are definitely getting hooked on Canva. The company estimates that over 80% of Fortune 500 companies are using Canva, and the company has been valued at over one billion dollars.
GoPro – A Hardware to Software Transformation
If you’re familiar with the name GoPro, you may be surprised to see it on this list. But the truth is, GoPro is a great example of a hardware company joining the digital business revolution and using SaaS to diversify its revenue streams.
GoPro is most well-known for its central product, mountable cameras that allow people to take live-action videos in extreme conditions. But what you may not know, is that GoPro has also monetized through the GoPro app, which lets users easily create short, viral-worthy videos. With the camera and app, GoPro had their hardware and software game covered. Now, they just needed to add a subscription-based product to generate recurring revenue.
Enter GoPro Plus, a cloud-based storage system that integrates effortlessly with the GoPro app. With one product, GoPro created a valuable subscription-model billing method, and solved the perpetual there's-never-enough-storage-space problem for their customers.
To make the on-boarding process even faster, GoPro Plus priced its service at a low flat-rate of $4.99 per month. The approachable price point, combined with the ease of subscription, transformed GoPro Plus into a no-brainer product extension.
Good Today – Using Subscription Based Models to Change the World
Good Today is a non-profit platform which is creatively using a subscription-based model to change the world for good. Started in 2014 by Rebel founder Joe Teplow, Good Today is a brilliant non-profit with a simple concept: for as little as 25 cents a day, billed in monthly or annual installments, you can join an ever-growing community of givers and becoming a philanthropist in your own right.
Every morning, users receive an email from Good Today, with a daily cause and two relevant charities to choose from. You can decide where your donation goes, or choose to rollover your donation to the next day’s cause. What may seem like a small personal donation is combined with thousands of others throughout the world to positively impact the world around us. The non-profit has also launched initiatives for companies to sponsor their employees for only $2 a month, and companies such as Shutterstock have already signed up their 1,500 employees for the service.
And having heard of the work Good Today is doing, Tinder founder Sean Rad jumped on board to try and help scale the non-profit even further. Together with Teplow and other prominent board members such as Guy Oseary and Molly Swenson, Good Today has plans to make their service even more user-friendly, by integrating their platform with messaging service Slack.
Good Today is an incredible example of taking a subscription model and using it in an innovative way. Good Today has raised over $360,000 to date for over 2,000 charities, boasts a community of nearly 10,000 users, and hopes to grow to 1 million users by 2020.
And speaking of Slack…
Slack – Improving Office Communication with Subscription Models
Slack burst onto the SaaS scene just a few years ago in 2015, but is already worth an unbelievable $20 billion. Now that’s a success story! So how did they do it?
First, they created an unrivaled product: a messaging service that makes business collaboration easy, fun, and highly effective. But the magic of Slack goes beyond its product. With its pioneering per active-user feature, it added ground-breaking innovation to the subscription-based pricing model.
Slack uses a traditional subscription-based model, with free, standard, and plus user-based plans. The addition of the per active-user feature means that Slack automatically monitors account activity to make sure that all paying users are actually using the service. If Slack notices an inactive user, it refunds the cost that the business was incurring for the inactive user.
Volvo – Driving Growth with Subscription Based Car Ownership
As a traditional car manufacturer, Volvo is another great example of how companies can use software licensing to maximize revenue through new and unique business models. Care by Volvo is the answer to a new generation of drivers who expect the seamless experience born from the digital transformation to extend into every area of their lives, including car ownership.
Volvo looked at the advantages of subscription pricing: a dependable monthly payment, no surprise add-on costs, easy upgrades, quick delivery, and a simple app-based or online payment process. Then, they applied those benefits to the typically messy business of buying a car. The result was a monthly subscription payment plan that includes the vehicle itself, regular maintenance, insurance, roadside assistance, upgrade opportunities, and more.
When the subscription program was rolled out in 2017, it was limited to two car models. In the summer of 2019, Volvo displayed its confidence in subscription-based car ownership by adding new features and extending the program to include all Volvo models.
All Eyes on Subscription
Whether B2B, B2C, or even non-profit, the pricing strategies of these six ambitious companies all point in the same direction— subscription. Subscription-based pricing creates recurring revenue, improves the customer experience, and can be applied to any product, in any industry, by any company.
Regardless of your type of business, it’s time for you to explore what subscription-based licensing can do for you.
If you’re interested in learning more, download our whitepaper and discover how you can create a win-win with recurring revenue.