The Subscription Economy
Pricing Plans, Tiers and Free Trials
Firms offer tiers with different features, free trials and annual discounts to segment customers and encourage commitment.
Pricing is a design choice.
Tiers
Basic, standard and premium plans let customers pick what suits them.
Trials
Free or cheap trials reduce risk for new users.
Annual plans
Discounts for paying yearly lock in customers.
Psychology
The middle plan often looks like the best deal by comparison.
A three-tier menu
Streaming offers a basic plan with ads, a standard plan and a premium plan with more screens.
Assuming price is set only by costs
Customers' willingness to pay matters.
Key takeaways
- Tiers segment customers.
- Trials reduce risk.
- Annual plans lock in users.
- Decoys shape choice.
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