Building a Subscription Based Business Model? Innovate Pricing Models


How can we build a subscription model
out of pretty much any business in the world? Let’s put an association on it because
people like to be with other people that are like them that like the things
they like. It’s pretty brilliant, Right? Let’s look at how you can go and
innovate in terms of business model. So in terms of business model, there are 14 different business models
that pretty much cover everything. And if you drill down, you’ll see
that everyone is covered. For example, landlord, tenant and broker are both covered by
Airbnb’s model and Uber’s model for example. So it’s a broker in that will pro will
facilitate introduction of these people to you as a broker and landlord tenant
in that you own a car or you own a house and we are going to put somebody in
it to rent it for a period of time. So even if you might think, well that’s
only real estate, it’s really not. If you drill down. So
there’s an affiliate model. There’s a pay as you go model a, you can
be a publisher, you can do franchising, you can have manufacturer that each,
that has sales reps that are out selling. You can just wholesale direct as a
middle person, you can broker deals, you can have a reseller with a
value added reseller, a model. You can be a retailer, you can do
network marketing all you can eat, meaning it’s one fee and you
get everything as much as
you need usually in data. But also at buffets you can be a direct
seller or have a subscription business. So I like to look at these as models and
have that as the first thing that I’m thinking about. And then the second thing that I’m
thinking about is what are the different pricing models? And so we know
there’s free with ad support, there’s freemium with upsells
based on value. If it’s worth more, we charge a whole lot
more. A tiered volume. We give discounts or charge less as
people consume more features and add on. So there’s a, like a car would be a good,
when you’re in the finance department, they’re saying do you want floor mats
with that low price leader of Walmart, a MSRP map, manufacturer’s suggested retail price
versus minimum advertised price, a free with paid support costs or
a time cost plus or times costs. Having a portfolio suite of products
like Microsoft office or Adobe creative suite, commodity-based like
golf balls or rubber bands. We’ll sell you the razor. And then
we make our money off the blades, we’ll give you the cell phone for free, but you sign a contract
premium and luxury or discount. So those are kind of the pricing models. And so if you take those business models
and you take those pricing models and you put them on a business model
innovation map, it looks kinda like this. So I like to say what’s the primary,
secondary and tertiary, what’s the first, second and third model
for the business model. And then how can we apply the
different pricing models that, and if you think about this, that means you’ve got 14 different
business models and 14 different pricing models that you can mix and match to
create completely new businesses and I’ve never seen I, I never was able to find
anything that, that did that. So I built this and I just think it’s
amazing for coming up with different ways to think about your business because
you can just pop different things in. So for Uber, they’re a broker
model as a business model, as their first model and their pricing
model on connecting drivers with passengers as a broker, as a volume,
they charge 15 to 30% brokerage fee, which is, I just heard from the Uber people is
going up to 50% now this secondary model for business is landlord tenant. The drivers are renting their car space
to passengers and the pricing is tiered. The first pricing model is it’s
tiered based on the type of card. Do you want a black car?
Do you want an Uber pool? It’s going to be more
for one than the other. But then the secondary pricing
model is the farther we go, it’s a volume model. The more miles you
consume, the more we’re going to charge. And then the tertiary model
is the thing that we all hate, which is called surge pricing.
It’s a time of day. So you know, let’s just screw you even
harder for that. Okay. So that’s three pricing models
layered on top of one business model, which is layered on top
of another business model. And then over on the tertiary
side they’ll do affiliates. So they’ll pay referral
fees for new customers and
referral fees for new drivers from time to time. So this is something that you can take
with your business and really think about how to innovate because innovation can
be really hard if you can’t systematize it and this allows you to do
that. So for survival life, we had a model of direct seller,
we sell gadgets that people want. Our pricing model is Perry’s brilliant
innovation, the trip wire, right? The low price thing that gets you in. And then there are 11 times more
likely to take the next offer. The secondary pricing model
is cost plus or times costs. We do upsells for additional products
for some sort of profit margin. And then our secondary business
model is again Perry innovation, the association, how to Cal, can we build a subscription model out of
pretty much any business in the world? Let’s put an association on it because
people like to be with other people that are like them that like the things they
like. It’s pretty brilliant, right? So subscription was FPA membership, value based model and then a tiered
membership levels and then features and ad-ons. So additional add on benefits. And then the third model is as publisher
with a free and ad supported because we’ve got all these websites
and all this content. So we’re a publisher and we have
ads that we sell on that as well as sponsorships. So when you’re doing yours
and you have a model for this, you have a sheet to do this in
your materials. Just put the, take the sheets out for business models
and pricing models and play with them and see what you come up with for all
of the different products and profit centers and your business. And I
think you’ll come up with some really, really cool stuff, particularly if you go through
the strategy and trends
stuff before you get into it. Because if you’re thinking, how
can I take advantage of that trend? It doesn’t really work with
my current business model. Then just run the business
model innovation man.

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