The rise of micro-subscriptions – Protocol

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Good morning! You thought subscription fatigue was bad? Wait to see what comes next.

Welcome to 2022. It will be $2.99 ​​per month.

If you suddenly feel like you’re being charged for everything in your life, that’s because you are. And more often than not, that line on your credit card statement is a monthly charge.

Subscriptions are everywhere. Dinners, razors, video games, electric scooters, workout clothes: almost anything can now be purchased on a monthly payment model. And, overall, interest in the subscription economy shows no signs of abating.

  • “That’s the name of the game,” said Stephan Liozu, who has written several books on pricing strategies. “People are now just saturated with subscriptions.”

But now we move on to the next chapter: Welcome to the era of micro-subscriptions.

  • A monthly payment for the latest SaaS offering is too expensive? Switch to consumption-based pricing and only pay for what you use.
  • Tired of the existing features on Snap? Sign up for the premium plan of $3.99 per month.
  • Don’t want to buy a $70 video game? Download one for free and pay for expanded features as you go.

There are indicators of growing consumer animosity and evidence that companies may be testing the limits of the subscription business model.

  • Probably the most visible is the fatigue of subscriptions to streaming platforms, which is causing a lot of problems for Netflix and others.
  • Software as a service has become the primary method of delivery, creating headaches for some IT managers who now find themselves with bloated application suites.
  • Pasta is essentially the nectar of the gods, but do we really need a subscription service for that?
  • And in an instantly classic case of jumping the shark, BMW decided to start charging $18 a month for a heated seat subscription. Rightly, the movement has been ridiculed.

Businesses are constantly looking for new ways to make money with us, and the lure of the monthly fee model is bound to be too enticing to pass up.

  • “There’s definitely a push for more monetization,” Liozu said. “He’s moving away from freemium. And the recession obviously doesn’t help. Businesses are in survival mode.

Many companies are used to offering a set of products or services as a bundle, making it easy to unbundle and sell as separate subscriptions. Add to that worries about an upcoming economic downturn and it’s a short-term strategy for companies to try to both grow and diversify their sales.

  • Done right, subscriptions can provide a more stable source of revenue, which also gives businesses the ability to raise prices for consumers to increase revenue. Slack, for example, just increased the cost of its premium tier.
  • Subscriptions also provide companies with much more intimate data about their consumers. This helps to better personalize marketing to persuade users to spend more, which is becoming increasingly critical in a cookieless world.

Small payments make us pay for a product or service – something we could have gotten for free or as part of an otherwise larger service bundle, like TweetDeck. They can also help alleviate some of the issues businesses face in managing subscription models.

  • Netflix, which is trying to crack down on subscribers who share passwords, hopes a cheaper tier will persuade those people to buy their own subscription.
  • And software vendors willing to avoid the central IT office go directly to users with low introductory price options to get them hooked on the product.

Given the success, it’s likely we’ll see even more. For example, Elon Musk wants to drop the already very low price of Twitter Blue and bill everything up front rather than monthly.

Since the Cambridge Analytica Facebook scandal, backlash has intensified against the “free” business model, in which consumers largely pay for the product with their data or some other form of non-cash remittance.

But maybe it wasn’t so bad. Companies are going to get our information one way or another. Now they will also get our $2.99 ​​per month. Maybe our only hope now is the hacker community.

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