How to accelerate iteration on pricing, bundles, and promotions

Customer needs and preferences often change in uncertain economic times. Today, two-thirds of consumers say they’re spending more cautiously or purchasing less, and more than half say they’re prepared to decrease their home budgets if necessary to weather financial turbulence.
These cost-cutting behaviors can especially affect B2C goods and services, which are among the first expenses consumers cut when they need to trim spending. In 2022, 53% of consumers paying for a streaming subscription and 48% of consumers paying for a membership said they would cancel the service if they couldn’t pay other bills.
The cumulative effect of tighter consumer budgets is fewer dollars up for grabs in the marketplace, forcing companies to become more competitive and making customer retention more important than ever. Existing customers generate an average of 70% of a B2C subscription company’s revenue — and this share increases as a company scales.
With B2C customers looking for ways to save money in the current economy, a well-timed discount, bundle, or flexible subscription offer can help retain customers under pressure. By rapidly experimenting with pricing, packaging, and promotions, businesses can identify offers that will most effectively retain existing customers and prevent churn rates from rising.

Why speed and agility are key in times of economic change

Even in a rosy economy, customers’ willingness to pay (WTP) constantly changes in response to factors such as marketplace trends, competitor branding and pricing, and product innovations. An iterative approach to pricing is always important, but in uncertain times, it becomes even more essential to stay in tune with customers’ shifting needs.
The success of new plans and promotions comes down to how quickly you can implement them in response to the market. For example, after recently experiencing significant churn, Netflix introduced an ad-based subscription model that gives customers a more affordable monthly price point. Their speed to market with this new offering allowed them to start retaining and attracting price-sensitive customers sooner.
Delays in new offerings can cause churn and lost revenue — especially when competitors are also reacting to the market and looking for new ways to win new customers. The quickest way to determine customers’ WTP is to experiment with offers and find out what works. Because B2C products and services generally have lower price points than B2B offerings, small changes can have a big impact across a large subscriber base, and the effects are measurable almost immediately.
There are three key areas where price iteration has a track record of success for B2C companies:
  1. Seasonal promotions. Whether they’re aligned with major holidays or cyclical events like the start of a new school year, seasonal promotions allow you to tap into consumer emotions and adapt to their needs and desires by offering deals on things they’re already motivated to buy.
  2. Fremium plans. By giving customers a free trial up front, you can learn how they use your product or service and use that information to determine how to move them to a paid tier. This approach also gives the customer time to feel comfortable and realize value from your business before committing to a longer-term plan.
  3. Family plans and gifting options. Today’s consumers want to be able to share products and services with others. Opportunities to share costs on a family plan, or give a subscription as a gift, are popular options.

How to experiment with pricing, packaging, and promotions

To experiment and iterate rapidly, B2C companies need systems and processes that can quickly accommodate changes to pricing, plans, and promotions, and gather data about how sales and retention are impacted by each adjustment.
Some businesses create a tool, often a spreadsheet, where they list hundreds of different promotions for different seasons or types of customers, then figure out a way for all their sales channels to pull from it. This often requires hard-coding rules for how and when certain offers are displayed, making it difficult to update quickly and run timely experiments.
A more powerful option is to invest in an intelligent billing system that centralizes information about customers and automatically applies offers targeted to them. Having a system that allows you to create different types of plans is also essential for rapid iteration. Finally, pre-built connectors between your billing system and e-commerce platforms and app stores can help you fast-track price and plan iterations instead of investing large amounts of engineering hours to keep things connected.
Once you have an agile system in place, try these tips for setting up smooth, successful experiments.
  • Create pricebooks that include default standard prices along with special prices you can offer to specific types of customers.
  • Set up promo codes that are easy for customers to remember and use across devices.
  • Create bundles, or bundles within bundles, to create greater value for customers.
  • Support convenient gifting options that include gift receipts and services like wrapping, if applicable.
  • Provide family or group plans to enable sharing, and market them directly to the kinds of customers that might use your product.
  • Identify loyal subscribers or subscribers at risk of churning and provide a one-time discount code to prevent churn.
  • Experiment with options for billing at various frequencies, whether monthly, annually, by milestones, by delivery, or other custom options.

Retain subscribers in any economy with rapid price iteration

Providing flexible pricing options is key to retention when customer needs are in flux. In times of economic uncertainty, quick iteration on pricing, packaging, and promotions can help B2C companies respond quickly to customer needs and preserve revenue. The right technology makes it possible to deploy these new offerings in minutes, without a huge engineering lift that contributes to future technical debt.
Learn how Zuora Billing can help you quickly experiment and pursue any subscriber growth or retention strategy with flexible pricing, packaging, and discounting options.

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