The report is based on a survey of 318 subscription professionals from companies with over 50 employees and annual revenue exceeding $5 million.
The report paints an optimistic picture for the subscription economy, with 96% of surveyed industry leaders anticipating substantial growth in subscription revenue for 2024. About 3 in 4—or 73%—of subscription businesses are raising prices in 2024—an over 10 percentage point increase from 62% in 2023.
“We’re seeing this in software and consumer services. Cost-conscious people leave services, but those who value food, content, or software stick around. The industry has shifted from ‘growth of all costs’ to ‘efficient growth,’”
Guy Marion, Chargebee’s chief marketing officer said.
Beginning in 2024, Amazon Prime Video will include ads unless consumers pay more. In 2023, Netflix increased the basic plan price from $9.99 a month to $11.99 a month with plans to increase the price again this year. Disney Plus and Hulu have also increased their prices.
“I’ve been a subscriber for 15 years, but enough is enough. There’s nothing left on the platform to justify the price, and their originals are guaranteed to never get an ending, so why bother taking up a new show?” an X user tweeted, responding to Forbes’ reporting about Netflix raising prices.
“Yep. Too many are bending over and taking it from Netflix. It needs to stop. People need to say enough is enough and cancel it,” another tweeted.
About 86% of surveyed industry leaders believe retaining existing customers is more important than acquiring new ones.
“It’s been quantity, quantity, quantity since Netflix launched and pre-pandemic. It’s been buying tools, hiring people, and spending whatever it cost to acquire a customer. The growing market share has been the mindset,” Marion said.
About half of survey respondents—46%—are leveraging AI to enhance operational performance, paving the way for improved market analysis and product refinement to improve the consumer experience. In other words, consumers will pay for a better experience.
Companies are using AI to focus on their “good” customers rather than their “bad ones,” Marion added. A“bad customer” constitutes someone who will never be profitable, which means they may return shipped goods, Marion said. The company wasted resources to ship a product and thus the customer was a net loss, he said.
“Bad customers kill subscription businesses,” Marion said.
Overall, while many consumers may be disgruntled over higher prices, these companies are investing more in existing customers to keep them happy and loyal.
Source: forbes.com
