Top 5 Ecommerce Pricing Models
1. Revolving Pricing Model
A revolving pricing model is most commonly used for subscription based services. The key sign of a subscription is: consistent content delivery. This means you deliver fresh content daily, weekly, monthly and so on. Seeing as how your product is delivered on a schedule it only makes sense to charge your customers on a schedule. Does it have to be the same schedule? Absolutely not! Plenty of subscriptions offer many revolving pricing options. These can be monthly, annually, semi-annually or anything your customers desire.
2. One-Time Charge Pricing Model
The one-time charge model can be a slippery slope. If you are considering it, make sure you run a lot of numbers before you commit to it. Meaning, the ROI must be there or else you will not be in business long. One-time charge models work for mobile apps, audio downloads and Egreeting-cards. Let’s think about the mobile apps specifically. Here at Softway we build a lot of mobile apps so we have a good understanding how much money goes into making each one. If you are going to release them on IPhone and Android you need to have a strong marketing plan to ensure the ROI because this won’t be cheap.
3. Usage-Based Pricing Model
The usage-based pricing model is exactly what it sounds like. This is becoming very popular for energy companies and internet companies and has always been a favorite of cell-phone providers. For ecommerce, let’s say your product is one like GoToMeeting. They don’t offer use a usage-based pricing model but they very easily could, and in my opinion they should. It is an option they could offer to smaller businesses that only need their services ever so often. They could keep your billing information on-hand and charge you a set price for each session used in that billing period. Or, charge you for ten sessions up front and then you use them whenever you need to.
4. Freemium Pricing Model
This is mostly seen in social sites like Linkedin and Spotify. Both of these offer a free account and premium accounts (free-mium). The idea here is that once your customers immerse themselves in your free services, they will want to pay more to get all of the services. Both Linkedin and Spotify’s premium services charge a monthly revolving price and Linkedin actually has a few premium services that are tailored to different audiences. Spotify gets you on the commercials; you pay more and there are no commercials.
5. Tiered Pricing Model
Now here’s where things get a little tricky. Let’s say you are selling a tangible product that has to be packaged and shipped. This product is one that you buy in bulk from a manufacturer and re-distribute. Because you buy in bulk, you get price breaks. With a tiered pricing model you are basically passing along those price breaks. Meaning, the price for one product is not going to be the same cost per item if the consumer wants to purchase 10. A lot of subscription based services offer tiered pricing as well; if you pay for a year up-front it is cheaper than paying month-to-month. Tunecore is an ecommerce service that distributes music and video content to all of the go-to digital marketplaces for anyone and everyone. Sign-up, choose your product (or bundled product package at a discount), upload your content and select which stores you want it to be sold in. Within 48 hours your content is being sold on your selected markets and then 60 days later you can start cashing in the checks.
These ecommerce pricing models are not new and innovative models; they are simply recycled from the tried and true and formatted for the ecommerce business model. After you decide exactly how you want to charge for you service or product it is up to you to implement this pricing model. If you are building the ecommerce site yourself then you need to do a lot of research on building a paywall because inside that paywall will be your pricing model. If you feel you are already over your head, contact Softway Solutions and our expert team will build, implement and even maintain your ecommerce portal for you.