What's a better subscription pricing model: per-user, or multi-user packages?


5

I'm currently working on a web application that will be used by medical clinics. We're discussing the pricing model we're going to use. We've already decided to go with a monthly subscription model. Furthermore we won't limit on features; everybody get's all features. Therefore the pricing will only be based on the number of users/accounts a clinic has.

Currently, we're thinking about two models:

  • Multi-user packages: We offer small, medium and large packages that, for example, include respectively 3, 10 and 25 user accounts.
  • Per-user pricing: You pay a fixed price for each user each month.

Regardless of the model we choose, everybody will get a free (unlimited) trial for a few weeks, so they can try and start using the application, without worrying about costs.

In our current discussions, there are two views:

  • Pro multi-user packages: When going with multi-user packages, it's easy for clinics to add an extra user, because they'll often have a spot left. Therefore, they don't have to think about the difference in pricing each time they add a user, which would be required if per-user pricing was used.
  • Pro per-user pricing: When using multi-user packages, during sign-up, a clinic might feel that they have to pay too much because they need a package that's larger than necessary. This might be a risk for us, as users are not yet convinced of our application at that moment (during sign-up). This thought/feeling is probably more negative than the extra price a clinic would have to pay when an extra user is added if the per-user pricing was used (as in that situation, the clinic would already be convinced of the value of our application).

I'd love to hear what you think about this!

Pricing Subscriptions Web App

asked Oct 14 '13 at 23:22
Blank
Jonathan
126 points
  • I'd expect that per user was standard, but with a discount if you opt for a multi-user package. – Steve Jones 6 years ago
  • @SteveJones Uh, you mean going with per-user pricing, and offering some percentage based discount if one clinic pays for more than X users? That's also be an option indeed. – Jonathan 6 years ago

4 Answers


2

You can take the multi-user package from different point of view:
"the clinic can be glad to know that thay have more space (users number) available without additional costs..." And, IMHO, I think you overestimate the feeling of "paying too much" - they already have a choice and they must know that from practical point of view, the "borders" of the categories (small, medium, large) must be defined in one way or in another.

From marketing point of view, you may stress the difference between the categories instead of on single-user licence. So the client will say "ah, we are a medium-size clinic so we go for the medium licence" and not "we are a clinic of 16 employees so we buy 16 licences"

And, of course, for your company the multi-user package way is also better, because the client will almost surely buy more licences that he needs than less. E.g.clinic wita need of 7 licences will buy the 10-licences package and not the 5-licences package. This give you the place to decrease progressively the price (e.g. $100 for single user, $450 for 5-licences and $850 for 10-licenses.) This can have a "positive feeling" impact on the client because he knows that more he buys, less he pays per user.

And the last point I will cite in favor of multi-user package is the administration. The direction of the clinic maybe don't know immediately who will be using your software in their clinic. They can realize later, than employees A and B don't really need it (despite they were on the first list) but employee C can use it (despite they didn't think about him first) and they will still have one licence "just in case". All of this without administration worries of buying/cancelling licences each time there is a change in their personel...

answered Oct 14 '13 at 23:49
Blank
Data Smarter
1,274 points
  • Thanks for your reply, it contains very relevant arguments! – Jonathan 6 years ago

1

If I was you, I would do some User Testing

Just go out to a few perspective clients and ask them what would be a prefferable option for you

I say this for one reason, what would work for one industry wouldn't for another, and the only people that would know what will work for an industry is the customer.
Also there is ABSOLUTELY NO reason you have to choose one or the other. Sell individual packages and offer a volume option, than track which sells more

answered Oct 15 '13 at 00:33
Blank
User60812
820 points

1

Based on personal experience, I'd say you are better off with the multi-user packages.

Many customers (I assume yours are the same: and ask to be sure) may have a couple of part-time people who need minimal access to the software ... but still need it. If they have to pay full price for those people (who are part of the team: the standard question is "can the team access it or not) it gets awkward. You want pricing where "all the team can use it" with no questions.

Offer a 30-60 day free trial to let people get a chance to see what the software is like, if you want to get over the 'package is too expensive and may scare away people who just want to try it' concern.

answered Oct 15 '13 at 02:47
Blank
Kamal Hassan
1,285 points
  • Thanks for your reply! One thing we're afraid of is people (like part-timers) sharing one account. Do you also have experience with that (and how to handle it in our advantage)? – Jonathan 6 years ago

1

Without all the details of your business/application, have you considered pricing per patient (or some other data metric that more accurately corresponds to usage)?

Pricing by users automatically results in your prospect evaluating your product in such a way that may limit access. Rather than rolling it out for every user, the business decision maker may opt to save money by only allowing select users access or "sharing" logins. You don't want that to happen. In fact, the more users within an organization, the more entrenched your product will become and the more long term revenue you will generate.

If you tie the price to the number of patients the practice has, you remove all internal usage barriers while still scaling the sale in a logical way that most clinics understand. More patients means a larger practice, and therefore a larger budget to pay for your product.

answered Oct 17 '13 at 00:01
Blank
Tlueker
96 points
  • We've definitely thought about this. (We discussed pricing per treatment.) However, one concern was that clinics might choose to not register simple treatments, to save money. This would result in less revenue for us, and possible trouble for the clinics using out product. However, it's good to hear that others also suggest this option. We might have to think about it a little more. – Jonathan 6 years ago
  • The problem with the above approach is that not all treatments are equal. A small practice may perform 10 treatments per day, that are each worth very little. A large practice may perform 4 treatments that are each very expensive. In such a case the small practice would end up paying more than double what the larger practice is paying. There is no correct answer here - it really depends on the business and the market you are targeting. One option might be to offer packages - "Bronze - 2 users and 4 patients per day", "Silver - 5 users and 10 patients" etc. – Gavin Coates 6 years ago

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Pricing Subscriptions Web App