6 min read · Written by Grant Rayner on 29 Nov 2023
Share by emailThe last few articles have focused on products. I’ve shared some thoughts on books and templates as products, and some of the very real challenges involved with both. In this article, I’m going to focus on subscription products. I’ll provide some examples of subscription products. I’ll then highlight some of the benefits of adding subscription products to your suite of products and services. I’ll share some considerations that will determine how you might price your subscription products. Lastly, I’ll touch on promotion.
In the context of this article, a subscription product is a a service or item that you develop and maintain for which your customers regularly pay a recurring fee, either monthly or annually, to retain access or use.
A subscription is different from a retainer, in that a subscription provides one product to an unlimited number of people. In a retainer arrangement, you’re contracted to provide a service to a single organisation (of course, you could have multiple clients on retainer).
While a subscription product is sold like a product, I would argue that offering a subscription is actually a service. Subscription products require ongoing work, potentially taking time away from more profitable activities, such as consulting.
Before looking at the benefits of subscription products, let’s explore a few different examples:
You’ll notice that there are some different delivery models here. Let’s dig a little deeper into each of these examples.
In the case of a weekly newsletter, you’re providing new content every week. This process will involve ideation, writing and editing. What your customers are paying for is a new piece of content in their inbox every week that educates and/or entertains. I’ll be writing more about articles as a subscription service next week.
For training videos, customers are paying for ongoing access to these videos. There would also be an expectation that these videos will always be available when needed, and that they will be updated and perhaps added to over time. Importantly, this model also assumes that customers will need continual access to these videos. For example, their employees may need to view these videos once a year as part of mandated corporate training. A subscription approach to training is different from a customer paying a one-time fee to watch a training video. I’ll cover online training as a product in a separate article.
With an application, customers are paying for access to a utility that you will maintain and improve over time. I’ll be writing more about applications in a separate article.
Lastly, with country risk information and analysis, customers are paying for ongoing access to different country reports. However, country risk doesn’t necessarily change that often. So, to ensure ongoing utility and value, you will probably want to include situation updates or alerts as part of the subscription.
With each of these examples, there is an expectation of ongoing work that justifies ongoing payments from customers.
The key benefit of subscription products for you as an independent security professional is that they can provide a consistent recurring revenue stream. This revenue has the potential to grow over time as you add new subscribers. This revenue can help you diversify your revenue streams, making your business more resilient. It may even be that your entire revenue stream could come from one or more subscription products.
Another benefit of subscription products is that they provide an opportunity to deepen your relationship with your clients by providing ongoing value. As such, they can be a source of revenue and a medium for promoting your services.
From the customer’s perspective, they should be getting significantly more value than what they’re paying. That’s the core tenet of the model. You’re spreading the cost of developing and maintaining the product across a group of paying customers in such a way that each individual customer is paying a small fraction of what the product is worth. Overall, you should be earning significantly more than the product is worth.
To be successful, a subscription product must provide ongoing utility. Either the customer continually uses the product (e.g., an application) or they continually receive informative updates (e.g., articles or an information product). If the subscription program doesn’t provide ongoing value for your customer, they’ll eventually stop subscribing either to save money, or to put their money to better use by subscribing to a similar but better product.
Let’s move on to consider the different factors to consider when determining the price for your subscription product.
Producing a subscription product takes time. You’ll need to factor in this time when you consider your pricing. In addition, you’ll need to consider the amount of ongoing work that will be required. For example, you might need to spend time to write a new article each week or you might need to continue to develop and maintain a software application.
Based on the time it takes to develop the product, and the ongoing time commitment necessary to maintain the product, subscription products will have a break-even point. You’ll need a specific number of customer subscribing to the service to enable you to break even and cover the costs of initial development and ongoing maintenance.
Using subscription articles as a simple example, let’s say you’re writing one article a week. Each article takes around four hours to write, edit and publish. Based on an hourly rate of $250, each article is worth $1,000 of your time, which is an opportunity cost. On a monthly basis, you’re producing $4,000 worth of articles. If you plan to offer your article for a subscription fee of $5 a month, you’ll need 800 subscribers to break even. If you’re able to get 1,000 subscribers, you’ll earn a revenue of $5,000, with a profit of $1,000 above your opportunity cost. Given you’re working 16 hours a month on these articles, a profit of $1,000 isn’t amazing. That said, $5,000 a month as a supplement to revenue earned from other products and services helps to provide revenue diversification. There are also a number of intangible benefits, including promoting your expertise. Your articles may lead to additional project opportunities.
The obvious question here is this: are you able to get 1,000 people interested in what you are writing about? It’s not a trivial challenge. Of course, you could also consider raising the price of your subscription. In doing so, you’ll start to influence demand and may end up with less subscribers and potentially less revenue.
You can add additional value by offering discounts on other products or services. For example, if you’ve written books or templates, you could offer a discount code for those products to anyone who signs up to your subscription services.
Remember: everything you work on takes time, and that time may represent an opportunity cost. That is even more relevant for subscription products, which will require an ongoing commitment of time. You’ll need to determine whether this time could be better put to use on other projects.
Don’t underestimate how hard it can be as an individual to maintain a reliable weekly output. In 2022, I published one article a week on crisis management. In 2023, I increased my output to one article a week on travel security and one article a week on business (this article). Two articles a week is a significant commitment that starts to impact other work. I certainly won’t be continuing this rate of effort in 2024.
In addition to building and maintaining the core product of the subscription service, you’ll also need to continually promote the service if you want it to grow. Options to promote your subscription product include:
As a baseline, I recommend sending an email to all of your existing clients letting them know about your subscription product. Then, include mentions of your subscription products in each of your newsletters. You might, for example, provide updates of recent changes or improvements. In my case, I provide updates in my monthly newsletter of new articles. Lastly, actively promote your subscription products on LinkedIn. Two posts a week to your network and to relevant groups is a good start point.
You should certainly consider developing a subscription product that is tightly integrated with your other products and services as part of an ecosystem. In the next few articles, I’ll dive into more detail relating to different types of subscription products, including articles, applications and more.