Selling subscription services is something that most applies to those freelancers who work in web design or development. Typical subscription services include hosting, domain names, SEO services and CMS systems. Essentially any service which you pay on a subscription you would mark up and rebill on a subscription basis to a client. If you work on this aspect of your business you can develop a large set of recurring subscription payments, often without any further cost to you. This will then provide a tidy amount of money each month, often for doing very little.
What about support?
One potential drawback to selling subscription services is that they often require support services. For example if you provide hosting services to your clients they will often call up for help setting up their email or asking about things like spam and so on. Additionally if the service goes down – and this is particularly relevant to web hosting – you can experience a lot of stress and waste a lot of time in support. Therefore it is important to factor this in when you mark up the price, make sure you have enough to cover potential support AND provide your recurring revenues.
Also if you aren't comfortable with high stress, be warned that hosting can be a HARD business, and there is nothing worse than explaining to clients why their email is down.
What other drawbacks are there?
Another potential drawback with selling subscription services is the question of what happens if you decide to close down. This might not seem important now, but make sure to consider what you would do if you suddenly decided to go back into the workforce or left the country.
One possible solution to this problem is to stay in touch with other freelancers or small agencies involved in the same sort of thing. For example if you sell web hosting services to your clients and decide to close down you could move all your clients to another freelancer’s server and increase their income.
Some Tips for Selling Subscription Services
Here are some tips for selling subscription services:
- Mark Up High
Don’t feel guilty about marking up your prices significantly. If hosting costs you $10 a month, it’s not unreasonable to sell it on at $30 a month, even though that is effectively triple the cost price. Remember if cost is a huge concern your client is free to cut you out and go straight to the source - you can even mention this to them!
Marking up high means that if things ever go wrong and you need to provide support services, you’ll still have it all covered.
- Bill Yearly
It is unlikely that as a freelancer you have the necessary infrastructure to keep billing all your different clients on a month-month basis, so it helps to instead bill them in yearly doses.
- Stay on top of Billing Periods
A little organisation can go along way in making sure you bill everyone on time. Set up a system of reminders either in your favourite calendar application or directly in your accounting software (products such as MYOB can be setup this way)
- Look for Low Maintenance Products
Self service is ideal for selling subscription services. To use hosting as an example, it is best if the client can create and service their own email addresses, check their stats and perform other maintenance tasks without calling you. Look for products that provide this functionality.
- Find Services you can Rebrand
It doesn’t look great for you if your client realises that you have marked up everything to the hilt, so it’s always best to find services where you can rebrand the console with a logo or theme, thus avoiding any awkwardness.