Revenue: Subscription vs. Transactional
Think of revenue in two ways: subscription and transactional. Both can be profitable, depending on your product.
Subscription:
- Defined: Your customers pays a subscription fee on a recurring basis because they love your product
- Acquisition: Freemium, Trial, Both? If you go Freemium, your goal should be to convert free customer to paying customers. If you go Trial, your focus should be on keeping those subscribers after the trial ends.
- Examples: Email lists, Premium Content, Premium Communities, SaaS, Information Aggregation
Transactional:
- Defined: Your customers pay for each transaction that occurs
- Acquisition: Your customers are willing to pay a "transactional" price for something because you are adding value, reducing pain points, or sharing knowledge.
- Examples: Any Shopify store, Expert Guides / Courses, Marketplaces
Revenue generation is not binary -- this can be a blend of both Transactional and Subscription.
Ex: A stock photo website that charges $20 / image, or 3 images / month for $45 monthly.
Personally, all of my freelance work is a blend of the two: upfront dev costs, then ongoing fee for maintaining the tech stack and being available for questions.
My clients are small businesses: if something is working, the client generally doesn't want to be bothered and would prefer to run the businesses. I email them each week and say "How are things going?" This has generally resulted in <15 minutes of answering simple questions, via email, each month.
Any thoughts? Please comment below!
Happy rev gen :)
