Can you guess the subscription company based on their ideal customer profile?
We’ve been sharing a bit on pricing strategy in theory, so let’s put this to practical use.
Can you guess the company based on their target customer?
Target Customers:
Between 22-35
$75k-$150k per year
Living in cities
Going to classes and using apps
Can you guess the company now, given what their target customers value?
What they value:
3-4 workouts per week
30 minute workouts
on-demand classes
expert teachers
performance tracking
Can you guess the company based on their customers’ willingness to pay?
would pay $15 - $65/mo
WFP scales with workout frequency
premium associated with expert teachers
It’s Peloton!
If you guessed any kind of higher-end fitness subscription business, pat yourself on the back.
To take things further, here are some sample pricing models Peloton might have or will be considering!
Linear per month subscription - similar to peloton, likely priced at a median number within the $15 - $65 per month range.
Tiered subscriptions based on usage - offer ranged subscription prices that increase with usage, but offer volume discounts to lower unit cost per workout.
Charge an add-on fee for office hours - offer the chance for subscribers to book time with coaches to perfect their technique and charge a premium.
To summarize, we can reverse engineer what we just did and generalize so you can use it as you think about your subscription business’s pricing strategy.
Take Peloton as an example when you read the following questions and compare them to the pseudo answer key above. A person pricing out packaging for Peloton would consider these questions to figure out their ideal customer profile and usage-based or feature-based differentiation. Lastly, Peloton would gauge their price sensitivity and product market fit.
5 questions to determine who are their customers?
What age are your customers?
What gender are your customers?
What is the household income of your customers?
What is the employment status of your customers?
What is their geographic location?
How do they behave?
What’s their workout frequency?
What are their workout types?
What are their goals?
What are their current fitness investments?
What is their workout duration?
What is their workout intensity?
Usage:
Frequency
Duration
Intensity
Type
Feature:
Gear
Community
On-demand classes
expert teachers
leaderboard
performance tracking
Lastly, what is the customer’s willingness to pay and likelihood to buy based on the usage and feature differentiation?