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A Note on Subscriptions with Introductory Pricing

Published on 23 Jul 2013

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I stumble across this deal in one shape or form almost every other month and it’s not really a problem if I miss the deadline as it’ll probably return in a few weeks. So what does this tell me and many other consumers? Well, that if it can be this cheap now, then it can be this cheap again— or perhaps this should always be the price. And this message is reinforced every time a flyer or rep reaches out to consumers. Perhaps it’s one of the reasons why many consumers feel that the Internet is too expensive. They want the service at the low price that they initially received. Services like Internet subscriptions don’t face the same accelerated rate of technological obsolescence that some products like smartphones do. There is no last year’s plan to clear out.

So what about existing subscribers? Those already on an existing commitment have nothing to worry about — for now. But subscribers who are on a month-to-month schedule will want the promotional discount or it’s off to competitor B. These deals are designed to target subscribers who are unhappy about the price of their current subscription, including your own. There are even online discussion groups that are focused on dealing with retention departments with one goal: extending and keeping that discounted price. The most commonly prescribed technique? Threaten to jump ship.

So in the end, this is a race to the bottom, where subscribers become loyal to the lowest price. Competition and innovation are expected to drive the cost of connectivity down, yet customer retention is even more important as saturation kicks in. As a service provider, this is a tough line to navigate, as there is little to no differentiation in your service. Or is there…?