How sticky are your products?

Sticky products

Products are sticky if your customers buy over and over again generating recurrent revenue.
How sticky are your products ?
Typically these products are consumables that are required to keep the solution going.
There are also products that companies will buy recurrently as they have become obvious for business.
Like filing systems, copiers, printers, portable computers, … not exactly consumables but products that are being bought on an ongoing basis.

Sticky services

Besides the obvious services that are required on a normal basis like cleaning, utility maintenance, … there are services with a higher price tag that are recurrent too: accounting, auditing, cloud computing, …

Converting into recurrent

If you have a product or a service that brings recurrent revenue your future is more certain.

The problem is how to get your products into the recurrent class?
a) Maybe the concept of your product needs to be changed by making an essential part replaceable. However this is not suited or feasible for most products.
b) Or adding on services to your products like Apple does: for example assurance, maintenance,…
c) The easiest way is to change the pricing: from one price upfront into a monthly or yearly price to be paid – like a subscription. In many cases this is possible by adding the maintenance into the pricing structure.
Hence instead of selling a product you sell a lease or rent including the maintenance.

Benefits and drawbacks of subscription pricing

The drawback of such a subscription based pricing is that the customer can stop the subscription.
The benefit of subscription based pricing is the opportunity for the salesman to go and visit the current customers and staying in contact with them whereas with a one time purchase the relationship gets lost quickly after delivery.
An additional benefit is the possibility of a higher total revenue over time as your solution keeps being used at the customer.

Could you convert your products into a subscription based pricing ?


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