This article was first published on Do Better (by Esade).
The digital economy is forcing businesses to shift their approach to creating value for customers, yet the way they convert anything into cash still obeys rules and practices that made sense for physical goods but make far less sense today.
Findings by the authors’ research reveal why digital businesses seem to be stuck in time and need to rethink their current pricing strategies to adapt to the new rules of ecommerce.
The rapid growth of on-demand access with little to no cost has prompted businesses to market innovative subscription or membership models that leverage the appeal of “freemium” – a combination of “free” and “premium” where users get basic features for free but additional features or services cost money. But are these models the best way to monetize a business?
“Many players face a deepening crisis: even recognized success stories such as the New York Times, Netflix and Spotify are probably leaving good money on the table or foregoing sales that would still be profitable at some lower price,” says Bertini.
“We believe that earning revenue in the digital age requires a fresh approach. Recently, we have noticed organizations using crowdfunding platforms or rather extreme mechanisms such as “pay-what-you-want” and voluntary memberships. We believe companies can do better.”