Subscription News delivered straight to your inbox.


Benchmark: Value-Based Pricing

Amy Konary

Research by the Subscribed Institute in collaboration with McKinsey & Company

The Subscription Economy continues its expansion across B2B sectors, from financial services to manufacturing, giving companies more opportunities to innovate and scale than ever before. But for all the enthusiasm about the subscription model from their customers, providers, and investors, companies are finding it hard to keep up with the operational realities of meeting the subscription moment.

Building long-term relationships with customers is the route to value in the subscription economy. Yet the Quote to Cash (QTC) process at most B2B companies—even those with subscription businesses—is optimized for linear transactions, not relationships. This results in complexity and cost to the provider, and a poor experience for the subscriber. Companies that set out to improve their processes are faced with multiple design choices. And determining which choices to make is a lengthy process that involves coordination with multiple teams in your company.

Impact on Revenue Growth

In order to identify the key QTC design elements of successful enterprise B2B companies, Zuora’s Subscribed Institute collaborated with McKinsey & Company to analyze three years of performance data from nearly 500 companies. We compared indicators such as revenue growth, expansion, and net retention of these companies against 30 metrics corresponding to design choices in the quote-to-cash process.

Our study found that customers increasingly want to shift from flat fee to value-based pricing where they only pay for what they use, and higher-growth companies are doing a better job of meeting that need.

While value-based pricing typically offers customers more flexibility, like paying only for what they use, we also identified areas where simplicity was called for.

Get more insights from the study by downloading the entire benchmark below.

Next Next Next Next Next Next Next Next Next Next

Fresh subscription stories delivered to your inbox, weekly.

Subscribe to Subscribed
By using the website, you agree to the use of cookies. Head to our cookie policy to learn more about cookies and manage cookies on this website.