Customer acquisition costs often account for a large portion of your product or service costs. Smart entrepreneurs look for ways to get paid more than once by the customer to make the most of their customer acquisition costs.
I used to sell a video series to educate investors only on DVD. Once the sale was done there was little opportunity for me to sell to the customer again. I observed some similarities between my business model and Netflix and began to offer a subscription service like Netflix. This provides a more continuous income stream and spreads out my customer acquisition costs across a much longer time horizon.
Many years ago when the World Wide Web was very young we tried to offer a similar subscription service for commonly used computer applications, rather than the model of the day which involved selling the application on floppy discs or the then new CD format.
At that time the World Wide Web’s infrastructure was not yet mature enough to allow customers to grasp, much less embrace, the concepts of what might now be considered cloud storage of applications and documents. We could not get the market makers to fund the concept. With today’s auto-billing capabilities, selling subscriptions is much easier than ever before.
Can you convert your product from a one-time purchase of subscription service?
