Free and Paid Subscriptions: Simplifying Management

Payment is not always the first thing a subscription demands. Often, businesses aim for gaining customer trust first, and then nudge them toward the paid models. Their strategies include free-trials, zero-cost memberships, and freemiums. These businesses essentially manage two subscription types together: free and paid.

And this can get pretty messy if management tasks are not given their due attention. Subscription management software exists for the purpose of giving growing businesses what they deserve: automation, subscriber lifecycle monitoring, and effortless free-to-paid subscriber transitions. With this software, they can turn streamlined operations into a reality.

Free vs Paid Subscriptions: The Differences

Free and paid subscriptions have clear distinctions that make their identification easy. Free subscriptions include all those models that don’t demand payments from customers outright. They let them get comfortable with their services first. After the customer develops a healthy relationship with their services, they encourage them to pay.

There are various free subscription types in the market. These three are the most adopted ones:

• Free trials: Customers are given a free trial during which they can use a service as much as they want. There’s no feature restriction, meaning, they can use all the advanced features a software, an app, or an online tool has to offer.

But once the free trial ends, the customers have to subscribe for further access. Trials normally last up to a month, and rarely stretch beyond that. They give users just enough time to get familiar with the services, and then restrict access when engagement is at its peak. The users’ urge to use more is what ultimately converts them.

• Freemiums: Freemium platforms let customers use their basic services or features for free. But the advanced features come with a price. And that price is paid subscription. There is no time limit for the free services. Customers can use them for as long as they want. 

As an example, think of an AI checking tool that allows users to run AI detection on their content for free. But only for content up to 1000 words. For scanning more words than that, they need to subscribe.

• Zero-cost memberships: These memberships not only encourage users to become their members, but also market their services another way: by asking users to subscribe to their newsletter.

When users sign up for free, they receive the membership’s latest updates regarding new services and events. These updates can spark interest in users, and motivate them to become full-fledged members.

On the other hand, paid subscriptions are those that require payment from the beginning. There is no free usage period at the start, so customers have to directly subscribe for service access. They can’t bypass subscription.

When we think about paid subscriptions, we think of recurring billing too. That’s because recurring payments are a core part of subscriptions. Users agree to getting billing automatically in the terms and conditions section when they sign up. On the basis of this agreement, they are charged on a repeat basis. This ensures that their subscription remains active.

Often, businesses employ both free and paid subscriptions. At first, they offer free trials to attract interested users, and effectively show them their service value. When users are successfully engaged, they nudge them into becoming paying subscribers. This way, both free and paid subscription models together become great tools for acquisition and retention.

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Complexities of Managing Free and Paid Subscriptions Together

There’s a number of complexities that arise when a business decides to offer both free and paid subscription models. Here are some of those:

• Manual tracking of trial expiries

When a user begins their free-trial, the business has to record their start date. They have to calculate their end date too according to the set duration of the trial. Now this has to be done for all the users that leverage free trial. Otherwise, their service usage would go unchecked.

There’s also something beyond recording the dates, and that’s tracking them. Each user’s trial end-date needs to be actively tracked, so that their access can be restricted on that date. If you don’t have a management system for automatic tracking, you have to go through this challenge manually.

• Transitioning free users to paid ones

If users decide to subscribe, they should be given a seamless transition. But this transition can never be seamless with manual operations. Imagine that a user signs up, fills a payment form, and pays. But is then asked to wait for payment confirmation instead of being granted instant access.

After the business manually verifies the user’s payment, it sends them their access link or subscription account credentials. This process is not only not instant, but also frustratingly slow. It might discourage the user from continuing there and then.

• Risking revenue leakage due to free subscription

Revenue leaks happen when users exploit free subscriptions. For example, when they use them for too long without getting noticed, or they use multiple accounts to get a free trial again and again.

When trial tracking is manual, such occurrences are normal. Businesses can easily overlook some users and let them utilize services beyond their term unknowingly. Or they might have too many users to track, allowing most of them to bypass the free trial deadline by a day or two. All such unauthorized service uses contribute to revenue leakage.

• Managing service access for both subscription types

Customers have different expectations regarding the free and paid models. In free models, they expect the basic version of a service, and in the paid one, they look for a premium experience. If they switch from free to paid, and don’t see a considerable difference in their experience, they might churn early.

That’s because they don’t see any additional value in their paid subscription. To prevent this, businesses need to set clear access boundaries for free and paying customers. They have to configure access permissions so that both customer segments utilize different feature tiers and experience different experiences.

How SubscriptionFlow Puts Easy Management Within Reach

SubscriptionFlow makes offering both free and paid subscriptions easier than ever. The software automatically takes care of the management part, letting you reap the benefits of both the models at the same time.

Here’s what this subscription management software has in store for you:

• Automated transitions

Users transition instantly. They don’t need to wait for payment confirmation. SubscriptionFlow links you with fast-processing gateways that update the billing system when payments are a success. So when the payments succeed, the software registers them instantly, lifting service restrictions in real-time. Users are given fast access to the tier they paid for.

• Freemium tier management

Inside the subscription management platform, businesses can create different tiers, and define different service permissions for each. The platform then ensures that each tier’s boundaries are effectively implemented, and that there is no trespassing.

This means that users on the free plan only use the features allocated to them. They can’t bypass rules as long as the software is enforcing the access permissions automatically. Similarly, users on the paid plan get to access whatever their package offers seamlessly.

• Invoicing and payment collection

For users starting their subscription journey, invoicing becomes necessary. SubscriptionFlow has got this aspect covered too, as it automates their complete billing flow. Invoices are generated right on the payment due dates, and transferred to the concerned users instantly. Automatic payment collection can also be enabled, so that customers can renew subscription as fast as possible.

• Dunning management

You don’t need to worry about payment failures anymore. Just as the software automates your regular payment collection, it automates payment retries too. Frequent retries ensure that you receive your payment from the customer’s account as soon as it lands in there. This minimizes your reliance on the customer, and speeds up the payment recovery process.

• Free-to-paid conversion analytics

It’s important for businesses to monitor the performance of their subscription models. After all, if you don’t know what’s lacking, you can’t fix it. SubscriptionFlow gives you advanced analytical tools that you can use to evaluate your free to paid conversion rate.

If the conversion isn’t going as planned, you can look into the matter and update your strategy accordingly. You can also see your retention rate, most popular plans, subscriber behavior across multiple touchpoints, and more.

Get the best of the free and paid subscription synergy with SubscriptionFlow. Use free access to encourage conversions, and paid plans to deepen retention.