Pricing models are a critical DTC business strategy. To quote Patrick Campbell of ProfitWell, “You can’t just take the product to market and hope; the market is out of your control.” Along with your plans for product marketing and distribution, the right pricing strategy is a top priority.
How will you know the price is right? You use reliable, high-quality data to build your pricing model.
The price is right?
Good data is the difference between guesswork and an informed, thoughtful decision. Drew Carey isn’t going to make you gamble your company’s success on a guesstimate, but you still need to know if the price is right. Whether you’re launching a brand-new subscription product or adjusting pricing strategy for an existing DTC line, high-quality data will put your pricing in the Goldilocks Zone: Not too high. Not too low. Just right.
Market research data tells you how others in your DTC sector approach pricing, but there’s also plenty of pricing model data within your own business. How much does it cost to make your product and deliver your service? Don’t forget, you pay for materials, labor, shipping, and utilities. These costs are relevant pricing data. If your product is already on the market, you have data about customer behavior, DTC market share, when your subscription pricing strategy is working, and when it needs some work.
Got answers?
Data determines a lot more than DTC value metrics and subscription market values. When you ask:
- Do we have what we need in stock?
- Where is our nearest supplier?
- What’s the demand for this product?
- Who is looking for what we offer?
- What features do our customers like best?
Data has your answers.
It may be a lot of information to track, but not keeping track causes big problems. If you don’t track demand, for instance, you end up with too much of a low-performing product and not enough of your most popular offering. And if you don’t track consumer trends, your prices have no staying power. If prices are too high, no one is buying what you’re selling. If they’re too low, you struggle with expenses.
To get your DTC subscription pricing model on track, you need the right answers. For those, you need high-quality data.
Data-driven pricing
Every subscription customer is different, but there are still DTC trends to track. Customer data is good for assessing demand, targeting marketing campaigns, driving repeat business, and upselling subscription status — IF your data is accurate, complete, consistent, current, valid, and unique.
Maintaining high-quality customer data makes your DTC business more responsive to what your subscription customers want as individuals and as a demographic. It also helps you create sustainable pricing models.
How do you build a data-driven pricing model that works? Start with these steps for data quality management:
- Collect industry, market, and customer data.
- Use the data quality dimensions to define management standards.
- Ensure the quality of your existing data records.
- Make rules to manage the quality of future customer records.
- Use your rules for regular data quality checkups and maintenance.
Your company’s subscription pricing model must be high enough to make a profit, low enough to keep customers, and consistent enough to keep you competitive. Low-quality data leads to DTC pricing disasters — and sends your most loyal customers running for the hills — like Netflix’s new password sharing ban.
High-quality data helps you understand your customers, who they are, what they will pay for your subscription service, and what pricing changes will hurt customer loyalty.
[cta]For help with data quality management for data-driven pricing, reach out to pam.lang@xcelerated.com, call (877) 236-9155, or visit xcelerated.com to learn more about custom data quality management solutions for your DTC subscription business.[/cta]