How Elastic Pricing Can Drive Customer Retention and Revenue Growth

In an ever changing and dynamic competitive environment, it is essential that companies move from having a transactional engagement with customers to building a long-term relationship with them.

One way to build this long-term relationship with the customer is by adopting a dynamic subscription-based model with elastic pricing that can respond to market needs at the time.

While many companies today across several industries are adopting subscription-based models, these models have to be carefully attuned to their unique customer and competitive environments.

For some companies, the consumption of these services and products vary for each customer and at different periods of the day, week, and month. For example,  Cloud-based services are a great example of this varying consumption, where a standard subscription model might not be the ideal solution.

As a result, Companies must adopt an elastic subscription model in such cases. An elastic subscription model ensures that the customer pays for what they use. Moreover, the benefit of this is that this model is convenient and cost-effective for customers, ultimately driving more satisfaction and retention.

On the flip side, there is a common myth that the elastic subscription model is cost-intensive for businesses which is why many Companies are deterred from its adoption.

However, we are about to discuss why this is far from the truth and that Companies can grow revenue, and at the same manage the dynamic nature of the elastic subscription model. The key is leveraging a robust billing and monetization platform.

Let’s look at how companies can grow their revenue with elastic subscriptions.

The biggest advantage of the elastic subscription model is that it improves customer retention and deepens engagement with them.

Here’s how it works

Offers flexibility

Today’s customers prefer flexibility in pricing. They want to be charged for the services they consume. Take the cable industry, for instance. The cable industry offers myriad services to their customers ranging from cable, broadband, prepaid and postpaid, mobile TV, etc. Traditionally, the customers were billed a fixed charge per month for the services offered to them. Now they are charged based on their choices. 

For example, they are charged for specific channels they watch or specific calls they make, or the specific amount of data they consume. This elastic subscription model helps the cable company develop an attractive bundle for customers, leading to customer delight and eventually brand advocacy. Amazon Web Service (AWS) is another example of why elastic subscription works. AWS offers over 70 products and services to B2B customers. They recognize their customer’s buying preferences and create elastic offers for different segments. This took them to the market leader position.  

Facilitates Experimentation with Different Strategies

Considering that customer needs change rapidly, companies have to add new or remove products from their offerings to respond to these changes. However, finding the right pricing strategy can be quite a challenge. Companies have to experiment with different pricing strategies to understand which pricing resonates the most with the customer. They will have to try different billing models, create custom products, pricing models, and prices for different customer segments and check their response. Sometimes a customer may display hesitancy in subscribing to the services. In such cases, companies must understand the customer’s behavior, predict their intent, and accordingly change the pricing to encourage subscriptions. This will help in improving the conversion rate. 

Improve the Customer’s Lifetime Value

In today’s hyper-competitive environment, customer loyalty is extremely important to grow business and generate revenue. Customers might choose to shop from a competitor brand if they are unhappy with the service or if they do not receive any value-adds. Customers love the micro-moments in their customer journeys. These moments can be created by offering an add-on product for free or at a discount. For example, a customer might end up buying a mobile cover while purchasing a mobile phone even if they lacked that intent. However, such add-on products can be offered only if the company’s billing system has the capability to customize the billing. That’s where the elastic pricing model becomes helpful. Elastic pricing helps companies customize each customer’s pricing throughout the customer journey and build a strong relationship with them. The personalized experience improves customer loyalty and eventually their revenue. 


We are in a paradigm where Companies are realizing that they must have an intelligent pricing strategy to weather tough business conditions or unforeseen crises and grow. It is essential for companies to invest in modern revenue management systems to develop elastic subscription models. However, these systems have to be automated for error-free functioning. 

Using a modern billing and monetization platform, companies can automate the complete customer journey from quote to order. It helps companies create personalized pricing offers based on customer segment, channel, and products. Companies can also identify customers displaying low intent or a potential to churn and devise strategies to engage with them. 

OneBill’s is one such tool that empowers the sales team to create specific pricing plans with unique configurations, promotions, and bundles for specific customers. In addition, the system fully automates the quote approval process. 

To know more about how OneBill can benefit your business in generating revenue, schedule a discovery call today.

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