Charging subscription fees

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Does anyone have experience with program subscriptions fees. I wrote a �Permit Tracking System� for use (for free) in the cities we do business with. I have another city interested in using our system for their city. They are asking what I would charge to allow them to access our system. I have no idea how this would work and looking for others that might have experience in that area.

I was thinking of charging a one time set up fee to add their city to the system and then an addition �per permit fee� for each new permit they add to my system. Maybe an annual fee also.

Have any ideas?

[Keith Hubert]

Re: Charging subscription fees

Please explain more what your “Permit Tracking System” does and how your existing users access the application.

[[email protected]]

Re: Charging subscription fees

I operate a privatized Building Department just like a local jurisdiction but we contract with cities that can't afford or don't choose to have their own building department. The Permit Tracking system tracks the initial permit application, all activity with the permit and allows for the attachments of documents such as plans and engineering specs. Also auto calculates building permit fees. There are a number of other functions, such as, printing permits, and Certificate of Occupancy, running activity reports and so on.

[Ted Giles]

Re: Charging subscription fees

Couple of things to think about Richard when working out a price.
New User = Training
Possible Data upload
A lot of initial support
Possible new system requirements

There are a number of theories regarding software pricing depending on the business "drivers".
If the objective is cash, then a pricing model for the package, with annual maintenance and support charge, and optional upgrade/consultancy prices might do.
If you work on a Usage basis, you will need a lot of calculations which may be challenged, so it's doable but also can be time consuming.

Finally, what will you do if this takes off across multiple cities because the price is low?

[Steve Wood]

Re: Charging subscription fees

PayPal has a nice subscription model when it comes to collecting money from your members. You can tier the initial subscription, like $100 each month for six months, then $75 per month from then on, etc. lots of different arrangements. PayPal will auto-bill the member on the anniversary. If the member cancels the subscription through their PayPal account, you will receive an alert so you can cancel their membership, or you can arrange to have the membership cancelled automatically.

[DaveM]

Re: Charging subscription fees

Richard,

without knowing more about your operation, it would be very hard for one to assume to know how you could/should charge, if that is part of what you are asking.

Method to charge is a different scenario, but it looks like you have some very good answers above. It appears you have a very good idea of how to stop usage on non payment.

It appears you have some idea of charging by usage. Should you charge by each item from a client instead of how many come to the site? example: building permit = 200.00, then your part would be 20.00? occupancy = 65.00, then your part would be 6.50? Yes I would charge them a setup fee and possibly a training fee and yes an upgrade fee as it becomes necessary. Yearly fee is ok.

You are replacing people that usually costs about 65,000 each for a year including wages, space, and other that are necessary to maintain a department. That was a figure from a few years ago. It may be higher now. That figure does not include storage, legal fees, etc.

Just a little business "101"

[Tony Evans]

Re: Charging subscription fees

We offer name and address data hygiene/optimization services, basically a combination of Software as a Service, Data as a Service, and expert analysis for the past 23 years. In the past 5 years, much of this business has migrated from invoice per job billing to subscription (per unit and "unlimited") billing.
Some thoughts:
* Subscription billing can help create an annuity. It doesn't take away your need to continue to produce value, but allows you to focus on improving the service which strengthens the annuity.
* Consider amortizing set-up and training costs into the committed term of service. It may make it more financially palatable for the customer. This also helps to justify a higher ongoing rate, creating a more valuable annuity.
* Look (ask prospect(s)) for ways to structure the model to fit the customers' budget needs. If it is easier for them to justify cost as part of a permit, then charge per permit (unit based) with a monthly or annual minimum. If it is easier for them to commit to a flat monthly or annual fee, set it up that way with ceilings on the covered number of permits and support time. If some things cost more or are of greater value than others, does differential pricing or blended pricing work better. Etc, etc., etc.
* Make sure you consider all your costs.
* Make sure you (and the customer) consider all the value the customer is to receive.

[[email protected]]

Re: Charging subscription fees

Thanks all for your input, there is some valuable information that will help me structure some sort of model.