The Ephemeral Promise of MRR in Subscription Pricing Durability

Sweet, sweet MRR.

We yearn for it, like the children yearn for the mines.

But anyone who's ever built a subscription business, from software, to communities, to content & education, knows that MRR is not so easy to obtain.

Every step of the way, churn threatens to eat away at your MRR, draining your energy as you pour money into marketing only to have customers fall out holes in the bottom of your product.

Frankly, it f**king sucks.

So what can we do about this?

How do we retain customers with durable subscription pricing that creates stable cashflows?

Well.

First, subscriptions persist when customers have a reason to keep paying their subscription.

You can arbitrarily stuff anything into a subscription pricing model. But if doesn't continuously provide enough value to on a recurring basis to justify the recurring cost, the consequence is churn.

There are various tactical things you can do to reduce churn.

But if people don't want to pay for your product. They won't.

Second, make sure you understand the value your product offers relative to your pricing.

Sometimes a great product is simply too expensive for some customers.

Or, competitors undercut your pricing and offer similar value at a lower price.

Strong MRR this month may become weak a year from now. Simply because of outside pricing pressures, or because you raise your own pricing to move upmarket.

And the defining feature in all of this, is time.

Time is what makes predictable revenue a beautiful thing.

Every billing cycle, like clockwork, customers send you money.

This is why Costco has a $300B+ market cap.

And the reason why SaaS companies are valued so highly.

But time introduces a new dimension to pricing as a value mechanism.

Because over time, the world changes and evolves, and therefore your pricing must persist as meaningful over time to justify continuous payments.