Paying influencers for subscription program

[WinMore]

I'm looking to approach some influencers to promote subscription based software.

Subscription prices range between $2 and $7/month.

The software is relevant to the influencers themselves and their audience.
I have no idea how much they would expect to be paid, or not.

I was thinking $50 up front, and 50% profit of the first 3 months. 30% of the whole year if the customer goes for a whole year at once. (so $3 of the customer takes only 3 months, but $6 if he takes a whole year with the cheapest plan).
It might depend on their audience size, but I would expect that the % aspect of it would offset that he $50 would become less and less relevant the bigger the influencer.

Size of influences I'm thinking of approaching is about 300k youtube subscribers.

If you need an example of the business model, think chess.com

Software is free, or partially free with some restrictions. If you pay you don't get ads, and lose the restrictions.
If you pay more, you get some extra perks.

Maybe I'm lowballing, I really have no idea. I don't want to burn bridges by being a cheapskate, but I'd rather not get screwed either ^^

 

[CCarter]

Are the end users, the people buying the software, consumers or businesses/entrepreneurs?

And most importantly WHY do they need your software? What's the pain point you are solving for them?

 

[WinMore]

It's a tool to help them get better at a mental sport (fine, videogame). Also convenient to do research on competition. (strategies, history, etc). There are ways to get this information, but it's a long and tedious process.
It's mainly a gigantic timesaver.

1. Streamline info to get to the important data faster
2. Research competitors
3. Test (and update) strategies faster

Some would use it less intensively then others. Most consumers consider the sport a hobby.
There is a competitive scene.

Customers are consumers.

 

[MrSanti]

I'm looking to approach some influencers to promote subscription based software.

Size of influences I'm thinking of approaching is about 300k youtube subscribers.

I worked on the biggest YouTube network for about 3-4 years. So I can help you with that.
Influencer marketing can be a bold move if you do it right.

I used to work reaching out to channels in a sales team. Email was the go to, but you can try to contact on social media too. You'll probably have to send a few emails to get a response, not everybody have their main email on their channel contact, some might answer the same day, and others, a few months after you sent it.

Another way would be to look if they are in any YouTube network already, Socialblade was the tool for that. Contact the network and negotiate with them for that channel, they have direct contact via manager if the channel is big enough, but you'll probably end up paying more.

Now about money. Some channels will promote your website if you just give them a 1 year Premium access to the service, if they are interested in using it.
Some others even being small channels, will ask for a stupid quantity of money.
It depends on wether they've already work with some brand or network campaign, and how much money they got from that and expect. Some quality channels will probably negotiate a bit.
If they've just used Adsense, and didn't have any campaign. They'll probably take those 50 bucks without thinking about it.

Just make sure that the channel has quality. Look at how much views the channel has per video compared to the number of suscribers. Look at how many comments and likes too, if the video has a few thousand views but not too many comments and likes, or the comments are from random channels and countries, the owner is probably using bots.

I would give to all of them a free year of the top tier subscription so they can make a video and use it, even on the reach out email. And if they use it a lot, just add more years so they keep showing it on videos.

 

[Ryuzaki]

I don't have direct experience doing this myself, so this is simply an opinion and definitely not gospel:

A subscription price of $2 - $7 bucks a month is extremely low. Even coughing up 50% of revenue to someone is a paltry $3.50. (I say that, but then I think about stuff like Netflix, but they have 182.5 million subscribers according to the Google search I just did).

So if you're asking people to make an entire video review, for instance, that's way too much work for a possible $3.50 times whatever number they might attract. In this case you'll be better off paying them some flat fee for a sponsorship or review.

That may be more than you're expecting to spend, but if the person is an important enough influencer you can continue to leverage that video in all of your marketing materials, use it as a funnel, help it rank in Google and Youtube, whatever.

You'd really have to hit scale to make this work out.

Do you have data on cost of acquisition yet?
Do you know what your churn rate is?
Do you know your average lifetime revenue per customer?

That kind of info will help you know what you can spend acquiring customers. From there you can work on retaining them to increase your lifetime revenue per customer. From there you can figure out how to increase value high enough that you can either increase your base price or add on extra tiers of subscription.

What I'm trying to say is that it's really hard to make any of this work if you don't have the cash flow. Is it possible to increase your price?

 

[WinMore]

I wasn't planning on asking them to make a video about it.
Just use it as a resource in their videos, or mentioning it.

I have no data yet on churn rate, cost of acquisition or average lifetime revenue.
Not sure how to go about it, since atm there are no customers.

Currently all there is, is the tool. No marketing has been done. Pricing was based on similar models (I mentioned chess.com).

We don't mind spending more. It's just that with the %-based incentive there is less chance at a net loss.

The idea of having them create a separate video might not be such a bad idea.
Originally I didn't consider it, because I don't have good experiences with that.

In the past I struck a deal with a content creator, to promote some product and an event, and he released the promotion video 1 day before the event (not as agreed upon), and the quality of the promotions he did was absolute garbage. I think that's why I preferred the approach of mentioning and using, rather than a promotion video. But this might be less effective (if the promotion is done well).

Regarding raising of the price: I think people spend a lot more time each month using Netflix, then they would be using my service. I personally would use it about 1, sometimes 2 times per week.
While using it, it is between 15 minutes and 2 hours, depending on the debt of research.
EDIT: I realized this is inaccurate. Depending on the competitive season it might be used every day of a few weeks, tracking the competition and trying to figure out how to best approach the next tournament.

$5 seemed fair, until I came across chess.com. But to be honest I think most people that decide to pay go for the premium plan. (Source: personal choices made in the past. I realize this is VERY anecdotal)

I have seen some subscription plans of $10, but they are supposed to be used daily. (Thinking fitness programs, language learning, etc). This tool is not mean for that. Do research, create strategies.
Strategies are applied elsewhere. After testing strategies, return to tool and modify.

I find it hard to charge more than $10, because it's still possible to find the same information for free (it just costs more time). But maybe I'm underestimating the laziness of my target audience.

Sorry for rambling, I'm really at a loss. Maybe I'm comparing myself too much with other tools.

 

[Ryuzaki]

@WinMore, I wouldn't set the price based on how much time people use it for. I'd price it based on the value it provides to the users.

It's hard to know exactly what it is you're doing. But you said it's for influencers and data aggregation and crunching (I guess). That sounds more like business-to-business and not business-to-consumer. If that's the case I wouldn't fear having a higher price.

For instance, if an influencer has to spend 5 hours every two weeks doing the work you're describing, but a $15 a month subscription saves them that 10 total hours... People are going to spend $15 to save 10 hours, especially if it means they can make another video that brings them several $100 in profit, or whatever they may be doing.

You also can factor in the "how much money do people piss away on nonsense" factor. If they're busy enough to use your software, they're busy enough to run out for fast food meals every day, etc. They probably piss away $15 without even thinking about it, every day. And we're talking a potential $15 a month, hopefully with auto-rebills so they really don't have to think about it or sweat it.

 

[WinMore]

It really is to consumer. The only "business" that might use it are the influencers themselves.

You are right, people spend a lot of money on trivial stuff. And it's true, the tool can save several hours.
So $10-15 a month doesn't sound like milking it. My local fitness charges me $35 and I'm not even going every month...

Regarding the payment for the influencers: I'm getting the feeling there is no "standard" for this for sort of thing. If they are working with a network, chances are higher they have certain expectations, but from reading here it seems my original ideas weren't that crazy (apart from my pricing).

Sorry I can't be more clear about the nature of this tool.

 

[CCarter]

If it's a hobby people are interested in AND there is a competitive scene you can charge a lot more than you are currently thinking about. Comparing yourself to similar tools puts you in that mindset. The audience most likely doesn't even know the chess.com model.

Here is also something to think about:

You can charge $7 a month and the person stays on for 3 months. You net $21.

What if you charge $49 a month and the customer only stays on 1 month? You net $49.

So the pricing versus the lifetime average revenue might make more sense by an increased price. You also have less support to deal with.

Imagine the craziest scenario the overall global community is 100,000 people and 10% of them sign up, so 10,000 users they each are paying you $7 a month. That comes to $70,000 a month.

However 1% of those people have daily support issues. That's 100 people a DAY you'll be communicating with to solve their problems. Is talking to 3000 people a month and spending 1-3 hours trying to help them in total even feasible? Perhaps not.

100 people a day is a lot of people to talk to and you'll not only need to fix their problem if it's a programming problem, but also give them help as well as hand holding - That's just 1% of your audience. You'll have to hire to scale and that quickly eats away your $70K a month revenue.

Now instead of $7 you charge $49 a month, and only 2% of the 100,000 people signed up. That comes to 2000 people generating you $98,000 (28K more in revenue). If 1% of the 2,000 people have daily support questions you are only talking to 20 people a day - 600 a month for $28K more revenue!

And here is the real kicker, it's very very very difficult to increase your price from $7 to $49 without showing significant improvements within the product.

So it's better to start high. If you need to discount or do a promotion, it's a lot easier to give 20% off of $49 than 20% off of $7.

I've seen people play mobile video games that have In-App purchases spend $10,000 in a single month for In-App purchases. One clan required users to spend $200 a week bare minimum for every person in the clan, 150 people max in a single clan. That's how they gain and controlled the realm. If you couldn't spend that much you got kicked out.

So - don't fix your mind on the lowest possible tier of what you think people are willing to pay. People will pay a lot of money for their hobbies. Basically don't try to get broke people to sign up, cause they are ALWAYS the first people to leave. 99% of your headaches will come from the lowest tier customers - the ones paying you the least but wanting the MOST.

Time and time again every SAAS owner I've come across echo the same thing. It's why a LOT of SEO tools have a price cut off of $50. You get rid of so many headaches you would not believe.

This might be off on a tangent, but with a higher price point you can pay more to influencers, have a marketing budget and do other things like make a healthy profit.