Creating multiple subscription tiers with different features and pricing is a key strategy for maximizing revenue in a car subscription business. By segmenting customers and tailoring plans to their needs, you can create a more personalized and attractive offering that appeals to a wider range of customers.

Anatomy of a Car Subscription Plan

1. Plan Name

This is the name of the subscription plan that you offer to your customers. The name should be clear and descriptive, so that customers can easily deduce what is included in the plan while also remaining appropriate for wider marketing and promotional activities.

2. Weekly Subscription Price

This is the amount that the customer will pay per week for the subscription plan. The price should be competitive and attractive to customers, while also allowing you to make a profit.

The price of the plan should consider the minimum term with regards to customer onboarding costs and the likely subscription duration, the weekly distance allowance and the likely wear and tear and depreciation this would contribute, etc.

Importantly, the price of the chosen subscription vehicle is typically in addition to the base plan price - so the price of any individual vehicle does not need to be considered at this time.

3. Minimum Subscription Term

This is the minimum length of time that the customer must commit to the subscription plan. The minimum term should be long enough to provide you with a steady stream of revenue, but not so long that customers feel locked into the plan.

4. Weekly Distance Allowance

This is the maximum number of kilometres that the customer is allowed to drive per week as part of the subscription plan. The distance allowance should be based on the needs of your target customer segment, and may vary depending on the plan tier.

5. Distance Overage Cost

This is the cost that the customer will incur if they exceed the weekly distance allowance. The overage cost should be fair and transparent, and should be communicated clearly to customers in advance.

6. Swap Entitlements

This refers to the number of times that the customer is allowed to swap the vehicle during the subscription term. The number of swap entitlements may vary depending on the plan tier, and should be based on the needs of your target customer segment.

7. Establishment Fee

This is a one-time fee that the customer must pay when they first sign up for the subscription plan. The establishment fee should be competitive and attractive to customers, while also covering your costs.

You can also choose to leverage the Establishment Fee for promotional purposes.

8. Deposit

This is a refundable deposit that the customer must pay when they first sign up for the subscription plan. The deposit is usually held to cover any damages that the customer may incur during the subscription term, and should be returned to the customer at the end of the subscription term if there are no damages. The deposit amount should be reasonable and commensurate with the value of the vehicle.