Price a subscription on two numbers: what you keep from each subscriber every month after the cost of serving them, and how many months the average subscriber stays. Multiply those together and you know what a customer is worth — which tells you what you can afford to spend winning one, whether a tier is worth having, and whether a free trial is generous or expensive. Everything here is those two numbers, worked through.
At a glance
| Feature | Detail |
|---|---|
| The two numbers | Monthly margin per subscriber, and how many months they stay |
| Why it beats one-off sales | Next month starts where this month finished, not at zero |
| Churn | The share of subscribers who cancel each month |
| Tiers | Two or three. Judge each in pounds of margin, not percentages |
| Fulfilment | A £1 rise in the cost of serving a subscriber can remove a quarter of the profit |
| Free trials | Cheap if people stay, expensive if they do not |
Why a subscription is worth more than the same sale made once
Take City Florists, a subscription flower business: a weekly bouquet plan at £40 a month, a fortnightly plan at £22 a month, about £6 of flowers, wrap and fuel in every delivery, 250 subscribers, and growth of roughly 6% a month.
On the weekly plan, 250 subscribers paying £40 a month is £10,000 of sales a month — sales being the money coming in, which is what HMRC calls turnover. Four deliveries a month at £6 each is £24 per subscriber, so £6,000 goes on flowers, wrap and fuel. That leaves £4,000 a month to cover the other bills and pay the founder.
Compare that with a florist selling the same £10,000 of bouquets one at a time over a counter. Both had a £10,000 month. But on 1 February the subscription florist wakes up with £10,000 already sold and the counter florist wakes up with nothing sold and a month of selling ahead of her.
That is the whole advantage: you sell a customer once and get paid many times. It works backwards too — losing a subscriber does not cost you one sale, it costs you every sale they would have made for the rest of their time with you.
What a subscriber is worth over their time with you
City Florists keeps £16 from a weekly subscriber every month — £40 in, £24 of deliveries out. Suppose 5 out of every 100 subscribers cancel each month. If 5% leave every month, the average person stays about 20 months, because one divided by 0.05 is 20.
So a weekly subscriber is worth £16 a month for about 20 months, which is £320 of margin over their time with the business. Some people call this the customer's lifetime value; it means what one customer is worth to you in total rather than in one month.
That number is the permission slip for spending money on marketing. If a subscriber is worth £320, spending £60 to win one is a good trade. Judged on the first month alone that £60 looks insane, because the first month only brings in £16 — which is why founders who look no further than month one never spend anything on advertising and never grow.
The catch is timing. She pays the £60 today and gets the £320 back over nearly two years, so the business has to fund the gap. That is a cash flow question, and a different one from whether a customer is profitable.
Work out your pricing with Plan, free. Plan does the pricing maths with you — costs, margin and what to charge — one short question at a time, in your browser.
Churn: the number that decides everything
Churn is the share of your subscribers who cancel in a month. If 250 subscribers become 238 by month end, twelve people left, which is roughly 5%.
Five percent a month sounds like a rounding error. Starting with 250 subscribers and losing 5% every month, you finish the year with about 135 of the people you started with. You have lost 115 — nearly half the business — without a single thing going wrong. To be the same size in December as in January, City Florists has to win 115 new subscribers just to stand still.
Now drop churn to 3% a month. A year later about 174 of the original 250 are still there, and the average subscriber stays about 33 months rather than 20, so a weekly subscriber is worth roughly £530 instead of £320.
Two percentage points moved what a customer is worth by over £200. No price change, no new tier, no advertising. That is why the boring work — delivering on time, answering messages, making it easy to pause instead of cancel — pays better than almost anything else you could do.
Growth needs the same care. Growing "about 6% a month" means net growth, after cancellations. On 250 subscribers, 6% net is 15 more people, but she is also losing 12 or 13 to churn, so she has to win around 28 new subscribers a month to show 15. Keep that up and 250 becomes just over 500 in a year.
Tiers: how many is too many
City Florists has two plans: weekly at £40 with four deliveries, and fortnightly at £22 with two.
The weekly plan keeps £16 of £40, a 40% margin. The fortnightly plan keeps £10 of £22, a 45% margin. The cheaper plan has the better percentage and is still worth much less. A fortnightly subscriber is not half a weekly subscriber, they are about 60% of one, because £10 is 62p in every pound of £16. Judge a tier by the pounds of margin it brings per customer per month. Percentages do not pay bills.
Two or three tiers is right for a business this size. A third only earns its place if it does a genuinely different job — a large weekly bouquet at £60 where the flowers cost £9 a delivery rather than £6, say. That keeps £24 a month, half as much again as the standard weekly plan.
Four or five tiers with small gaps between them does not work. Every extra tier splits your audience, makes the page harder to choose from, and adds work to every delivery round. When people cannot decide, they mostly do not buy.
The delivery cost that eats the margin
Every subscription that involves sending something has this problem. The price is fixed for months at a time. The cost of fulfilling it is not.
City Florists spends £6 a delivery. Say flowers and fuel push that to £7 — a change most people would barely notice. The weekly subscriber's monthly cost goes from £24 to £28, so the £16 she was keeping becomes £12. That is a quarter of the profit gone from a £1 movement, and across 250 subscribers it takes the monthly margin from £4,000 to £3,000. Over a year, £12,000.
So know the cost of one delivery to the penny, including packaging, fuel, failed deliveries and replacements for anything that arrives damaged, and watch that cost more often than you watch the price. Then design the plan around the delivery: a fortnightly plan costs half as much to fulfil as a weekly one, which is why it survives on £22. Grouping deliveries by area, or a fixed day per postcode, takes real money out of that £6, and every penny out of it goes straight into your pocket.
Free trials and discounts
A first-month offer is not free marketing. It comes out of the same pot as everything else, so cost it.
City Florists offers half price for the first month on the weekly plan, giving away £20 per person. Against a subscriber worth £320, that is a sensible price to pay — if they stay.
They often do not. People who join on a discount cancel more than people who join at full price, so count the ones still there later rather than the ones who signed up. Say 100 take the half-price month and 60 are still subscribers three months on. The £2,000 she gave away bought 60 customers, not 100, so each kept subscriber cost £33 of giveaway rather than £20. Still a fine trade against £320 — but it is £33, and you should know that before you decide.
A cheaper offer often works better. A free first bouquet costs £6 of real flowers, gets the product into someone's kitchen where it does the selling, and does not train anyone to expect half price.
One rule saves more money than any of this: never discount the ongoing price. A one-off offer costs you once. A permanent 10% off £40 is £4 a month — a quarter of the £16 you keep — for as long as that customer stays. The same caution applies to "twelve months for the price of eleven": you get £440 up front instead of £480 and a customer who cannot cancel for a year, but the year's margin drops from £192 to £152, and you have to deliver twelve months of flowers on money already spent.
When the time comes to move an existing subscription price, our guide to raising your prices covers the notice and the wording.
Figures correct as of September 2026. Tax thresholds, fees and rates change; check the linked GOV.UK pages before acting. Prices and costs shown are indicative and vary by area and by what's included.
What is Plan?
Plan is a free business operating system for people starting or newly running a UK business. It walks you, one simple step at a time, from your elevator pitch through brand, product and pricing, to a complete business plan — then uses everything it now knows about the business to help with the basics: logo and brand, marketing, a website, a bank account, funding, insurance, company registration. You can use as much or as little as you want.
Put in your monthly price, what it costs to serve a subscriber and how fast you expect to grow, and Plan builds your Year 1 profit plan month by month, exportable as a spreadsheet for your accountant.
Frequently asked questions
How do I price a subscription? Start with what it costs to serve one subscriber for a month, including delivery, packaging and failed deliveries. Set a price that leaves a margin you can name in pounds, then check that margin times how many months people stay comfortably beats what it costs to win a customer.
What is churn and what is a good rate? Churn is the share of subscribers who cancel each month. Losing 5% a month means the average subscriber stays about 20 months and you keep just over half your customers across a year. Cutting it to 3% takes the average stay to around 33 months.
How much can I afford to spend to win a subscriber? Work out what one is worth first: monthly margin times how many months they stay. A subscriber worth £16 a month who stays 20 months is worth £320, so spending £60 to win one is sound. Remember you pay that now and get it back slowly.
How many subscription tiers should I offer? Two or three. A third only earns its place if it does a genuinely different job, such as a larger option for people who would happily pay more. More tiers split your audience and add work to every delivery.
Are free trials worth it for a subscription business? Sometimes, but count the people still there three months later rather than those who signed up. If 100 take a half-price first month worth £20 and 60 remain, the offer cost £33 per kept subscriber.
Two ways to do this
Build the numbers in Plan, free. Put in your price, what it costs to serve a subscriber and how fast you expect to grow, and Plan works out the margin and lays the year out month by month. It runs in your browser — nothing to download.
Or do it on paper. You need three figures: your monthly price, what one month of serving a customer costs, and your honest guess at how many months people stay. If you are still setting the underlying price, start with the guide to pricing a product or service.