How Inflation is Forcing Subscription Businesses to Rethink Their Offer

Inflation is starting to take its toll on subscription businesses. Find out how to make sure your subscription business remains profitable.


Marta Poprotska

a year ago | 6 min read

As you well know, prices for goods and services can always change. While some rise, some may fall.  But inflation is when there is an overall increase in the price of goods and services over time. Basically, it means you can buy less today than yesterday, reducing the currency's value over time.

Given the recent market fluctuations, customers have less disposable income and often have to reevaluate their spending. These changes are causing SaaS enterprises to rethink their offering to safeguard the future of their business.

The Global State of Inflation in 2022

It’s no secret that prices are soaring in many parts of the world, partly due to the Russia-Ukraine conflict, which has caused a record increase in fuel prices and energy bills. These factors have slowed global growth and exacerbated inflation worldwide. Inflation affects many facets of life, from transport to food costs. Global inflation is projected to increase to 6.7% in 2022, twice the average of 2.9% recorded between 2010 and 2020.

Pew Research Foundation analyzed data from different countries and found that in 37 of the 44 nations surveyed, the average annual inflation rate in the first quarter of 2022 was at least twice what it was in the first quarter of 2020.

According to the latest report from the Bureau of Labor Statistics,the annual inflation rate in the US in May was 8.6%. This was the most significant increase since 1981. In the UK, inflation reached7% in March, whileone in seven adults could not afford to eatdaily. With inflation showing no signs of decreasing anytime soon, it’s something that SaaS businesses should pay careful attention to.

Effects of Inflation on Customers of Subscription Businesses

The record level of inflation has also had a strong impact on the subscription economy. Subscription companies thrived during the pandemic as customers enjoyed the convenience, safety, and predictability of subscriptions. According to, the average US consumer had five subscriptions by the end of 2021. This is up from an average of two before the pandemic. But the world is facing what Forbes and others have called “The Great Unsubscribe,” as customers feel the pain of rising subscription prices and look to cut costs.

From a business perspective, inflation will cause monthly profits to decline as fixed income from subscriptions might steadily decline. The natural tendency is for subscription companies to increase their products' prices.

As prices increase, subscription-based businesses are often the first non-essentials when consumers are forced to make tough budgeting decisions. A CNBC survey found that 36% of customers will cancel a subscription if higher prices continue, subscriptions could become something to forgo just as cutting back on eating out, driving, and going on vacation are ways to save money. For example, customers may decide that their music or video-streaming app subscriptions are no longer necessary and unsubscribe to cut costs.  As any SaaS company knows, a high churn rate is an important metric to watch and can be the death of subscription services.

6 Ways Subscription Businesses Can Innovate To Combat Inflation-Related Unsubscribes

Since Forty percent of consumers believe they have too many subscriptions, they may well act on this and move to cancel some of them if inflation continues to soar. The Kearney Consumer Institute calls this“the subscription apocalypse”. In that same context, The Financial Times called Netflix the “canary” for this trend, asthey lost 200,000 subscribers in Q1 2022.

You probably feel very uncomfortable reading these statistics if you have a SaaS subscription-based model business.  But we are here to help with some advice on setting yourself apart from your competitors and demonstrating that your product is worth investing in, securing future revenues. Given the current climate, here are some suggestions for keeping your business relevant during difficult times.

1. Demonstrate Your Value To Consumers

Value needs to be consistent, keeping consumers happy with their paid streaming services. This can be by continually improving your product, sharing informative content, or offering gifts or deals. You want your subscribers to know exactly why they stay with you and what value your product adds to their lives. In short, the ROI is top of mind!

A. Get Your Business on Subscribers’ Vital “Needs” Lists

People usually spend their money on needs when forced to choose between a want and a need. Inflation pushes consumers to reevaluate what belongs on their “needs” list, canceling what they no longer believe fits this category. So, your goal is to make your product indispensable to your customers.

To create an indispensable product, start by understanding your subscribers’ needs and preferences. What are their pain points, and how can you solve them? Then, work with these customers to create more value. Simply put, If you continue to innovate and create value, you’ll likely be rewarded with loyalty.

B. Design For Lifetime Relationships

Consumers seek security, relevance, convenience, and purpose from their support businesses. You will probably build long-term relationships, productive partnerships and get paid easier if you offer all these things. 

The model of SaaS businesses is based on recurring payments, so retention is necessary, if not more important, than obtaining new subscribers. Monitoring key metrics such as customer lifetime value, acquisition cost, and churn cost is crucial for your business's health. The longer a relationship lasts, the more valuable it is.  You can read more about reducing your customer churn rate.

2. Focus on Customer Experience

Make your clients your focus, reimagining your customer-service strategy to focus on their user experience. You’ll gain the ability to better understand what it takes to obtain customer loyalty and retention. This is a powerful play that requires thought and planning. What are your subscribers experiencing when they use your product? How can you improve this experience for them? You’ll also need to define and monitor your metrics for customer success to determine how your business is doing and then act accordingly as an ongoing process.

Can your consumers see their values displayed in your business? They’ll be looking for emotional intelligence and empathy, especially when times are tough for them financially. If you earn their trust, you are far more likely to retain their business and maybe even get some referrals.

So how do you do this? First off, plan your marketing content carefully. Stay away from bombarding customers with “buy, buy, buy” messages. Of course, gaining revenue is a goal, but you need to approach it carefully. Instead, engage directly with them to find out what they love about your product and how you could improve. Your main goal should be to demonstrate real value. Use individualization and segmentation to increase engagement amongst your existing subscribers. Focus on re-engaging those who have unsubscribed through nurture sequences and promoting items of interest. Make it clear that you care, and customers will likely respond positively.

3. Personalize and Differentiate Your Offering

A. Tailor Your Services to Your Customer’s Needs

Personalization at scale, at every touchpoint, is imperative if your business is to remain relevant. According to a McKinsey survey of subscribers, 28% said that a personalized experience was the most important reason for them continuing to subscribe to a product.

To create a personalized experience, you’ll need to understand your product/market alignment and focus on your customers. Create buyer profiles to get to know your ideal consumers and their needs and gear your product towards this niche. Then, market your product so its benefit is clear to your most valuable customer groups. This will keep customers coming back as they will feel like your product caters specifically to them and has real value.

B. Offer Carefully Planned Choices

One effective way to optimize personalization is to offer choices. Barry Schwartz’s TedTalks session “The Paradox of Choice” explains that freedom of choice, while empowering, must be approached carefully. Too much choice can leave people paralyzed with confusion. So how does this relate to your business?

Provide a few solid and easy-to-understand options for customers, each targeted at a different segment. If customers are experiencing a problem, they want two or three options to resolve it successfully. Don’t overwhelm them with too many options.

Alternatively, allow your customers the freedom to choose, tailor, or create their subscription package, on a month-to-month basis, according to their needs. Your pricing strategy will lead this process.

Learn all 6 ways how subscription businesses can combat inflation-related unsubscribes on PayPro Global's Blog.


Created by

Marta Poprotska

Marketing & SaaS enthusiast. All things B2B, ECommerce & Tech.







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