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How to improve the discount management system for subscription businesses

How to improve the discount management system for subscription businesses

What cultivates customer loyalty and increases customer retention better than a subscription program? It’s a perfect solution to keep customers within your store, get recurring payments and stimulate repeat purchases.

What is better, that modern plugins, like Advanced Subscription Products for Magento 2, allow you to combine regular and one-off purchases. But merchants had to deal with one challenge - discount management. The subscription plan discount could be much lower than a current promotion on a one-time purchase of the same product; or discounts created in price rules could conflict with the subscription plan discounts. This confusion had a negative impact on shoppers' desire to make recurring payments on Magento 2 stores and encouraged them to unsubscribe. 

However, with the latest update of Advanced Subscription Products for Magento 2 the discount system management has become easier. Now you don’t need to control all the promotions and compare discounts, the module will give an opportunity to recalculate total prices automatically and offer the most beneficial one to subscribed customers. It will help you retain customers in your store and give you a stable minimal revenue from subscriptions.

How subscription costs calculated

Before we describe a new feature in more detail, let’s remember how subscriptions work. If you’re familiar with the process, you can skip this part and go to the new feature description right away.  

To offer subscription plans to customers, first of all, you should decide what products the subscription will be assigned to and what selling model you want to adhere to: the subscription model only or the combined one. The next important point for consideration is the discount amount for subscription, which you need to add in the subscription plan settings.

Let’s say we want to give 25% off to any customer with a monthly subscription on bags. For it, we go to Sales > Plans > Add Plan. Here we name the plan for convenience, enable initial fee, set repeat payments to monthly and regular payment price to 75 % (so the discount to be 25 %), choose price rounding and save. 

subscription plan

When the plan is created, add it to the products. The system will calculate the price with a discount, round it according to your settings and display it on the storefront as a subscription price. 

subscription plan discount

Now when we know how Advanced Subscription Products price calculation works, let’s explore a new recalculation feature.

Recalculation of Totals

Recalculation of Totals is a new feature of Advanced Subscription Products for Magento 2, which enables the system to compare discounts created from price rules and subscription plans and apply the most beneficial one for the customers on recurrent orders. The initial purchase becomes even more profitable for buyers: the cart price discount is applied on top of the subscription plan price. In this way, buyers will enjoy the lowest possible price, which can encourage them to make more purchases and become loyal brand advocates. 

Let’s see how the recalculation works on the example. 

A product, let’s say it’s People Magazine, costs $45. We’ve created a subscription plan giving a 25% discount for subscription on magazines. But this season our store is running a promotion campaign, which offers a 50% discount on magazines and newsletters. To avoid the existing subscribers feeling deprived or even betrayed, and to spread the special offer to recurrent payments, you can enable Recalculation of Totals. 

For it, go to Stores > Configuration > Aheadworks Extensions > Subscriptions and Recurring Payments 2. Enable the Recalculation of Totals and save configuration.

Recalculation of Totals for subscriptions

Now, when a shopper subscribes to our People Magazine, the initial payment will be $16.88.

$45 × 25% = subscription plan price; the subscription plan price × 50% from cart price rule = initial payment.

For the recurring payments the system compares discounts (25% < 50%) and applies the highest one. So, the buyer will pay $22.5 (50%) as a recurring payment until the end of the campaign or any other discount changes.

25% < 50%

$45 × 50% = $22.5 (recurring payment)

Note: Here we should remember the Advanced Pricing feature which takes effect on the recalculation under the common rules. I. e. it dominates over product price, so discounts are applied towards advanced pricing (not a product price) if the feature is enabled.

Bottom Line

Advanced Subscription Products for Magento 2 is the perfect solution to create strong membership within your store, cultivate customer loyalty, and drive repetitive purchases. 

Install the latest version of the Advanced Subscription Products extension to arrange a better discount system for initial purchase and recurring payments and improve customer satisfaction.