How many customers make maximum use of their subscriptions? Most businesses that offer subscriptions offer their customers much more than they can ever use for one fixed price. Some customers like this because they know exactly what their monthly costs will be regardless of how much they use the service.
From the image creators point of view, it is helpful to have an idea of the size of the market they are addressing and how much each customer is likely to use.
Shutterstock is an interesting example. It is expected that Shutterstock will have about 167 million downloads in 2016 and roughly 90% or 150 million of them will be subscription downloads.
In the past Shutterstock has said that about 40% of their annual revenue, or $200 million in 2016, comes from subscriptions. It is unclear whether that is still the case since we assumed that each one of the 35,000 Enterprise customers has a subscription. Depending on how much of the Enterprise revenue might be included on the subscription side the business the subscription revenue might be higher.
Based on the prices Shutterstock charges for annual subscriptions, I estimate that Shutterstock sells at least 91,000 subscriptions annually. Half of them for the right to download 350 image per month and the other half for the right to download 750 images a month.
If that were the case, then there would be 45,500 X 4,200 possible downloads (350 per month) for a total of 191.1 million DL and 45,500 X 9,000 possible downloads (750 per month) for a total of 409.5 million DL equaling 600.6 million total images purchasers would have the right to download. Actually, they only downloaded 150 million so on average they download 25% of their allowance.
Since Shutterstock started out with only the 750 download option, it seems likely that a few years ago many customers started saying, “We never use anything near the number of downloads we’re allowed. How about giving us a cheaper option with fewer downloads.” I suspect that is how the 350 download option came into being. In fact, a much higher percentage of customers than 50% may now be using the 350 option.
Suppose 75% now use the 350 option. The numbers would look like this: 68,250 X 4,200 possible downloads (350 per month) for a total of 281.2 million DL and 22,750 X 9,000 possible downloads (750 per month) for a total of 204.8 million DL equaling 487 million total downloads that the purchaser would have been allowed during the year. Since only 150 million were actually downloaded they downloaded 31% of their allowance on average.
However, in some cases where the customer has minimal need for the product a subscription price can still be more expensive than the customer is willing to pay for what he or she needs.
If the average customer downloads 25% to 31% of the number a significant number may download many fewer than 1,300 images a year. On the other hand, if they need more than 225 images during a year it would be more expensive to purchase Image Packs for single-image-downloads. The fact that about one-quarter of Shutterstock’s revenue is generated from single-image-downloads indicates that a significant percentage of their customers use fewer than 200 images per year.
For more on this see “Enterprise Mystery”
here.