Industry Insights

Car Subscription Business Model: The Key Elements of a Successful Pricing Model

March 14, 2023
10 min

Learn how to create a profitable and attractive pricing model for your car subscription business.

If you’re an automotive fleet owner, you may be considering car subscription as an option

for your fleet. The car subscription industry has been growing rapidly in recent years and

we’ve seen several successful brands mature their subscription offerings across the globe.

Subscription has become an increasingly attractive option for fleet owners looking to

expand their business or diversify their revenue streams. However, to build a successful car

subscription business model, it's essential to have a well-designed pricing model in place. A pricing

model that not only ensures profitability for your business, but also appeals to your target


In this article, we will discuss the key elements of building a successful pricing model for

your car subscription business. We’ve already explored the importance of understanding

your target market, now we’ll look at how analysing your

competitors, determining costs, setting prices and a solid KYC process will help you create a

pricing model that works for your business setup.

Start with research and strategy

The first step to building a car subscription business model is to understand your target market and

customer’s needs, this is important because it’s this information that forms the first step

towards establishing your pricing model, because different segments of the market will be

interested in different subscription options and pricing structures. For example, a corporate

fleet owner may be looking for a flat-rate monthly plan on each car, while an individual

consumer will likely prefer a more flexible plan with different options that make having the

car convenient.

Next start researching and analysing the pricing models of competitors in the industry. Look

at what they're offering, the terms of their subscription plans, and the prices they're

charging. What optional extras do they have on their cars? This will give you an idea of what

is currently on the market and more importantly help you identify where gaps exist. By

identifying gaps in the market, you can create a unique pricing model that sets your

subscription product apart. Always keep an eye on the market trends and new entrants in

the industry, this will help you stay competitive and adapt to changes in the market.

Determine your costs and set your prices

When building a pricing model, it's important to consider the costs associated with running

your car subscription business. These generally include things like your vehicle acquisition

and maintenance and insurance. Insurance is important as true car subscription packages,

and the most successful players in the subscription space, include insurance in their monthly

costs. So it’s important to find an insurance provider that covers your subscription fleet and

drivers. Calculating your costs and factoring them into your pricing model is crucial.

It will ensure that your pricing is accurate and profitable from day one.

In terms of the structure of your pricing, there are a couple of commonly used pricing

strategies available for car subscription, including flat-rate monthly plans, or variable pricing

based on vehicle make and model where the customer has complete flexibility. Generally,

car subscription plans are monthly but some providers have different monthly term options

for different cars, for example, a smaller model with a lower price point may be available for

any monthly term starting from one, whereas a more premium model might start at a

minimum of three months. This approach can give you greater control over the revenue from

your specific fleet.

The other key part of your pricing structure is whether monthly mileage will be a factor in.

Do you want to let the customer choose their monthly mileage terms when they subscribe

to one of your cars? This is a common part of most car subscription strategies and has

similarities with a traditional lease. The benefits to you as a fleet owner are obvious; you

can ensure the depreciation of your asset value from high mileage is covered in the

customer’s monthly costs. Months and mileage will be a very familiar concept to any fleet

owner but it’s the complete flexibility for the customer that differentiates this part of

subscription from leasing or rental.

Make sure you know your customers

As a car subscription business, it's important to implement a solid Know Your Customer

(KYC) process to ensure the safety and security of your assets, and often to comply with any

legal and regulatory requirements in your region. A thorough KYC process should as a

minimum help you verify the identity of your subscribers and ensure that they meet the

necessary criteria to become a subscriber.

One of the key elements of KYC is checking the identification of your subscribers. This

includes verifying their government-issued ID and that they are the person who’s presenting

it and checking their driving license records to ensure they have a valid and clean driving

history before they take one of your cars. Additionally, credit checks can be useful in

assessing the financial stability and ability of a subscriber to make payments on time. These

checks should be included in your pricing and operational model and should also be

factored into your costs early on.

Taken from a BCG article: Driving Success in Car Subscriptions

Be ready to adapt to market changes

The concept of car subscription market is a new one, and because of that it’s evolving fast,

and being flexible and adaptable is essential. This means regularly monitoring customer

demand and competitor activity, and making adjustments to your pricing model as needed.

This may mean introducing new plans, adjusting prices, or even discontinuing a plan that

isn't performing well. Having systems in place for tracking and analysing customer data,

such as usage, demographics, and feedback, can help you identify any changes in market

trends and customer preferences, and these are often harder to implement later down the

line, so get them in place before your product launches.

To recap… building a successful pricing strategy for your car subscription business model requires a

thorough understanding of your target market, a competitive analysis, and a consideration

of costs. By understanding these key elements, you can create a pricing model that is both

profitable for your business and attractive to potential subscribers. Remember to be flexible

and willing to make changes as the market evolves.

Car subscription is an innovative and forward-thinking business model that has the potential

to transform the way fleet owners operate their businesses. It allows them to offer

convenient and cost-effective products to their customers, and can help attract a new

generation of customers who are looking for more flexibility and choice in their

transportation options. It's a great way to generate new revenue streams and diversify your


Car subscription is a dynamic and exciting industry, and we believe that it will continue to

grow in the years to come. As a fleet owner, it's important to stay ahead of the curve and

explore the opportunities that car subscription can provide for your business.

Share this post

Dan Kirby

Commercial Director


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