Offer Design
Part of Subscription business planning
Deciding when to discontinue an unprofitable subscription offer
Decide whether to change or end an unprofitable subscription offer using future economics and deliveries still owed to customers.
Set a review period and decision date before the next material supplier or sales commitment. Compare feasible choices over the same future horizon, including obligations to current customers. Stop new sales when no credible, terms-compliant continuation option has a better future result than an orderly exit; a loss in one report prompts investigation, not automatic closure.
Confirm the loss
Choose the unit: an ordinary shipment, a prepaid term or the offer over a defined period. Reconcile the amount collected or attributable to that unit with product, packing, delivery, payment, refund and remedy costs.
Show offer-specific fixed costs and shared overhead separately, so no expense is counted twice. A discounted first box can lose money while ordinary cycles contribute; the reverse can also occur.
Find the cause: are ordinary boxes costly; are too few customers reaching another paid cycle; or are refunds and replacements changing the result? Check product mix, late payments and incomplete reporting periods. Use actual records where available and label projected recovery as an assumption.
Key facts about managing unprofitable subscriptions in Australia
- Australian Consumer Law (ACL) rightsCustomers can request repair, replacement or refund if goods don’t meet guarantees
- ACCC roleEducates businesses and consumers; investigates misleading claims but does not resolve individual disputes
- Cash flow managementBusinesses must manage cash flow to meet obligations—see https://business.gov.au/guide/guide-to-managing-cash-flow
Compare the next feasible choices
Compare continuing, changing the offer under the applicable terms, limiting new sign-ups and stopping new sales over the same future period. Assess future receipts against the costs each option triggers, including avoidable orders and campaigns, non-cancellable supplier commitments, exit costs and overhead that would remain. Include the cost of fulfilling or resolving current customer commitments.
Money already spent cannot be recovered by sending another loss-making box. A lower-cost box or later dispatch may change what customers were promised, so assess the proposed economics and effect on existing orders before assuming the change is available.
Stop new sales when the best feasible continuation option has a worse future result than an orderly exit. If cash cannot cover a due obligation, address that exposure immediately rather than waiting for the next review. Give each option a decision date tied to a supplier or sales commitment.
Account for customers before closing sales
Count future renewals separately from parcels already paid for, orders in preparation and open refund or replacement cases. Identify which deliveries can still be supplied as promised and which need a customer-specific resolution.
Assess each faulty-goods complaint under the Australian Consumer Law (ACL), which forms part of the Competition and Consumer Act 2010. Consumer guarantees include that goods are of acceptable quality, match their description and are fit for a stated purpose; if goods or services do not meet a guarantee, customers can ask for a repair, replacement or refund. Seek advice where needed.
The ACCC educates consumers and businesses about their rights and responsibilities under consumer law and accepts reports, which inform its education, compliance and enforcement work. It can investigate if a business misleads consumers or other businesses about their rights, but it does not resolve individual disputes or give legal advice about a right to repair, replacement or refund.
For an individual complaint, contact the consumer protection agency in the relevant state or territory. These agencies manage individual complaints and issues with businesses in their state or territory and may offer voluntary dispute services.
For paid goods that cannot be supplied on time or within a reasonable time, identify affected orders and consider an appropriate response for each customer. For subscription or membership services, do not continue charging or deducting payments for a period in which the service is not supplied.
Tell affected customers the last intended charge, final included parcel, status of outstanding paid deliveries and route for questions or remedies. Check that checkout, account messages, billing settings and packing records agree. Stopping renewals does not itself settle prepaid deliveries.
After the last planned cycle, reconcile payments, parcels supplied, refunds, open remedies and supplier commitments. Record which assumption failed so a future offer can be assessed against it.
