Any business can offer a subscription model today. Whether associated with streaming services, magazines, gym memberships, or SaaS products, subscriptions enable enterprises to generate recurring revenue while delivering steady, predictable content to their customers.
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The 21st century is seeing a massive emergence in the subscription economy in the world. In different words, the subscription economy also refers to companies switching from the traditional pay-per-product business model to a subscription business model. It’s a fact that the subscription economy is changing customers’ shopping habits. If you are looking for more information about that topic, check the article: how the subscription economy took over our lives.
What is the subscription model?
The subscription model involves selling recurring subscriptions to consumers in exchange for access to a product or service over time. Most subscription-based businesses models charge either monthly or yearly. Subscription models offer a win-win situation for businesses and customers alike.
For a business, on the one hand, a subscription model is more comfortable to run, scales better, and generates guaranteed recurring revenue. The advantage of the subscription service model is clear; it is a constant, more predictable revenue stream. Netflix, Spotify, and HubSpot are great examples of businesses delivering subscription services. They understand that the subscriptions model can more than double their revenue. And they know that customers also prefer subscriptions for their services which also gives them several advantages even though just about any business can offer a subscription model these days.
For customers, on the other hand, subscriptions are more convenient, and they can sometimes cost less. There are advantages for the customers, as well, although they depend on how the service is implemented. Rather than paying $250 for a software license and then paying an extra $150 when a new upgrade comes out, every couple of months, customers instead prefer $25 per month for a one-year subscription with all the upgrades and special offers included. Their overall expenditure and their initial outlay would be lower.
Innovative subscription models
When you offer subscriptions to your customers and provide them with good value for their money, you are bound to gain a large following. You will get a lot of opportunities to make them feel special – be innovative and look outside of the box!
Innovative subscription model by Dollar Shave Club
When it comes to subscription models, let’s look at what Dollar Shave Club is doing – they solved a problem for all men. And what business model does Dollar Shave Club use, and why does it work for them? The company follows a subscription model. It works because their service is inexpensive. They allow customers to have razors and blades home delivered at a subscription fee of $1 a month. So, for just a few dollars per year, you get a package of new razors each month. This is a bargain compared to the costs of buying a new razor from the store. The subscriber doesn’t need to leave the house as the blades are delivered in the mail.
Subscriptions in the automotive industry
Subscription models have now reached the automotive industry. No longer do you need to buy or lease cars. You can subscribe to a vehicle (or the company that produces it). Many brands allow their customers to subscribe to a vehicle of their choosing. You may wonder what the difference between leasing a vehicle and subscribing to one is. Well, a lease would keep you locked in for an extended period. You are responsible for maintaining and insuring the car too. With subscriptions, you aren’t stuck with the car for a long time. You don’t technically own it, so it’s not on you to insure it. Some brands also allow you to change models when you want. The Porsche Passport program, for example, lets you swap vehicles as much as you want. There’s no problem with driving a two-seat Porsche for a while and switching to an SUV.
Subscription-based pricing method
A subscription-based pricing business model is a payment structure that allows a customer or organization to purchase or subscribe to a vendor’s IT services for a specific period for a set price. Subscribers typically commit to the services annually (usually monthly). Subscription-based pricing will allow your business to offer affordable, high-quality products that improve with time, emphasizing longer customer relationships and recurring revenue. Again, subscription payments lower entry barriers for products and services and allow more potential customers to purchase the product. While they may pay a larger amount over the long term, they can get immediate access to the product. In fact, subscription-based pricing attracts more customers!
Subscription billing with the billing software can make your life easier
Who uses subscription billing? Today, almost every type of company from different industries is moving into the subscription model. Subscription billing, without a doubt, accommodates a wide range of businesses, especially those transitioning to service offerings that want to include subscriptions. It is commonly used by telecommunication companies, energy and utility companies, and many more.
In a world, subscription billing is a charging method that enables merchants to bill customers automatically on a fixed schedule (monthly, quarterly, annually) for a specific product or service. As you can see, the market for subscription business models is rapidly growing every day because of their usability.
But how could you make your life easier and leave subscription operations on autopilot? Rather pay someone or a company experienced in precisely what you are looking for to choose your subscription model. Tridens Monetization, for example, could be the most common subscription billing software for handling or managing all recurring or subscription billing and payment activities. The most important aspect is that it is used in almost every form of industry, large or small.
Whether the software is on-demand or on-premise, we believe the subscription model will become the dominant form of selling software over the next ten years. And in the coming few years endless subscription model might occupy less than half of the software industry’s total revenue. We also believe the subscription model is a positive innovation for the whole economy.
The right billing software can help you reach the superiority you need to scale recurring revenue! With Tridens Monetization, you get flexible subscriptions plans for rapid growth.
Want to get more information about the Tridens Monetization solution? Leave a comment below or schedule a free demo!