Impact of Subscription Revenue Model on 21st Century Businesses

Abstract

Subscription model is a revenue model where customers have to pay some amount of fee for services and products provided by companies before they can use it. This payment can be done daily, weekly, monthly, quarterly or yearly. The development cycle for a sustainable subscription model begins with  acquiring customers, deliver consistent, high-quality service, look for opportunities to upsell or cross-sell, work to retain users and reduce churn and rinse and repeat. The types of subscription include subscription boxes / curation, repeat purchases / replenishment and access models. The benefits of subscription model to business owners are recurring revenue, financial forecasting, better inventory management, good relationship with customers, and faster feedback loop. Also, the benefits of subscription model to customers are convenience, personalized experience, assists in budgeting, and discoverability of new and unique products. Business that can use subscription model are those providing services and products such as access to content like video, music, books, membership sites, access to services such as software, utilities, insurance, leasing and access to products: personal care, food, pet care. The challenges of a subscription model include Subscription fatigue, difficulty in acquiring customers, credit card expiration. These challenges can be reduced by regular upgrade of products and services, provision of freemium to new or target customers and provision or recharge or renewal services to customers with expired credit cards.