Subscription-Based Model: Can You Implement It In Your Business?

Let’s take a look at the booming subscription-based business model. Fusebill, a company that does automated invoicing, billing and collections for subscription-based companies, says business models are increasingly based on selling ongoing subscriptions, not just completing one-off transactions.

There’s big business being done with this model. Netflix achieved much success with subscriptions, Amazon offers a Subscribe and Save program, and a great many small subscription businesses are shooting up every day. Businesses like Dollar Shave Club, PetFlow, ShoeDazzle and BabbaCo.

As NPR says, “Just name the item you’re looking for — socks, T-shirts, baby toys — and there’s a company that puts it in a box and will deliver it to you monthly.”

The benefits of the subscription model are clear: when you’ve got subscribers, you don’t have to worry as much about next month’s sales. You’ve got customers locked in.

“C.E.O.’s are beginning to appreciate the value of recurring revenue in a way I’ve never seen before,” Jim Schleckser, who heads the CEO Project, told the New York Times. “I think that the software industry adopted it, which caught people’s attention. Now you’re seeing companies in just about every kind of industry embracing it.”

If you examine at your existing business, you might be able to find a way to implement it. Take a look at Adobe. Their popular Creative Suite line of products like Photoshop and Premiere Pro were successful, but their high cost put the software out of reach for many non-professionals. Enter Adobe Creative Cloud. For $20 a month, customers get the benefit of the latest edition of any of Adobe’s Creative Suite products, and Adobe was able to reach a segment of the market that was previously inaccessible to them.

Fusebill lists some of the industries that are increasingly adopting subscription models on their website.

Brian Lee, the founder of ShoeDazzle, told the New York Times, “I think subscription models work best in two instances… Where the product is a necessity or when it’s an absolute passion. It stops making sense when you try to do something like a tree-of-the-month club, which doesn’t fit either of those categories.”

Tell us about your subscription-based business in the comments or let us know if you’ve recently added a recurring revenue stream in your existing business!

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About Vincenzo Ravina

Vincenzo Ravina is a writer, journalist and giraffe enthusiast from Halifax, Nova Scotia. You can learn more at his website, http://VincenzoRavina.com, or follow him on Twitter at @RavinaSBT.

  • erkekpaketi

    Hello Vincenzo. Thank you for the great post. Our company http://www.erkekpaketi.com is also working in subscription based model. We deliver underwear, socks, razors and condoms to men on a monthly, two monthly and three monthly schedule.