Subscription

recurring payment at regular intervals for access to a product

A subscription is a product or service which is paid for periodically, rather than all at once. Magazines and newspapers are often subscription products. Public utility services like internet connections or cable television are examples of subscription services. Subscriptions fees are usually charged for a consistent time period, typically in weeks, months, or years.[1]

In a traditional business model, revenue flows linearly – from marketing to sales and finance. But in subscription businesses, the revenue flow is cyclical. While the purposes of all functions remain unchanged, their revenue implications are amplified since customers need to be ‘won’ not just once but through every recurring billing cycle.[2]

Subscription business models were first introduced in the 1600s by newspaper and book publishers. With the rise of technology and software as a service (SaaS) products, many companies are moving from a business revenue model where revenue is made from a customer's one-time purchase to a subscription model where revenue is made on a recurring basis in return for consistent access to the delivery of a software good or service.[3]

Types of subscription business modelsEdit

Subscription business models can include a variety of companies and industries. Those industries include:

  • cable television,[4]
  • satellite radio,
  • websites,
  • gyms,
  • lawn care,
  • storage units,
  • coffee[5] and many more.

ReferencesEdit

  1. "Subscription Business Models - Types, Benefits & How to move into subscriptions?". Chargebee’s SaaS Dispatch. 2021-02-03. Retrieved 2021-07-18.
  2. "How To Move To a Subscription Business Model | Salesforce". The 360 Blog from Salesforce. 2021-05-03. Retrieved 2021-07-18.
  3. Fontanella, Clint. "What's a Subscription Business Model & How Does It Work?". blog.hubspot.com. Retrieved 2021-07-18.
  4. Schoen, John W. (2015-04-20). "How do cable companies make their money?". www.cnbc.com. Retrieved 2021-07-18.
  5. "Coffee Subscription Business Model". Presto Coffee Roasters. Retrieved 2021-07-18.