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The Rise of the Subscription-Based Business Model

As companies strive to meet the high expectations of customers, more and more are offering a subscription-based model and seeing incredible growth. This shift over to subscription models is causing the pay-per-product system to recede and gives way to a business model that is centered on building long-term relationships. However, the monetizing of these long-term relationships means that companies must better manage a direct, complex, responsive and multi-channel relationship with its customers.

Now, this might sound like hard work but we all know that its costs more to acquire a new customer than to retain an existing one. According to Bain & Company it costs a company 6-7 times more. And oh, let’s not forget the recurring revenue which we all relentlessly pursue.

Undeniably the main reasons as to why subscription models have become so popular, the growth in adoption of the subscription-based model will start to revolutionise the way business is done everywhere.

The key to a successful subscription-based business lies in dynamic and strategic pricing models that maximise subscriber acquisition and market share.

There are numerous pricing options available within the subscription economy. Pricing models that can be tiered according to functionality, discounted to encourage bulk purchases, calculated according to usage levels, term-based to lock in long-term commitments, or optimised to reward loyalty. There are also accompaniment incentives such as free trials, virtual coupons, early bird offers…and more.

Determining the right pricing models allows subscription-based companies to easily calculate the lifetime value of a customer, manage inventory, offer simple pricing, save on resource-based costs and many other business benefits.

For customers, the right pricing model would ensure that their needs are catered for, provide them with convenience, reduce costs due to bundling and promotions, give them budget security and remove cognitive dissonance.

Providing this value to customers on a consistent, ongoing basis means building long-term relationships which ultimately increases revenue, sustainability, and growth for a company.

With the right knowledge, tools, and products, attracting subscribers and creating a reliable and steady stream of recurring revenue is well within your reach.

Looking for more insight on subscription-based business models? Uscreen offers an in-depth look into various models that might be right for your business.

Shopping for a subscription service tool for your online store? Take a look at: WooCommerce Subscriptions or Payfast Subscriptions

Have any questions about selling subscriptions online? Give us a call and we’ll be happy to help.

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Paula Gries


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