Subscription services are getting more and more popular as we go. They are the new jam, and everyone wants a piece of that cake. We’re going to discuss what exactly they are and who can benefit from and use different types of subscription models.
A traditional subscription model is a recurring revenue system in which a product and/or service sells for a fixed price to customers. More modern approaches include more benefits for the customers and have the capacity to gain and sustain more customers and turn them into loyal, long-term customers via premium benefits that support both the customer and the business.
Subscription services are beneficial for both sides of the contract! Businesses get a stable and sustained stream of income, which helps them focus on innovating, progressing, and growing in general. On the other hand, customers lose the burden of trying to find and buy their regular, needed products or services.
Every business owner’s dream is to have enough trust from their customers that they’re not just paying upfront for 3 or 6 months but choosing products on their behalf. Isn’t that just awesome? Well, this definition is the subscription business models in a nutshell! With the help of a trusting platform, every business can run its own types of subscription models and gain various opportunities and benefits. Don’t forget that it’s not just you that wins, a good subscription model is a win-win contract for both parties involved!
With the customer subscription fee you have at least one month of predictability, which would help sustain a business’s resources at best.
As some types of subscription models tend to sell their subscriptions in a quarter or half a year period, the revenue will be recurring no matter what. Suppose you get enough feedback and act on it. In that case, the revenue will be recurring even without obligation
With enough support and attention, your business will form a strong bond with customers, which will lead to a longer relationship.
With no worries about reaching profit or covering costs, you have more time, energy, and focus to innovate your subscription plans with cross-selling and up-selling new products.
Need some help starting a subscription box business in Subi?
There are several types of subscription services/models, each with its own unique features, advantages, and disadvantages. They can predate as old as 1900s jewelry exchange subscriptions in New York jewel shops or as known as Adobe products, or as new and young as AI-based tools.
Replenishment subscription, better known as the auto-ship subscription model, customers sign up for recurring product delivery within the needed period of time. These products usually contain essentials like coffee, contact lenses, razors, or any product that runs out in a certain amount of time. This type of subscription model ensures the customer gets what they need, even if they forgot to look for it!
The frequency and amount of each delivery will be controlled by the customer’s needs, and the subscription contract should be renewed or declined every 3 or 6 months.
Remember the milkman? He was on an auto-ship contract which is a subscription model example!
The Software as a Subscription business model includes access to a web-based software at a fixed price. In a SaaS subscription, customers pay a periodic bill, usually invoiced and billed automatically on a monthly or annual basis. In return for the payment, the subscriber can access the software through a web browser, app, or one-time download.
One of the main advantages of the SaaS subscription model is that it allows businesses to become more agile.
Do you use Adobe products? They’re available as SaaS!
In an E-Commerce subscription, customers sign up for a box of goods that are delivered to their doorsteps at regular intervals, that is one types of subscription boxes. These boxes often contain a selection of products that cater to the customer’s interests or needs. The products can range from clothing and beauty products to food items and books. Subscription boxes can hold different types and themes of products in one box and satisfy different needs of family members or different needs of the subscriber. E-commerce subscription models are the most profitable subscription across all types of subscription models.
The curation subscription model is a specific genre of subscription service that selects a group of products for a customer within or across product categories. This is done either by utilizing previous sales data or by having consumers complete a quiz or questionnaire that outlines their preferences. Recently, businesses have started to use AI to recognize and curate subscribers’ needs.
In this subscription model, consumers are effectively paying for a brand to personalize their offering and conduct the process of product discovery on their behalf.
Curation boxes are the riskiest one among different types of subscription models, with 40 percent of cancellations in the first three months and about 40 percent of subscriber satisfaction.
More innovative brands use the help of celebrities and popular figures to curate different products, which got a lot of attention and helped businesses move toward more acceptance and approval.
One of the main advantages of the curation subscription model is that it seeks to delight consumers by appealing to their sense of curiosity and anticipation. Sometimes, it can be challenging to satisfy each customer, but it’s the risk people and companies are willing to take to broaden their view on marketing, products, and brands.
Remember Birchbox, from our previous articles about beauty box subscriptions? As a beauty product subscription service, Birchbox has been a leader in the curation subscription space for many years.
The access subscription model is where customers pay a recurring fee to gain access to a product or service. This model is also known as the membership model. This could be anything from access to a digital library of books, music, or movies to access to a physical space like a gym or club.
One of the main advantages of the access subscription model is that it provides customers with a sense of exclusivity. Customers get to access a product or service that may not be readily available to non-subscribers. It also provides them with the convenience of having access whenever they want, as long as they maintain their subscription.
The unlimited subscription model, also known as the all-you-can-eat model, is where customers pay a fee to gain unlimited access to a product or service. In an unlimited subscription, customers pay a periodic fee, usually monthly or annually, to gain unlimited access to a product or service.
The unlimited subscription model can be used alongside Access membership for customers with more needs. The unlimited subscription model is usually in favor of customers considering the small price for unlimited access.
The food industry first introduced this model, thus its nickname, all-you-can-eat, where customers had to pay a small price to get a chance to enter the buffet, and if they could eat a certain amount of food, they didn’t have to pay for the food. God bless America!
The Pay-As-You-Go (PAYG) subscription model is where customers pay based on their consumption. Also known as consumption-based pricing, this strategy involves charging customers without prior commitments. This model is particularly popular in the services industry, where providers fix a meter to assess the usage level of customers.
In a PAYG subscription, customers pay for what they use and for the time they use it. This could be anything from the amount of data they consume to the number of hours they use a software or application.
Premium memberships are known for their social media figures and exclusive content, but they were first introduced by private transportation companies to gain attention from the general public. Premium membership in concept contains a free service (or with a very small price) for everyone and more exclusive access or service for whoever is willing to pay a price!
In a DIY subscription, customers receive a box of the product they need, but with a twist! These boxes contain all the materials and instructions needed to complete a DIY project.
One of the main advantages of the DIY subscription model is that it provides customers with a sense of accomplishment and creativity. Customers get to create something new every month, and they learn new skills in the process.
Subscription boxes are a type of subscription model that typically include a few products in each box that are related to a single theme or niche.
For store owners, subscription boxes are an easy way to create a recurring revenue stream and introduce customers to new and exciting products. The subscription box business ideas are bold enough for a brand to be used as a marketing tactic as well. For customers, they get the convenience and excitement of receiving a box of goods, in their selected frequencies like food subscription box or even coffee subscription boxes. Also, many box subscription services offer discounted pricing for members. This allows customers to save money on their regular purchases too.
For store owners, these types of subscription models require more upfront work to ensure that each box is unique and contains items that customers will enjoy. For customers, it can be difficult to predict what products will be in each box and if they don’t like what they receive, they may not be able to return the items.
Subscription boxes are a great way to introduce customers to new products and experiences that they may otherwise not have had access to.
FabFitFun, a monthly lifestyle box, is one of the most popular subscription box services on Shopify.
Merchandise subscriptions allow customers to select the merchandise they would like to receive recurringly, based on their preferences.
For store owners, it allows them to create a recurring revenue stream that is tailored to their customers’ interests. For customers, they get to enjoy a selection of merchandise that they may not be able to find elsewhere.
For store owners, these types of subscription models require more effort to make sure that they’re able to provide each subscriber with a selection of products, that are uniquely personalized to their own choices. For customers, the cost of the subscription can be expensive and they may not always find the items they are looking for.
Merchandise subscriptions allow customers to get a selection of merchandise that is tailored to their interests and tastes.
Loot Crate is a popular merchandise subscription service that offers customers a variety of themed boxes each month.
Educational subscriptions are a type of subscription model that offers customers access to educational resources and materials on a regular basis.
By using this model, those working in educational or digital fields can enter the subscription industry without missing a beat. For customers, they get the convenience of having the educational resources they need delivered to them on a regular basis.
For store owners, this model requires them to have a high-quality resource base or genuine access to these tools. For customers, they may not always find the resources they are looking for in the subscription.
Educational subscriptions are the types of subscription models that provide customers with an easy and convenient way to access the educational materials they need, without the necessity of leaving the house or making time and effort for an offline class/course.
Skillshare is a popular educational subscription service that provides customers with access to a variety of courses and tutorials.
Different types of subscription business models have been adopted by a variety of industries. For example, software companies, e-commerce businesses, media and entertainment companies, educational technology services, dating services, and many more have adopted subscription models to meet their customer’s needs. Choosing the type of subscription models depend on the nature of the industry and the needs of the customers. Let’s compare types of subscription models in action with subscription model examples:
Running subscription model businesses is all about innovation, creativity, and loyalty. But trends play a huge role for new businesses or for those in need of new customers. Even older businesses with rusty strategies can use trends to optimize subscription programs.
Subscription trends 2024 contain eco-friendly material, hyper-personalization, VR, and AR tools. More industries are getting involved in subscription plans, and boxes are getting more inclusive, cheaper, and better. If you want to stand out, you need creative subscription box ideas!
there are many different types of subscription models to choose from, so it is important to take the time to carefully consider your options, knowing the pros and cons of subscription models and coand select the one that best fits your brand’s needs.
Making the effort to understand the different types of subscription models and determining which one is best suited for your brand will ultimately help to maximize your revenue. It is important to keep in mind that the goal of any subscription business model should be to provide value to both your customers and your business. Taking the time to select the best subscription model for your brand will help ensure that you are able to meet this goal.
