A subscription model business is a popular eCommerce business model in which customers will pay a recurring fee for getting products delivered for a scheduled interval. It could be monthly, quarterly, or annually.
Most businesses promote subscription business models because it gives guaranteed revenue and predictability. Customers are also happy with subscription packages as it is so convenient as they don’t have to place the order manually each time. Some websites also offer discounts for repeated purchases or sell subscriptions at a lower price.
The subscription model business prioritizes customer retention over customer acquisition. The aim is to build long-term relationships with customers.
Following are some key benefits of having a subscription model business:
- Predict your revenue
- Earn recurring revenue
- Build long-term relationships
- Promote upsells and cross-sells
- Spend less on ads and promotions (when compared to regular eCommerce business)
Examples:
Monthly subscription: Newspaper, Magazine, Beauty products ( Soap, Shower Gel, Toothpaste)
Streaming services: Netflix, Youtube, Spotify, etc.Software subscription: Kaspersky, Microsoft Windows, Adobe, etc.