The subscription economy, we have all heard of this term. It’s nothing new, but this term has become big business recently. Simply put, the subscription economy is the business of consumers making recurring payments for products and services, typically on a monthly basis, to businesses. They could be purchasing things such as pre-made meals, video streaming, or even software. This has become a business model many businesses are adopting. Often with a low cost to entry, many consumers are intrigued by getting new products every month or the “boxes” that are becoming popular such as Bark Box or Beauty Box.
Benefit of Subscriptions for Businesses
For businesses, the switch has moved from selling individual products to selling long-term solutions that people need. For example, is it more convenient for people to go into a store every month to buy the same product or to receive it shipped to them every month? It’s far more convenient for the consumer and business to run a subscription model. For the business, it’s an easier way to predict inventory, and for the consumer it eliminates the hassle of making the same purchase every month. Consumers don’t have to make the same mundane purchases, it’s done for them every month! Products that are staples such as food and cleaning products have becoming very popular subscription businesses.
Also, the subscription economy is great for businesses to generate recurring revenue. For businesses that solely rely on one-time purchases, their revenue will be different on almost any given month! With subscription billing, you can more accurately predict monthly revenue and growth. Recurring purchases are also a great way for businesses to foster a long-term relationship with their consumers. When customers typically make one-time purchases, it could be on the sole basis of price or convenience. With recurring purchases, the business gets to know more about the customer, and vice versa.
Long Term Benefits & Takeaways
In the long term, it seems as if the subscription business is here to stay. It’s always been “here” but with almost every business adopting some sort of subscription model, it doesn’t seem to be going anywhere. The convenience for consumers to pay monthly is something that will continue to persist and is much affordable in the short term. In the past, consumers had to pay a one-time fee for products such as software but with the subscription business they pay a smaller flat-rate monthly with occasional updates to their product. However, it seems though that consumers in the long run will end up paying more for their products and services. However, people will always pay for convenience in this day and age. The future is going to be found in subscriptions, and that is for sure.