Subscription Business Model: Is It the Right One for You?


Are you planning to start your own business? If your answer is yes and you already did some preliminary research, you may have considered setting up a subscription-based business. This business model has risen in popularity because of the convenience it offers customers. At the click of a button, subscribers are able to get the products or services they need.

Of course, it wouldn’t be a popular option if the return on investment isn’t good for the business owners. Since subscriptions entail recurring purchases, it also means a more constant flow of income for the enterprises.

So, is having a subscription business model your best option? It could very well be, but you have to check some things before you know for sure.

Are You Prepared to Handle Payments?

Since subscription-based products or services are all about recurring billing and payments, you can’t expect to handle payments manually, especially when your business starts getting more subscribers. You have to find a way to automate the process not just to speed things up, but also to reduce the likelihood of discrepancies, failed transactions, and other payment-related issues.

Fortunately, there are now advanced subscription billing solutions that are designed not just to track payments for each subscriber, but also to provide a wider assortment of payment methods. In addition, intelligent billing solutions also have the capability to implement frictionless payment facilities to discourage subscription cancellations. And because they can also automatically generate analytics based on customer activities, they enable businesses to use the data in order to study trends and improve their products and services.

Is Your Product or Service Marketable as a Subscription-Based One?

There are simply products and services that are more feasible for a subscription-based platform. These include phone services, broadband Internet services, and cable TV services. Other products such as books, collectibles, health food, and pet supplies can also be delivered on a regular basis as subscription box items.

But what about products that are normally sold through traditional retail or ecommerce channels? You’d have to get creative so customers can justify getting the same (or similar) products from you on a regular basis. For example, if you’re delivering beauty products, you can consider including cosmetics accessories in every third batch of monthly makeup products.

Can Your Business Scale Properly?

Given enough resources, it’s possible for any kind of business to scale up. However, this can be tricky for a subscription-based business. For some products, scaling up to handle more subscribers may be just a matter of upgrading one’s fulfillment services, but for other products, it could mean having to invest in bigger storage facilities to make sure one has enough inventory to supply all subscribers.

This one depends entirely on the amount of resources you have and how much you’re willing to spend in order to scale up. Remember that the competition for subscription-based businesses can be tough, and delaying expansion can mean a halt in your company’s progress.

Can Your Current Business Transition?

If you already have an existing business and you’re planning to switch to a subscription-based model, you have to make sure your company can handle the transition since implementing the change could entail an enormous amount of resources. This could also mean you might have to suspend current operations temporarily in order to make the change to a subscription-based model.

Fortunately, the existence of new communication, payment, and fulfillment methods are helping make the process of transition a lot cheaper than it was before. Digitization, automation, and outsourcing are also helping businesses cut down on costs even further.

As in any other business, there may be some risks involved in adopting a subscription-based business model, but its potential is too great an opportunity to simply pass up. If you think you have what it takes to make this business model work for you, prime yourself and your company, and get ready to take on the challenge. It is worth giving a try.

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