Advantages of a Subscription-Based Business

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When selling software or information is your business model, you’ll have more than just a few difficult choices ahead of you when it comes to structuring your business. The choice to be touched on today is how exactly you’re going to bill your clients. There is, of course, the choice of one large lump sum payment, or you could always charge a small amount per month in subscription fees for your customers to keep their access to your services. Each has pros and cons, and none is necessarily a better choice than the other as there are thousands of businesses that use either model.

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If you happen to be leaning toward a subscription-based model, however, here’s what you have to look forward to:

Consistent revenue

Securing new clients is a complicated process whatever industry you’re in. But then, when you have subscribers as opposed to one-time clients, you’re setting yourself up for a monthly replenishment of funds as long as you can keep your subscribers interested in what you have to offer. At this point in time, continuity or subscription merchants make use of expansive and interactive platforms to make sure that content is doled out and revenue is taken in. Many businesses like the security this offers as they have a much better idea of how much money they have to play around with, if they want to make certain upgrades to their system without putting too much on the line.

Win over smaller markets

Sometimes, an entrepreneur has an idea that’s groundbreaking and will fly off of the shelves once they’ve made it available for sale. However, it’s entirely possible that it’s in an industry that doesn’t necessarily have a large turnover of new customers. If you’re selling an item that helps an industry with a high barrier of entry like the banking sector, chances are whatever firms are already present are more or less your customer base for the next few years. If your product can be purchased once, you’re essentially out of business once you’ve managed to sell to as many people as you can. With a subscription-based model, you’ll be receiving money more or less indefinitely depending on the strength of your product.

Conclusion

The subscription model isn’t going anywhere anytime soon because of the degree of control and consistency it offers to a business. Although larger one-time purchases can result in a level of perceived success for a business, it also makes for a lot of pressure to maintain certain sales figures to keep growing the business with time. Being able to take less money on a monthly basis for both consistently, and possibly even the prospect of more total revenue per client over time, is a decision best for those who want staying power in their industry of choice and evolving over time into something larger than what was initially founded. Subscription models are also starting to be favored by individual consumers because there’s a tendency for subscription services to have much better customer support since there’s a more immediate risk of lost revenue from people who choose to stop paying for the service. Hopefully, this has given you a bit of insight into the subscription model.

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Summary
Title
Advantages of a Subscription-Based Business
Description
When selling software or information is your business model, you'll have more than just a few difficult choices ahead of you when it comes to structuring your business.

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