If you're putting the
finishing touches on your new business before you
launch, explore the benefits of the subscription
starting a new business? There
are many things about running a business that new business owners
You donít have a boss anymore and you
get to make all of the decisions in your company. What many
entrepreneurs donít realize is that they can choose the wrong
business model and find themselves working really hard for little
Before you start your business up, you
should consider a subscription
business model. Read on to learn what
a subscription-based business is and how it can benefit your
What Is a
Subscription Business Model?
Itís actually a very simple business
model. Your customers pay a recurring fee to use your products or
services. This can be done monthly, weekly, quarterly, or annually.
Subscription business model examples
can be found in almost every industry. In the fitness industry, TRX
offers workouts for a small monthly fee through its mobile app.
Quickbooks is accounting software
thatís been around for decades. Itís now offered as a monthly
subscription. Adobe now has its entire product line available for a
Of course, who can forget about
subscription boxes? You can get virtually anything from wine to
games in subscription boxes. Streaming services like Netflix and
Hulu all run on a subscription model.
The Top Reasons to
Switch to a Subscription-Based Business Model
Can a subscription business model make
that much of a difference in how you run your business? It can, and
here are the advantages of using a subscription model in your
1. Predictable Income and Cash Flow
The most stressful part of being a
business owner is knowing where your next client will come from.
Itís hard to live when your income goes up and down like a roller
coaster. For many small business owners, itís feast or famine.
You donít live that way when you run a
subscription-based business. You know how much income you can expect
All you have to do is multiply the
number of subscribers by the monthly cost. Youíll then subtract a
small percentage, which assumes that some customers will stop their
2. Easy Client Management
A subscription model makes it easier
to manage your clients. In most businesses, you have to invoice your
customers and then wait until they pay the invoice.
Customers can be late, which puts
pressure on your business. An
subscription billing software handles your invoicing, customer
relations management, and payments. Thereís no need to contact
customers to get money.
3. Business Made Simple
A subscription model allows you to
simplify your offerings. The mistake that businesses easily make is
that they give their customers too many choices.
They try to customize their offerings
to clients, but in the end, they just create confusion. Customers
donít truly understand what theyíre signing up for.
With a subscription business model,
you give your customers limited choices. That simplifies your
business and your customers choose the offer that fits their needs.
4. Easier Distribution
Whether youíre a personal trainer or a
software producer, you can benefit from moving to a subscription
Personal trainers have always had to
deliver their services in-person at a gym or studio. Youíd have to
deal with last-minute client cancellations and clients always
Plus, you could only serve so many
people because you have a limited amount of time. At most gyms, the
most productive trainers probably live there or spend the majority
of the time there.
Thereís a trend for online training,
especially now that people are at home.
You can move your business
to a subscription model, which allows you to work with more people
and have a reliable income.
Software companies have traditionally
relied on selling a physical product and selling additional licenses
to install the software on multiple computers.
Computing has moved to the cloud,
where users pay a subscription fee per user, and software providers
deliver their services over the internet.
Customers are thrilled
because they can pay a small monthly payment.
5. More Upsell Opportunities
It is much easier to sell more to
existing customers than it is to sell a high-dollar package to a
brand new customer.
When youíre selling a high-dollar
package, the sales cycle is much longer and there are more people
involved with the
Itís much easier to have a product for
a lower price for the customer to try out. Once they experience the
benefits of using your service, theyíre more likely to upgrade to a
Youíll see this often with freemium
software or with a free trial. Itís enticing enough for customers to
try and then buy.
6. You Focus on Customer Retention
You do need to have a system in place
to get new clients on a regular basis. What a subscription model
does is that it lets you focus more of your time on customer
If you plan to provide a one-time
service or product, youíll sell a customer once and then have to
replace that income the next month.
Your focus is always going to be on
the next sale. That is stressful and can often lead to
Since a subscription-based business
has predictable income, you can focus your efforts on delivering
impeccable service to increase customer retention.
That eases the pressure of having to
scramble to get your next sale.
A Subscription-Based Business Model
You may have had a certain image of
how your business would look when you first came up with the
concept. That initial concept can be flipped around now that you
know about the benefits of using a subscription business model.
This model works for many reasons and
it benefits you, your bottom line, and your customers. You have a
steady stream of income, while your customers enjoy the service for
a low monthly fee.
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