Subject areaRevenue and sales
Also known assubscription business model
The subscription model is the business model in which the customer pays a recurring fee, monthly or yearly, for ongoing access to a product or service, in place of a one-off purchase.
Revenue becomes recurring and therefore predictable, and the customer relationship is measured over time, on renewal.
This leads to the model's weak point: every customer who cancels removes future revenue, so companies that adopt it closely track churn (the share of customers who leave in a given period). The site's articles mention it as a lever to combine with flash sales and loyalty programmes, to offer more value to the most loyal customers.
An example
A manufacturer of laboratory chemical reagents stops selling order by order and offers a monthly fee that covers scheduled supplies and technical support: the customer plans the spend, the company forecasts revenue for the coming months.
Enrico Giubertoni. Licensed under CC BY-NC 4.0: you may quote, translate and adapt this entry with the author’s name and a link, stating any changes. For commercial use, write to info@enricogiubertoni.com
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