Subscription businesses: what are they and what are their advantages?

In recent years, with changes in user consumption habits and the rise of streaming content platforms such as Netflix, HBO, Spotify or similar, the subscription business model has become more prominent in the business landscape thanks to the numerous benefits it brings to both entrepreneurs and customers. By 2021, global spending on subscription apps grew 41% year-over-year.

Many companies are rethinking their businesses and starting to base their marketing strategies on subscriptions that allow their customers to enjoy products and services for a monthly, quarterly or annual fee. Although these types of fees are more common for services such as streaming platforms, insurance, electricity and gas bills, gym or academy fees, etc. it is also possible to offer payment by subscription for products sent periodically to the consumer.

Today we tell you everything you need to know about what subscription-based businesses are, what their main benefits are and how we can help you from PaynoPain in the whole process of collection of these subscriptions.

What is a subscription-based payment business?

Just as it works with subscriptions to a newspaper or even to the gym, the subscription-based business model for online commerce is based on offering users a subscription that allows them to enjoy products or services in exchange for a pre-agreed monthly, quarterly or annual fee..

A series of guidelines have to be established between the buyer and the seller, such as the frequency of payment (and shipping if necessary) for the product or service purchased or what is specifically included in the price to be paid, whether it is unlimited access to audiovisual content or the receipt of one product per month.

Another attraction of this business model is its adaptability. Among the different types of subscription businesses, your company can encompass different products and services:

• Physical products: these are physical products that are purchased on a recurring basis, and that you can establish a certain periodicity to buy them again, for example beauty or personal hygiene products such as shampoos, masks or food.
• Digital products: such as applications, programs or tools, games that can be used in exchange for a periodic fee, for example Adobe Creative Cloud.
• Content: subscription that in exchange for a fee allows access to entertainment content, art, information, training, as for example would be the case of Netflix, HBO or Spotify.
• Services: these are the first subscription businesses we know of where you pay a monthly fee for a service such as a gym or an agency, or for example, Amazon Prime.

Advantages of subscription businesses

If you are wondering why you should implement a subscription business model, here we bring you a series of advantages that will make you decide for this type of business:

• Guaranteed regular income

A subscription business is a source of regula or more predictable income than other models, as they allow a certain degree of planning so that you can foresee the growth of your business. You will know fairly close to what the monthly income will be, and subscribers will know exactly what kind of product or service they will receive and when they will be able to enjoy it.

• Simplicity and speed

Subscription businesses are characterized by a very simple sign-up process that anyone can access from any device. Normally, the registration process to create a user account is carried out in the same web page of the business, in a simple and fast way, through a form where the contact and bank data are introduced and where the tariff and its periodicity must be established. Likewise, the cancellation process is also usually handled in a similar way, thus offering extra peace of mind to customers, as they do not have to carry out complicated procedures.

• Updating and continuous improvement

One of the most outstanding characteristics of this business model is the need to constantly update the product or service. By maintaining a closer relationship with customers, they will immediately react to a new change, which will provide valuable information for decision making. In this way, the business must evolve and adapt to the needs of its customers.

• Marketing opportunities

Companies can take advantage of the context provided by this business model to create new marketing opportunities thanks to the information they can obtain about customers and their tastes and the close communication through channels such as email or social networks, having the possibility of creating communities of followers, which brings us to the next point.

• Customer loyalty

Normally, businesses that operate in this way have affordable rates, especially in the first months so it can be easier to attract new customers. However, it is essential that these customers, once they have tried the product or service being marketed, are satisfied and stay. That is why it is essential to offer special offers or other benefits, providing added value to the subscription.

Before starting a business, it is essential to analyze your market in terms of the sector in which your business operates in order to make the right decision. Deciding on one system or another will determine not only your business model, but also another relevant aspect such as turnover.

If you decide to opt for the subscription model for your business, from Paylands, PaynoPain's payment gateway, we offer you all the tools you need to start managing it quickly, securely and easily. Contact our team through the following form and we will solve all your doubts as soon as possible.