The subscription business model has become famous with the rise of streaming services and weekly produce boxes, but almost anything can be turned into a subscription if you choose a model that’s appropriate for your industry.
When done right, running a subscription business can reduce your customer acquisition costs and make life more convenient for subscribers. Not sure how to generate a monthly recurring revenue with your current products and services? These 10 subscription model examples demonstrate how this business concept can be applied to almost anything.
Access-Based Subscription Model Examples
Subscription businesses that offer access to products, content or software for an annual or monthly fee are a bit like country clubs—if you’re a paying member, you are welcomed in and can enjoy all the exclusive services inside. If you’re not a paying member, you’ll be stopped at the door.
The benefit of access subscriptions for companies is that they can keep monetising old content and tailor new content to the needs of subscribers. Customers can enjoy unlimited content without any maintenance or clutter. Subscriptions can be paid through a payment gateway with a debit or credit card or with a standing order through the customer’s bank.
The digitisation of media has given rise to streaming services that give subscribers unlimited access to an almost infinite range of media. Gone are the days of the local video store. Now, for a low monthly fee, subscribers have instant access to thousands of movies, music files, videos and audiobooks.
Typically, subscribers need to be connected to the internet all the time to access an online streaming service. However, some subscription services such as Apple Music allow the subscriber to download a wide range of songs to their device for offline listening. These files are then automatically removed from the app once the subscription ends.
Example: Bodyselfie TV
Bodyselfie TV is a video-on-demand (VOC) subscription business that offers boutique fitness workout videos from six top Los Angeles instructors. For €22/month, subscribers receive instant access to dozens of videos that can be sorted by fitness method (barre, mat pilates, bodyweight exercises and body sculpt) or by target muscle groups. Prospective customers get free access with a free 14-day trial before their credit card is charged.
Software as a Service (SaaS)
Software companies started out selling their products on compact discs but many have now shifted to a subscription-based business model. Rather than paying hundreds of Euros upfront for a word-processing program or antivirus, customers are charged an annual or monthly fee in exchange for access to the latest edition of the software with real-time updates, bug fixes and customer support. Subscription software business models are commonly referred to as Software-as-a-Service (SaaS).
To take out a SaaS subscription, the customer will be asked to create an account where they will pay the fee and be given the option to automate billing. Then, after the payment is completed, the download icon will display in a “purchased items” tab next to the subscription order or the customer will be sent an access key. Once the subscription period is up, the customer’s card will be billed again or—if they don’t pay or issue a credit card chargeback—the program will revert to the non-paying version with limited features.
Adobe allows customers to purchase each of its software programs separately or subscribe for access to over 20 creative apps. For €64,55/month, customers can use Photoshop, Acrobat, Adobe Express, Illustrator, InDesign and Premier Pro (along with many others) and receive 100GB of cloud storage. Prospective customers are offered a free 7-day trial before their card is charged.
Content subscriptions are a little different from streaming services because they’re consumed in more of an “active” rather than “passive” manner. This business model can be used for:
- Digital publications (magazines, newspapers, emails and academic journals)
- Sheet music
Once the customer pays, he or she has full access to all previously uploaded books, courses, articles, statistics and games and is sent notifications of new content as it is made. Content subscription business models typically offer a limited version for free, such as sample chapters of books, a limited number of free articles or the abstract (but not full text) of academic papers.
Scribd is an e-book platform that gives customers unlimited access to more than 60 million documents (including articles, books and audiobooks) that are uploaded by authors. Content can be downloaded to the Scribd app for offline use as long as the customer’s subscription remains active. Scribd offers a free 30-trial without download capabilities, then costs around €9/month.
Health and Wellness Subscription
Health subscriptions started with gym memberships and dental plans and now represent a wide range of services. Some of the most recent health and wellness subscription models combine access to several services to create a package deal, such as 24/7 gym access plus 24/7 doctor access and a monthly or annual session with a personal trainer (“recurring” services combined with “access” services).
Falck is a European health care network that serves customers in 29 countries. With a subscription, members receive annual check-ups and free emergency medical transportation as well as being guaranteed an appointment with a specialist in 10 working days and access to a 24/7 helpline.
“Perks” Subscription Business Models
Some businesses make money from subscriptions that give members exclusive access to insider discounts and faster service. The kinds of benefits to which members are given access might include:
- Free shipping
- Member-only discounts
- Member-only wholesale pricing
- Priority service
Example: Amazon Prime
Subscribers to Amazon Prime pay a monthly or annual fee (currently €49 in France and €69 in Germany per year, both set to rise in September 2022) to get perks like free shipping, same-day grocery delivery and unlimited digital content. For subscribers who place orders often, this represents significant savings.
Luxury car brands have even jumped on the bandwagon with recurring monthly vehicle subscriptions. In contrast to rental cars, which stay with the customer for the duration of the rental, a vehicle subscription gives the customer access to a specified selection of cars—any of which can be used while the subscription is active.
For high-flying business professionals, paying vehicle subscription companies every month means more choice in vehicles and no required maintenance. For a working or middle-class customer, it could mean the chance to enjoy the luxury car experience without having to pay the full purchase price up-front.
Example: Porsche Drive
Porsche Drive “puts the Porsche fleet at your fingertips” with subscription and rental options. The rental price for one day with a classic model is €519 in Germany, up to €5,872 for 14 days with a 911 GT3. In contrast, a monthly multi-vehicle subscription with Porsche USA costs €3,600/Month plus tax and a €595 activation fee plus tax and includes 2,000 miles, seven models, insurance, roadside assistance, vehicle maintenance and free delivery within 20 miles of the dealership.
Repeat Product or Service Business Model Examples
This is the other main kind of subscription business, also known as “auto-ship”. In this business model, the supplier delivers the same product or service to the customer every week, month or at a specified frequency for a regular, automatically deducted fee. Some of these subscriptions feature a varied selection of products and others provide the same selection every time. Many subscription business models now offer the ability to customise, downgrade and upgrade a recurring order from one month to the next.
Curated Subscription Boxes
Subscription box businesses that operate on the model of curation deliver a box of varied products each month to introduce the customer to different brands. These are often health and beauty products but can also include things like clothing items that are sent back and replaced with more. The idea is to delight the customer with variety while saving them time going out and looking for new products themselves.
Birchbox sends out monthly subscription boxes that contain between two and six beauty products from more than 200 brands. The boxes are personalised based on a quiz that the customer fills out at the beginning and the same product is never sent twice. If the customer finds a product they love, they can purchase the full-size product directly on the website. A monthly subscription starts at €16/month and there are discounted rates for three-monthly, six-monthly and 12-monthly subscriptions.
Replenishment Subscription Boxes
Whereas curated box companies promise not to send the same product twice, replenishment box companies intentionally send the same products every single time. Rather than the customer having to go to the store and purchase their favourite products when they run out, replenishment boxes restock the customer’s supplies automatically on a schedule set by the customer.
Example: Dollar Shave Club
Dollar Shave Club sends out a box of blades, shaving products, shampoos and face cream once every two, three or four months—depending on the customer’s preferences and needs. The boxes are customised based on an initial quiz, after which the customer can alter the suggested box to include the exact products they want to receive. The price is calculated according to the products ordered, with the simplest subscription starting at €9/month.
Food Service Subscription
The food service subscription model is a cross between a curated box and a replenishment box. Each week, each fortnight or twice a week, the company sends the customer a varied box of food based on the customer’s chosen dietary plan. The actual contents of the box (depending on the service) could consist of fresh ingredients together with suggested recipes, pre-prepared frozen meals or a variety of healthy, long-life snacks.
HelloFresh is an international company that delivers personalised boxes of fresh ingredients with easy-to-follow, healthy recipes. In the UK, a two-person, five-meal plan costs €53 per week plus shipping, for an average of €5 per serving. Customers can change their order week by week and discontinue the service at any time.
Repeat Service Subscription
Finally, a repeat service subscription model covers businesses like content marketing companies, advertising companies and even cleaning companies that perform ongoing services for clients and bill these services monthly. As long as the client continues to pay, the subscription service continues to be performed.
Because there is a direct business-client relationship and the provider needs to be able to plan their workload, repeat service subscriptions are often more formal—with a minimum contract and early termination fee—compared to something like streaming services or subscription cars.
Example: Cleaners in Europe
Cleaners in Europe is a company that offers contract cleaning services for hotels, bars and restaurants throughout Europe. Their janitorial package is customised according to the client’s needs and billed on a regular schedule.
How to Ensure a Successful Subscription Business Model
If these subscription model examples have given you an idea of how you might develop this model in your own business, make the transition as successful as possible with these tried-and-true tips:
- Conduct market research. Some businesses work best with subscriptions and others with transactions. Find out which model is most likely to work for you.
- Know your customer. Subscriptions are founded on customer relationships, so it’s essential to determine your customers’ pain points and needs and continue to meet their needs as these change.
- Prepare for the bulge in the “fish”. The initial transition to a subscription model brings in more revenue than costs, but this is followed by a period in which costs outgrow revenue as your subscription model expands. Prepare financially for the increase in costs before your revenue once again surpasses your costs.
- Use an automatic billing system. Subscription-based business models rely on reliable monthly recurring revenue (MRR) processed through a secure international payment gateway. For your subscription business, it’s essential to choose a payment provider that offers a no-fuss recurring billing system and merchant services that help your business grow.
The Right Subscription Model for You
The subscription economy offers abundant rewards to businesses and customers alike when it’s leveraged to its best advantage.
If you have a product or service that customers can benefit from on a regular basis, do your research, build a high-value pricing model and trial the subscription with a small group or specific product or service. Soon, you could find yourself with a growing loyal customer base, a growing MRR and the opportunity to turn your focus to evolution and growth.