Why would you want to turn your business into a subscription? Not all businesses can do this, but here’s why and how to get started.
Subscription Defined
A subscription-based business model is one where a customer or client pays a fee periodically for a service or a product. For example, Netflix charges a monthly fee for customers to access a database of shows and movies and your gym charges you each month for access to its facilities (whether you use them or not).
Why a Subscription?
The main reason for a subscription is to create a steady, predictable stream of revenue that can often be paid for on a monthly or yearly basis and usually in advance. This helps to even out the ups and downs of cash flow that virtually every business experiences during the year.
How to Get Started
Take a look at the services and products your business offers. Is there a way to offer some or all of them on a subscription basis instead? Examples can include a medical professional offering concierge medical services for a monthly fee, a contractor offering an ongoing maintenance agreement, an attorney offering a subscription for access to legal advice, and a product-based business delivering its products on a monthly basis.
Caveats
Not every business lends itself to this type of business model, especially one that delivers a one-time service or product. However, there may be some aspects of a business that can offer subscription-based services or products. It is also usually harder to get customers to sign up for a subscription vs. a one-time fee. Lastly, you need to be aware of churn, which measures the amount of customers who cancel each month, such as a gym member canceling their membership.
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