Pay it again Sam
Or is it pay Sam again? Do you remember the days when you had to buy a CD to access and install software? We’re talking Microsoft, Adobe, and just about any other software you can imagine. Slowly but surely, and then overnight, everything moved to the Cloud – tech companies changed their business models. Gone are the days of ownership and endless upgrades. Hallo monthly subscriptions where nobody owns the software; they merely pay for the privilege to use it. The effect of this shift stretches far beyond software. Even hardware followed suit. It’s impossible to buy a new laptop with a built-in CD or DVD drive today. Such is the power of this new way of thinking and working. Such is the influence of subscription-based business models.
Subscription business models in a nutshell
When you decide how your ecommerce business makes money, you must choose whether to sell products and services once off or on a recurring basis. This choice has far-reaching implications. It determines how you set up your website, which products you sell, and how you offer them. The subscription-based business model favours customer retention rather than acquisition. In essence, a customer will pay you multiple times over a prolonged period instead of a once-off large amount. The world economy is trending towards subscription billing on cars, entertainment, homes, shopping and software, ultimately increasing the lifetime value of their customers.
Over the last decade, subscription-based business models have boomed. Today millions of consumers subscribe to thousands of products and services across all industries. The growth in demand is so high that it is set to fuel the subscription ecommerce economy’s explosion to reach $687 billion by 2025.
Types of subscription business models
Subscription business models include streaming services, cable television, satellite radio, music subscriptions, websites, gyms, gardening services, storage units, etc. During and after Covid, some businesses spotted the gap, offering daily and weekly dinner or veggie boxes, meal delivery services and meal kits. According to Sifted, a media brand for the European startup economy, the global subscription box market reached $18.8bn in 2020.
Ownership has even become passé in car markets. Today consumers no longer need to lease cars over long periods. They can subscribe to a car service for shorter periods. Subscriptions include registration, maintenance, roadside assistance, and insurance. An added benefit; you can swap your car for a new one every month.
Subscription business models – the benefit of foresight
Hindsight is not the perfect teacher. A subscription business model allows you room to grow because you have a budget. You’ll also benefit from the constant stream of income. It helps you to focus on developing and delivering your product or service, and you have plenty of space to innovate whilst retaining customers. It also creates a more trusting relationship between companies and their customers because it’s ongoing, not once-off.
More than meets the eye
Don’t underestimate the complexity of subscription business models. It might seem obvious at first. A subscriber pays a fee for a set service every month or week. Simple. What if the subscriber comes on board in the middle of the month? How do you deal with customer queries and demands? And how do you ensure customers don’t migrate to another subscription service en masse? Subscription business models emphasise the importance of customer retention, ongoing product development and innovation.
Recurring payments, the essence of subscription business models
Subscription plans allow you to bill your customers manually or automatically repeatedly. Typically weekly, monthly, or yearly; however, custom billing is also an option. You can automatically debit your customer’s cards or send payment links and reminders to prompt them to pay. Truevo’s Subscription Billing offers automated payments, improved customer experience, and reliable payment processing for businesses in 2023 and beyond.
Let’s talk payments and security
If you want industry-leading payment security, look no further. Truevo is PCI DSS level 1 certified. This means we comply with the highest level of security worldwide for businesses that store, transmit or process card data. Card authentication via 3D Secure v2 is fully integrated into our online payment flow, adding an additional layer of payment security to protect you and your customers.
So, if you want your customers to pay again, and again, and again, speak to Truevo. We can’t wait to make the payments cha-cha-cha with you.
