How to successfully run a business with a subscription based business model
If you are looking to start a subscription based business, here are the tips that you should know before beginning.
If you are looking to start a subscription based business, here are the tips that you should know before beginning.
Are you looking to start a subscription based business? Businesses such as Netflix, Masterclass, and YouTube Premium are successful examples of subscription based businesses model.
If you are looking to start a subscription based business, here are the tips that you should know before beginning.
A subscription based business model is where clients pay a weekly, monthly, or annual fee for your products or services. It is a business model that retains its clients by providing a product or service that keeps the client interested.
If the clients find the product or service worth paying for, they will subscribe to your business. This allows you to have a steady stream of income.
Having a subscription based business allows your clients and you to easily manage purchases and sales. Your clients have the convenience of fixed scheduled payments for the products or services they want—saving you time for not needing to re-engage them for future sales.
The number of subscription based businesses has been on the rise lately. Maybe you are interested in starting your own, but you remain a bit cautious because you are unsure about the advantages and disadvantages of having a subscription based business model.
Here are what you need to know before starting your own.
Predictable recurring income
A subscription based business model allows you to create a steady flow of income every month. It will enable you to analyse and predict your income for the next few months.
Furthermore, you do not need to put much effort into keeping existing clients as they already know your product or service. It will result in you having a more consistent income which prevents them from fluctuating from month to month.
Keeping your existing clients satisfied and willing to pay monthly for your products or services allows you to focus more time and energy on attracting new clients.
By having a predictable monthly income, you can better analyse your financial standing, which allows you to plan for future expenses and inventory supplies.
If you would like to expand your business further in the future, having a predictable recurring income will look good on your business and make it more attractive to potential investors.
Easy access to your product or services
Businesses that are subscription based allow their clients to have easy and almost immediate access to their products or services upon signing up. When subscribing to a subscription based business, clients often receive a one-time discount or have a one-month free trial.
It allows your clients to try out your product or services before fully committing. In addition, offering your clients a free trial period would make the offer of subscribing even more enticing.
By offering value plans for your products and services will further entice new clients to subscribe, and it will, in return, save you money on marketing and sales.
Growth potential
Another benefit of having a subscription based business model is that it allows you to focus on one product or service in the beginning. You will be able to put more of your attention on improving them to meet your clients’ needs.
It also allows you to choose whether to expand your business when you have more cash flow and contacts. A subscription based business model gives you complete control over when you want to expand or downsize your product or service pool.
Subscription fatigue
Subscription fatigue happens when a client wishes to unsubscribe from your products or services because they are not using them to their fullest extent.
As of this moment, many businesses are using a subscription based business model. Everyone is subscribed to a company like Netflix, Spotify, or YouTube Premium, so there is a possibility that they wish to reduce the number of subscriptions they have.
Question on ownership
Subscription based businesses are where the companies rent out a service or product to their clients.
The clients have access to the services or products once they have subscribed to the business, but upon unsubscribing, the client’s access will immediately be removed.
This can be an unattractive feature to some people and deter them from subscribing to your products or services. The boomer generation may find this unattractive because they grew up in a time when a purchased product gave you complete ownership.
Sharing is caring, but you can’t share anymore
Back in the days when you could easily share your favourite music with your friends and family. Those days are over; subscription based businesses require you to be a subscriber to use their products or services.
If you are not a subscriber, you will not have access to their products or services, and if you choose to terminate your subscription, your access will immediately be revoked.
There are many subscription based businesses currently on the market. The idea of adding another to the long list of subscriptions is not very appealing to many people.
For you to make and attract more clients, you need to focus on user experience. Clients are willing to pay for subscriptions if they think that it will save them time or money in the future.
With Payleadr, you can easily set up a direct debit service for your business. There are only four steps to set up our service, and you are ready to go.
Our customer portal provides your clients with a secure, hassle-free way to manage or make changes to their payments. Our portal is created with your clients and you in mind; it is designed to navigate effortlessly, which keeps your clients coming back.
Furthermore, our merchant portal access allows you to have the most current data of your clients at your fingertips. You will be able to analyse purchase patterns to better understand and respond to your clients.
