Take advantage of the subscription business model

We live in a society where convenience is king. We prioritize businesses that can make our busy lives easier. Whether it’s by automatically sending us disposable razors before we run out or refilling our monthly vitamins, subscription based companies are growing rapidly.

From Amazon Prime to Chewy, these subscription based companies are the future of ecommerce. You would be hard pressed to find anyone that doesn’t have at least one subscription-based product on auto-delivery.

If you want to thrive in business, it is important to stay on top of rising trends and evolve your business model when change is needed. According to the Subscription Trade Association, 75% of distributor-to-consumer businesses will have a subscription-based leg of their business by 2023. But is a subscription business model really the right choice for you?

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What is a subscription business model?

A subscription business model is one where a business offers a product or service to their customer on a recurring basis. It could be on a weekly, monthly or annual basis. This model means a triple pay-off for a savvy business: it provides convenience to the customer, builds brand loyalty and encourages multiple purchases from one customer.

While the concept of a subscription is not new, the rise of subscription based businesses really started in the early 2010s when companies such as BirchBox, Dollar Shave Club and Amazon Prime brought automatic refills of products to the mainstream. Suddenly, it didn’t seem that odd to have a company automatically and regularly sending you household goods like razors, makeup and paper products. Why go to the store for a product when you can get it on your doorstep before you run out? 

Now you can find a subscription based business for almost anything from cat litter to probiotic sodas.

There are six types of subscription business models currently on the market.

There are six types of subscription business models currently on the market.

Subscription boxes

This is the type that really brought subscription based companies into the mainstream. Companies like BirchBox made it easy to expand a consumer’s horizons and try new make-up monthly by delivering it directly to doors. Now there are subscription boxes for just about anything. Order pet treat subscriptions, book of the month boxes or wine club subscriptions. 


A membership program is a subscription business model that provides a service on an ongoing basis for a recurring fee. The most common example of a membership subscription is Amazon Prime, Costco or fitness centers.

 how to start a subscription business.

Subscribe and Save

With this model, one time purchases are still accessible but it’s more enticing to enter into a subscription for a discount or free shipping. Examples of this type of subscription business include companies like PopFit leggings, Chewy Pet Supplies and coffee subscriptions.

Media and streaming services

This type of subscription includes services such as Apple Music, Netflix and Hulu. The consumer pays a monthly fee for content to be delivered directly to their device.

subscription business model

Digital subscriptions

As our society’s dependence on technology increases, digital subscriptions are also on the rise. Services such as Uber, LinkedIn Premium and other digital subscription models have grown significantly in recent years.

SaaS or Software as a Service

These types of subscription businesses include a subscription-based licensing of their software. Examples include Microsoft Office Suite and Adobe Creative Cloud.

Are subscription based businesses profitable?

There is a reason why business owners are jumping at the chance to reorganize their companies to include a subscription business model.

If executed correctly, subscription based businesses are very profitable. According to PowerSync, the global subscription economy makes up to 18% of the $41 trillion credit card processing industry. 

Subscription based businesses were on the rise prior to the Covid-19 pandemic but the pandemic only pushed the business model to explode more rapidly. Consumers still had needs while in quarantine and a subscription based business was the perfect solution to fulfilling those needs. 

The pivots required by the pandemic helped to grow the bottom line of some of the most successful subscription based businesses such as Amazon, Chewy, Walmart+, Dollar Shave Club and Instacart Express.According to Statista, there were about 120 million Amazon Prime subscribers in 2019. By the end of 2020, during the height of the pandemic, there were over 140 million Amazon Prime users. 

Why are subscription based companies so popular?

One word: convenience. 

In a constantly moving society, consumers desire options that will make their lives easier. Today, a click of a button is all it takes to order a good or service. Customers already know they love these products – why not make it even easier with a subscription that gives them what they want over and over again?

Subscription based companies are also excellent at building brand loyalty and generating recurring revenue. Investing in a subscription based business model is a win-win for consumers and business owners, alike. And once you secure that initial subscription, the hardest work is done – it’s all about maintenance and stewarding your raving fan customers. Quality products and excellent customer service go a long way once you’ve already brought the consumer in your door.

most successful subscription based businesses

How do I convert my existing businesses into a subscription business model?

First, take a look at your product lineup. What are you currently selling that can be turned into a product or service that consumers need on a recurring basis? 

Be creative here. Services like Rent the Runway, which rents high-end clothing, to BarkBoxes, which delivers dog treats and toys monthly, seemed out of the box when they started but are now among the most successful subscription based businesses.

Next, determine if there is a need for your product in the marketplace. If you’re already seeing a lot of recurring orders from a certain product, it is easy to turn that into a subscription. Reposition your marketing efforts for products that aren’t seeing consistent recurring orders but could be.

Finally, establish the infrastructure. Customer service is a huge part of the success of subscription based businesses. Build a quality team that is equipped to deliver this customer experience and positively build brand loyalty.

The key to being successful in business is to keep going until you find what works. Learning how to start a subscription business is no exception.

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