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Why should you go with Subscription based Business Model?


Subscription based business model


What irks the customer the most? When they have to pay for the services they haven’t used. Remember the libraries? You had to pay a fixed price every month, whether you actually picked a book or not that month.

If you hire a freelancer, you would need to pay out a certain fixed amount. Sometimes, the fixed amount does not do justice to you or to your freelancer. It is a good idea if you can pay a certain price to the freelancers for the hours they have worked. The flexible or hourly pay-out structure is gaining popularity as against the fixed price.

Subscription based business model works on a similar principle, wherein the flexibility of paying for the services you have used is available to the customer. The customer is changing, and would rather opt for flexible and hassle-free shopping, which comes with the subscription based models. The Software-as-a-service (SaaS) companies such as NetFlix, and Dollar Shave Club have gained popularity, and an excellent customer base to boast about. In fact, a lot of companies such as Salesforce.com and Dropbox are also following suit. With this rise in the companies adopting this change, it is obvious that customers prefer this over fixed models.

For one, the subscription based business model attempts to offer value to both the company and its customers. The convenience that comes with this model is incredible. For one, once subscribed you don’t need to reorder it, and secondly, you can stay within the budget.


subscription based business model


Businesses can easily predict the sales with the repetitive orders. With guaranteed revenue, you can get good acquisitions and better profitability.

Service based businesses are yet to attempt subscription based business model. While you have a monthly retainer agreement for the service-based companies, they are usually all about pre-purchased services. If you have a subscription based model for your service based business, you would have more options of getting people on board and improve the services offered. It helps increase the flexibility and gives the revenue a definitive boost. A lot of businesses have observed a 300% increase in their revenue after switching to subscription based business model.

Let’s see why companies need to adopt the subscription based business model


Ability to predict

With a subscription based business model, you can predict the revenue your company will generate in the coming months. With appropriate predictions, you can easily plan your resources, and even keep the inventory in check for the customers. This will help you accelerate the business momentum.

With this model, if at any point the customer wants to change the focus, you will just need to change the subscriptions, and charge them accordingly. It becomes highly convenient to the customer as well as you. There is no major paperwork, and you are set to meet the client’s requirements. Even when owning the tactics for your customers, and preparing the strategy, you can be flexible and keep improving with time with the

Even when owning the tactics for your customers, and preparing the strategy, you can be flexible and keep improving with time with the subscription based business model. The consistency in service is maintained owing to the flexibility and convenience. The idea behind going with the subscription based model is that the end clients would know that you are always ready with the necessary resources, even when they plan to change the services or the plan. You can even mention the services that won’t be under your scope in this case. The planning is done monthly, thus giving you more capabilities.


Improves the customer retention

Lead generation and getting new clients on the board and actually building your customer base can be quite a humongous task. Ask those who are into lead generation. They will tell you what a herculean task that is. With the subscription based business model this becomes easy. The customers will stay onboard, and will grow your company’s value.

With this business model introduced, you will see a rise in the number of repeat purchasers for the ecommerce industry. In fact there has been an increase of 5% in customer retention. The flexibility and the predictability allow the customers to stay on-board and enjoy the benefits of being with the company.

The relationship between the client and the customer grows in this case, as they are all about building trust, offering just what the client needs and that too within the mentioned time, and giving the client the support they seek from partners.


Increased scalability

Your clients can rework their subscriptions according to their needs, without affecting the contracts. The SaaS subscription can be scaled downwards or upwards as per the need of the time. If you want to accelerate the progress, you can scale the subscription upwards but, if you want to reduce the subscription for a while, then you could possibly work the subscription downwards. The scope can be redefined as per your needs, and that would change as per your business and scope for the month.

With SaaS services, you can easily improve your business, and work towards increasing customer base and retain them with ease. With the incredible benefits associated with the subscription based business model, you should ideally opt it for your business. Not only does it make scaling the model easy but also offers convenience.

Sodio offers SaaS services to the companies that aim to increase customer base while keeping their investments at a minimal. Connect with us for detailing the model best suited for you.


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