How the Subscription Services Business Model Works
Posted: Wed Jan 29, 2025 6:35 am
Nowadays, it’s hard to imagine how one can do without online cinemas, music services or personal efficiency apps. Despite their different purposes, they are united by the fact that all these services offer access to their services by subscription.
The subscription model market is growing rapidly: over the past ten years, the number of such services has grown sixfold. Following demand, more and more companies are switching to subscription payments, and large players are creating ecosystems and selling subscriptions to several services at once.
This article can not only be read, but also listened to in the new uae whatsapp list Megaplan podcast . We launched the podcast "Sounds like a plan" to talk about how entrepreneurs and managers can be more efficient, manage a team and business, and grow revenue and metrics. Listen to our podcast on Yandex Music and Apple Podcasts . Don't forget to like and subscribe - this will help it grow!
Back in the 17th century in England, you could subscribe to the delivery of water, grain or other crops, and in the 1660s, an insurance subscription in case of fire appeared. At the beginning of the 20th century, a content subscription appeared - the same newspapers and magazines. And a hundred years later, there was a dotcom boom - IT startups that sold services and goods via the Internet. One of the most famous is the American service Netflix. In 1998, its founders Reed Hastings and Marc Randolph came up with the idea of providing DVD rentals online without leaving home. In 1999, the company began working on a subscription basis: for just $ 10 a month, the user rented an unlimited number of films. And in 2007, the Netflix streaming platform appeared, which began offering films online by subscription. At that time, the business model of subscription services that we are accustomed to was born.
Nowadays, you can get anything by subscription: from movies and music to cleaning and ordering coolers to your home. It is clear why this model attracts entrepreneurs - there is no need to constantly attract new users, because you can attract one and take money from him every month for a subscription. Yes, the subscription model gives business more stability: a subscription involves regular payments, which means that the company can more accurately predict profits and plan a budget. But at the same time, the user must be attracted, convinced to link a card and continuously provided with benefits so that he does not unlink it.
The subscription service model allows you to stop constantly chasing new users. You have a base of those who regularly buy from you. If this base pays for the costs, you can focus on satisfying their needs. In this case, it is better to spend more money on improving the service, and this, in turn, will increase user loyalty and the virality of the product - roughly speaking, it will launch the project's growth organically by word of mouth.
The subscription model market is growing rapidly: over the past ten years, the number of such services has grown sixfold. Following demand, more and more companies are switching to subscription payments, and large players are creating ecosystems and selling subscriptions to several services at once.
This article can not only be read, but also listened to in the new uae whatsapp list Megaplan podcast . We launched the podcast "Sounds like a plan" to talk about how entrepreneurs and managers can be more efficient, manage a team and business, and grow revenue and metrics. Listen to our podcast on Yandex Music and Apple Podcasts . Don't forget to like and subscribe - this will help it grow!
Back in the 17th century in England, you could subscribe to the delivery of water, grain or other crops, and in the 1660s, an insurance subscription in case of fire appeared. At the beginning of the 20th century, a content subscription appeared - the same newspapers and magazines. And a hundred years later, there was a dotcom boom - IT startups that sold services and goods via the Internet. One of the most famous is the American service Netflix. In 1998, its founders Reed Hastings and Marc Randolph came up with the idea of providing DVD rentals online without leaving home. In 1999, the company began working on a subscription basis: for just $ 10 a month, the user rented an unlimited number of films. And in 2007, the Netflix streaming platform appeared, which began offering films online by subscription. At that time, the business model of subscription services that we are accustomed to was born.
Nowadays, you can get anything by subscription: from movies and music to cleaning and ordering coolers to your home. It is clear why this model attracts entrepreneurs - there is no need to constantly attract new users, because you can attract one and take money from him every month for a subscription. Yes, the subscription model gives business more stability: a subscription involves regular payments, which means that the company can more accurately predict profits and plan a budget. But at the same time, the user must be attracted, convinced to link a card and continuously provided with benefits so that he does not unlink it.
The subscription service model allows you to stop constantly chasing new users. You have a base of those who regularly buy from you. If this base pays for the costs, you can focus on satisfying their needs. In this case, it is better to spend more money on improving the service, and this, in turn, will increase user loyalty and the virality of the product - roughly speaking, it will launch the project's growth organically by word of mouth.