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A Guide to Subscription Model Businesses

It’s a well known fact that subscription based businesses are booming. A simple definition of a subscription based business model is a business model that charges customers a recurring fee (typically monthly or yearly) to access a product or service.

But it’s not just your usual music streaming services like Spotify, we’re talking about. It’s not just limited to SaaS softwares either. In fact, 53% of all software revenue will be generated from a subscription model by 2022. 

SaaS Definition: SaaS stands for ‘Software as a Service’, it’s a software distribution model in which a service provider hosts applications for customers and makes them available to these customers via the internet. CRM platforms are a very popular example of a SaaS software.

It’s obvious that subscription based models are highly popular amongst software businesses, however, more industries are finding success with it as well. That’s what makes this strategy so appealing for businesses, no after what industry you’re in. If it’s implemented correctly, it can be a very powerful tool for growth.

Why are subscription models so popular?

With almost 9 out of 10 people in Britain, signed up to at least one subscription model, it’s clear to see that a lot of people like to sign up to them. These benefits come for the end user but also for the businesses as well. Some reasons why they’re so popular amongst businesses are:

  • Subscription based consumers are more loyal
  • Consumers prefer subscriptions
  • They make forecasting a lot easier
  • Easy to customise pricing packages
  • Subscription-based pricing attracts more customers
  • Businesses can earn more through up/cross-selling

What subscription models are available?

You might be thinking that there’s only one or two different types of subscription models. Well, actually there’s quite a few, all offering a different angle on flexible plans for consumers.

  • Closed Memberships – Only subscribers will be able to use the service or product. Popular amongst streaming and SaaS platforms, such as Netflix and Spotify.
  • Open Memberships – This is the model chosen by Amazon, for their Amazon Prime subscription service. Everyone will have access to the platform, but subscription members will get extra benefits.
  • Freemium Subscription – Similar to an open membership, but it’s typically used for gaming and services, especially SaaS softwares like a CRM platform. Some services, features, or content will be available for free, whereas other premium features will need to be paid for. 
  • Subscription Boxes – This subscription model has become more popular in recent years. Consumers sign up to a box delivery service, normally weekly or monthly. It can either be a box with specific products that they know of, such as Graze, or it can be a surprise, like the Gadget Discovery Club.
  • Buy & Subscribe – Particularly popular for people that find themselves continuously repeating their order every other week. It will let the consumer subscribe to a certain product on a regular basis. The model works well for everyday products that are used on an ongoing basis, such as baby nappies and toiletries.
  • ‘Keep Them Engagement’ Model – If your business only has limited or seasonal contact with your customer base, then this model might be for you. It keeps consumers engaged and subscribing all year round. Wanderlust does this very well. Although they host 50+ yoga festivals in a year, they create an online content platform, Wanderlust TV, where people could access lessons from their favorite instructors. Very engaging for their consumers, all year round.
  • Free Memberships – This isn’t really a subscription model, but it does help create a community amongst your users and customers, which is very beneficial for businesses. At Contapp, we encourage all of our users to give their feedback which we will use for development of our platform. There’s also a good chance that these members will be more loyal than regular customers. 

Our Final Thoughts

After reading all the different subscription models being implemented by lots of different businesses in a range of industries, it’s important to identify which one will work best for you and your customers. The beauty of subscription models is that they can be flexible and customised to suit any business. Some of these are better suited for services and others are better for product based businesses. 


Contapp’s Plans to Become a Subscription Model Business

Part of Contapp’s exciting roadmap is to introduce affordable subscription plans and innovative features to our existing mobile app. The introduction of these subscription plans and features will be mainly aimed at Startups and SME’s. 

This will transform the Contapp mobile app into a SaaS subscription model, which will bring added value to our users around the world, for a small, competitive fee. Once the new premium plans and innovative features both launch, this will allow us to build a streamlined web CRM platform. Contapp’s CRM will have powerful integrations from leading software businesses to become an affordable all-in-one SaaS platform.

You can download and use Contapp for free in the Apple App Store or Google Play Store right now. Keep updated with our new app updates, latest news and more, by signing up to our newsletter and following us on our social media pages.

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