If your company is thinking about launching a subscription model, read on.
Below is a description of the most common subscription models and some familiar company use cases.
For b2c businesses, there are essentially 3 types of subscription models: Access / Curation / Replenishment
In the b2b world, most recurring revenue businesses are run using the ‘Access’ model (ex: enterprise SAAS, Hosting, Ed-Tech, Fin-tech, etc.).
1. Access subscription models are driven by a paying base of members or enterprise clients who pay a recurring fee in exchange for exclusive access to something – namely, software, a platform, a club, a specific offer, etc. Think Netflix, Spotify, and other streaming services, media; paid apps and gated content (ex: Calm, Peloton Interactive); exclusive clubs, gyms, etc.; paid loyalty programs like ‘Amazon Prime’, Roblox Premium, Uber One, Dash Pass. This model works well for service, loyalty, and platform-based businesses with an exclusive and unique value proposition.
2. Curation subscriptions seek to surprise customers by providing a themed delivery of novel samples, new items, or highly personalized experiences in categories such as apparel, beauty, and food. Think IPSY, graze, HelloFresh, Stitch Fix. This model works well for novelty-related product companies, seasonal product businesses, and those looking to generate ROI from a surplus in inventory.
3. Replenishment subscriptions allow companies and consumers to automate the purchase and delivery cycle of household items and related consumables, such as razors, detergent, vitamins, diapers, etc. Think Dollar Shave Club, Harry’s, Inc. Amazon Subscribe & Save, The Honest Company. This model works well for businesses selling consumable products whereby the customer must otherwise re-purchase/ replenish a product every 30-60 days at a point of sale (be it online, or in-store) if there is no subscription option.