Subscription Model Business Best Practices

Subscription businesses are highly profitable and can offer you and customers several benefits and rewarding experiences. However, to achieve the most with your subscription business; you need to follow a set of best practices. Without following these guidelines, you may find your business will stagnate which is frustrating and can limit the lifespan of your business.

Here are some of the best practices for you to consider.

Know Your Statistics To Price Your Subscription Services Sensibly

If you want to make a decent profit while operating your subscription business you need to determine your pricing strategy. Many businesses believe this process can be very easy; however, there are several considerations which are often forgotten when setting prices.

The first consideration is the customer acquisition cost. This is essential because you need to know how much it will cost you to acquire customers to ensure that together with your delivery costs; that you will be making a profit.

The second is the delivery costs. This is the cost to your business for the production and delivery of your product or service. This must also include all customer service costs that may occur from troubleshooting or queries.

The third element to consider is customer retention. This is essential as you can use this to determine how you can spread the costs of the acquisition and delivery costs over the lifetime of the consumer. Therefore, while in the first couple of months the consumer may be a cost to your business; over the longer period they will generate a profit.

Once you have all of these figures you can calculate the correct pricing that will give you a strong consumer lifetime value. To calculate the lifetime value, consider reading this article.

Add New Features Constantly

A subscription business is always about adding value to your customers’ lives. Therefore, you need to constantly be looking at ways at improving your business’ offerings with improved or new products, additional personalisation, new content and more options to subscribe to your business. By offering new features, you can generate a fresh feeling every time your customers use your products and they will always see the continued improvement and value your service adds to their lives.

Automate Your Payments

Make your business’ revenue generation easy by ensuring all your payments are done automatically. Setting up automatic payments for your subscription business has several benefits for you and your customers. The main benefits for you are it is cheaper to process the invoices and easier to monitor your income for missed payments.

Gain Insights Into Your Consumers’ Needs And Purchasing Habits

To ensure your services are attractive to your target audience you have to know what their buying habits are and what they are looking for. This can be done through asking your current customers or completing some market research tasks such as consumer surveys, focus groups, etc.

This will allow you to create marketing materials that will target them and return good results. This will lower the conversion rate and acquisition costs. Therefore, you can improve your profits or lower your prices to be more appealing to your target audience.

Have A Professional Looking Website

One of the most important aspects is to ensure that your business’ website, and other marketing outlets, to look highly professional. This will increase the perceived value of your services with consumers and visitors. A higher perception in value will allow you to charge more for your services and improve conversion rates.


There are many different best practices for your business to consider when you want to operate a subscription service. Consider the options above to ensure your organisation maximises it revenue while minimising costs and improving profits.

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The Most Profitable Subscription Businesses Online

Subscription businesses can be very profitable, if you select the right model. There are several types of highly effective versions of subscription websites. This article will look at what models are available and why they can be highly profitable.

1. Membership Subscription Website

This is a site where paying subscribers are provided with and share information on a specific (or narrow range) of topics. This style of subscription website creates a strong community of customers who are linked by a common interest. Therefore, there can be a lot of communication that takes place between members. This communication needs to be monitored by moderators and members of your staff.

To make this work you need a way to deny access to those who have not paid. You also need to have a significant amount of support and current activity to entice potential customers to subscribe.

This is one of the easiest and most profitable types of businesses as there are few costs other than maintaining the community and monitoring it for behaviour.

2. A Periodic Subscription Website

This model is very similar to that of the old magazine subscriptions. Members pay to have issues of a digital magazine or newsletter delivered regularly to their email address.

For this membership system to work, the website often has a free area where potential customers can sample articles or past issues (although never gain access to entire copies) and sign up for the service.

There doesn’t even need to be a paid members’ area; unless you are offering a HTML version of your newsletter / magazine through your website. This can save costs and lowers the requirements for your website. Although, digital magazines can be difficult to market and often businesses rely on word-of-mouth and great content to build interest.

3. Reference Subscription Website

This model offers paid subscribers access to a library of content. This content is often industry related and can offer training support, how-to guides, case studies or industry research.

The importance of this model is that new content is constantly being added. Without new content, paid subscribers will quickly use the data and then unsubscribe. They will also see little value in the services you provide and may leave negative reviews which can damage your growth opportunities.

This model can be financially effective as it costs little to create and distribute content and content can be delivered to customers over an extended period of time. It is also one of the easiest to draw attention to, as the premium content itself can be used to draw potential customers to the website.

One of the best ways to market the site is to have some free content or a blog that proves your expertise.

4. Application Subscription Website

This is one of the most common subscription models online. Many software and accounting companies use this type of business to deliver their services as it is easier and more cost effective. Essentially a customer pays for access to software that is available only from your company.

This requires a lot of technical work as you may want to offer a limited free version of your website or a trial service. However, the rewards can be high as consumers are often willing to pay a premium for access to software that can support them to achieve tasks that cannot be done without the software.

It is also very easy to promote, as there are plenty of options available to demonstrate your expertise and the use of your subscription service.


Subscription based businesses come in various forms. Your business could be community, content or application based and each one of these has its benefits and disadvantages. All you need to determine is what the best fit is for your skills and knowledge and implement it.

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7 Common Challenges With Subscription Model Businesses

Having a subscription business is one of the best to run. They offer you a significant number of advantages and are a great way for consumers to gain access to software, information or products that might usually be out of their price range.

Yet there are a numerous challenges that businesses operating under the subscription model face. Here are seven of those challenges.

1. Customer Management

Subscription businesses tend to have a significant number of users at any one time. This can be hard for the business to manage with all the customer records that are needed. An inaccurate customer management database can damage relations because mistakes are made. These mistakes can be down to staff not knowing what level of service customers have, whether they are on a trial or when their subscription period ends.

To avoid this, you need to utilise an effective customer database that can categorise where in the sales process an individual is and previous interactions they have had with your company. It should also track the current status for a customer’s membership.

2. Automatic Invoicing

With numerous customers signed up to the services of a subscription based business, manual invoicing becomes troublesome. Invoicing becomes an even bigger problem if you have customers on different payment options, subscription levels or with add-ons.

One of the best ways to solve this is to use an automatic invoicing system that can use your customer database to automatically generate and distribute your invoices. This can also be implemented when your customer purchases a subscription for the first time and for when customers cancel their subscription.

3. Secure Payments

One of the biggest challenges subscription businesses face is the security of their customers’ payments. If subscription businesses cannot offer guarantees that their payment system is secure, customers are unlikely to sign-up for membership.

4. Pricing Plan Management

Most subscription businesses have different levels of service. Dollar Shave Club for instance have three different types of subscription and some SaaS companies have many more. Different subscription levels are a great business strategy and likely to grow your business as it offers more affordability or choice to the consumer.

This can make recurring billing difficult to manage. To combat this complexity, you need to utilise an effective recurring billing software program that will manage pricing changes with ease.

5. Failed Transactions Management

With so many customers subscribed to the business, it can be difficult to notice when a failed transaction has taken place. It is an ineffective use of your time to go through the list of transactions manually to check everyone. This task is almost impossible if you have hundreds or thousands of customers.

Therefore, businesses need a way to automatically highlight when transactions have not been processed and to inform customers of failure. From there, the payment system can automatically resolve the issue by finding a solution for payment to be made or to cut off the customer so they don’t get access to the products / services until the payment has been made.

6. Discounts And Promotions Management

To grow, subscription businesses may require special promotions and discounts to entice target audiences to sign-up. This can be tough to manage manually and would require significant work that can make implementation financially ineffective. By using an effective subscription billing model, businesses can track the number of discounts redeemed and the effectiveness of the marketing efforts as well as seamlessly manage the billing.

7. Multi-Currency and Language Support

While some subscription businesses only offer their products to customers in one country, those offering subscription or content services can often be global. This can cause numerous problems with billing customers, whose charges may fluctuate with exchange rates or can’t read the bill because of language problems.

A good subscription billing system should be able to manage the invoicing no matter what country the customer is located.


There are numerous challenges that subscription businesses face while setting up their services and maintaining their customer relations. One of the only ways that businesses can overcome this is by using an effective recurring payment system that can address these issues.

Do you need recurring billing and subscription management software? Contact one of our experts at, call or check out the Fusebill free trial.

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5 Reasons To Shift To A Subscription Model

The subscription model is one of the best options for your business. It offers you and your main target audience significant benefits while also being easy to set-up, establish, maintain and even exit if that is your long term goal.

Here are some of the main reasons why you will want to move your business to a subscription business.

1. You’ll Be Better At Planning Your Resource Allocation

Because you’ll know exactly how many subscribers and how much they will be paying each month, you’ll be better placed to know what your revenue will be. This will allow you to better judge what resources you’ll need to purchase and deploy to deliver services. This can be a vital component to your business’ success because it will reduce waste while improving resource efficiency.

With better predictions on your monthly requirements you’ll be able to reduce your outgoings and generate more profit from every customer. Eventually, this will mean your business can survive with fewer customers.

2. It Be Easier To Attract Your Potential Customers

Those businesses that aren’t using a subscription model suffer from one major problem: customer attraction. The major issue with their attraction is the amount of funds needed by the consumer prior to purchasing their product. However, most subscription businesses remove this barrier from the consumer by offering a lower more regular charge, which is much more affordable. Therefore, the number of potential customers that are available suddenly increases.

3. It Increases The Lifetime Value Of Customers

With a one off payment model, the lifetime value of the customer is the amount that the customer spends on that one transaction buying your product. With a subscription model, the value is the total amount they spend on subscriptions while they are with your business. Because subscribers are often with businesses for a long time and if you price your subscription right, then you can often find that your business can achieve more revenue from each customer.

To ensure this is occurring, consider how long your customers will remain with your business using the normal distribution. Then find the point where 25% of your customers leave your subscription business and spread the costs over this time. So for instance, if you have a product at $120 and you have 25% of your customer leave after 6 months, price your product at $20 per month. If your customers stay with your business on average 9 months, the lifetime value of them would have increase by $60.

4. It Is Easier To Retain Customers

To is naturally easier to retain customers within a subscription business. While there is the freedom to leave suppliers at any time, it can take a significant amount of work for the consumer and often they are more willing to put up with the higher charges than to cancel their subscription. Also because you know how much you are earning each period prior to its start and are allocating your resources more efficiently, you can assign more time to customer service. This will improve your customer’s experiences and their retention rates.

5. It Gives You A Platform To Sell More Add-ons

Selling to current or past customers is much easier than selling to new customers. Therefore, you can earn more money with a database of your customers by selling additional products that compliment your main product. For example, Dollar Shave Club sell creams and shaving foam to their customers who subscribe for the monthly shavers. This gives them higher revenues without the need for intense marketing.


Moving to a subscription model is highly beneficial for many businesses and yours could benefit from a significant increase in retention, profits and attraction by offering customers an easy to purchase subscription of your product.

Do you need recurring billing and subscription management software? Contact one of our experts at, call or check out the Fusebill free trial.

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Getting Your Customers To Understand The Convenience Of Subscriptions

Subscription businesses are a great model because they offer businesses a significant amount of benefits while also providing a high degree of customer satisfaction and affordability to customers. There is a problem however; many customers do not see the benefits of a subscription business and this can hold them back from joining your business.

The biggest benefit of course to customers is convenience, and customers respond well to businesses that offer this. Therefore, to attract more of your target audience to convert to subscribers, you need to make them understand the convenience of your subscription.

This can be more difficult than selling the benefits of your service, which might be obvious. So here are a few points you can highlight to your potential customers on why a subscription is beneficial.

1. Customers Know When The Payment Is Due / Being Processed

All your subscribers are likely to have a set date in which they pay for their subscription. This date is set each month and does not change. This is one of the most convenient aspects of a subscription service because it allows customers to plan their finances better and ensure they have enough money in their accounts when it is needed.

Another benefit gained from this convenience is that customers need not worry when they are going to receive their bill and panic when it arrives. By knowing well in advance when payments will be due, customers are more relaxed and have a happier customer experience.

2. Customer Know How Much Each Payment Is Going To Be

As your subscription payments are all going to be the same, unless they purchase one time add-ons, then the customer is always going to know what the price is going to be for the products they have bought.

This can be a great convenience as it further supports their financial planning and again stops the panic when the bill comes in. Also, because the payments are regular, there isn’t any negativity when the bill comes. Customers will often try to reduce bills if they are issued periodically and are not set, partly because they want a good deal, but also because they are often surprised about the amount being charged.

Therefore, you can save yourself time and improve opinion of your business by highlighting the set price charged per month.

3. It Saves Time

Receiving and paying an invoice periodically, uses up the customers’ spare time and if it is a business client, they are likely to want to spend more time being productive than completing administrative tasks that are unnecessary.

The same can be said with customers. Most people today live a very busy life and it is important that you highlight to them that an automatic payment for a subscription service will save them time.

4. It Costs Less

Most subscription businesses offer reduced rates for those customers that pay a subscription automatically. This is because it costs less to process these payments and therefore, the business can afford to take a small cut to entice customers.

You need to highlight this to your customers who are likely looking for a good deal and will probably assume you are still charging them for payment processing costs.


Your customers might not understand the convenience of a subscription based service. Therefore, you need to explain to them how it can save them time, stress and money while being good value for money and excellent service. Use the above four points to help you create strong arguments why your business’ subscription service is good for your customers and see the number of subscribers increase.

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4 Innovative Subscription Business Models

There are many different business models available for entrepreneurs who want to earn money by selling a service or product. The subscription business model is one of those models. Most subscription business models work by the business taking a regular payment from the customer and then giving them access to resources or a computer program for a set period of time.

However, these aren’t the only subscription business models that are available. There are numerous other subscription models that entrepreneurs can use to deliver their services and products. Here are four of the most innovative subscriptions available and what makes them unique.

Personal Styling

Today everyone leads busy lives and time for shopping and self-styling is getting harder to find. For some this can be an excuse for not going shopping too often and this is why the personal stylist has gone online.

Stitch Fix combines e-commerce with the in-store experience of retail shopping and personal styling. They send the customer five items they’ve handpicked for them based on their answers to a lifestyle and fashion questionnaire at the beginning of the subscription.

The customer can then try on the clothes sent and keep only what fits and what they like. Feedback is also passed back to the stylist, so the next box can be tailored to be more in tune with what the customer likes.

Shaving Gear

One of the most popular and recognised subscription services, which is slightly unorthodox, is the Dollar Shave Club. The service promises to deliver blades to the customer’s door for just one dollar a month. There are other options available; but, the service is pretty much the same.

In addition to the blades, each customer gets a free handle and has the option to purchase add-ons such as shaving cream and moisturiser.

The brand entered the market with an incredible advert that broke with tradition and went viral online. Since then, the subscription service has gone from strength to strength and has started new lines and improved customer options.

Kids’ Toys

Box of OMG is probably one of the more unusual subscriptions services available online. Not only do customers not have to pay a subscription to receive anything, but their contents are not guaranteed.

The service works like this: a customer subscribes to the site via email or a social media account and every quarter, the company sends out a limited number of boxes randomly to those on the list (you aren’t guaranteed a box each quarter). Subscribers can increase the chance that they will receive a box by signing up friends, advertising the brand on social media and competing in other activities on the site.

The boxes are full of toys, comics, snacks and other items to keep your children happy.

Travel Clubs

Netjets is probably the most unique business models on this list. For a hefty subscription fee, customers can choose how many hours they wish to fly per month and then reserve that time as a share of the private fleet maintained by the company.

This can be an effective way to reduce travel costs for businesses that travel regularly. The same can be said for public figures.

There are also similar options for cars.


There are a number of options for those looking to start a subscription business. The only barriers to entry are legality and your imagination. Consider how you can convert your business into a subscription business or what new business you would like to start. As recent years have shown, there is a growing demand by customers for this model.

Do you need recurring billing and subscription management software? Contact one of our experts at, call or check out the Fusebill free trial.

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The Future Of Subscription Model Businesses

What is the future for the subscription business model? Are subscription businesses going to grow or are customers going to avoid them? This article is going to look into the current trends and see what is likely to happen to the business model in the future.

The Current Status Of The Subscription Business Model?

In recent years there have been a number of traditional businesses that have moved from the old pay-per-use model to the subscription model. One of the best examples is Adobe, who has moved away from customers purchasing their software outright to a monthly payment scheme. Another example is the film rental company Netflix who offer customers unlimited rentals as long as they are subscribed to their service.

There are many advantages for these businesses. Firstly they can offer their products to a larger market as a small monthly fee is more manageable than a one off payment. Also, a monthly payment becomes less of a purchasing block in the customer’s decision making process increasing conversions and customer retention. Therefore, businesses can gain more value from their customers than they would do with a one off payment.

Another advantage is that a subscription business has more revenue stability; so businesses can accurately project their incoming revenue and determine what they can afford and what they can’t.

Customer’s View Of Subscriptions

Customers are continuously looking to improve their wealth and access to more luxurious goods while paying less for them and having fewer purchasing decisions. Subscription businesses are continually giving them these benefits. For example; Dollar Shave Club costs just $1 per month for a shaver and there is little decision making for the customer.

Likewise with online film subscriptions, the decisions for the customers are made easier. By having access to an entire library, customers are able to switch what they are watching if they are not satisfied with their choice. With the old pay-per-use model, the customer would be stuck with a bad decision and this would reflect negatively on their customer experience.

How Can The Subscription Model Grow

The movie rental experience can be replicated across many different industries. For example, if you sell food you could automatically package food for your customers and deliver it straight to their door. Customers can even give their preferences on what they prefer to eat so you can tailor each box.

This model could have several benefits for a grocer. Firstly, because demand is known beforehand, there is less product wastage. Secondly, products could be provided that are in season and therefore costs can be lowered. Thirdly, there is no need for large stores to display items – a website would be sufficient. This would again reduce running costs, giving the business greater profits.

The grocery market in the UK is already moving in this direction with some of their biggest grocers providing guaranteed weekly delivery slots that don’t need to be booked every week. The shopping list can even be put on repeat only to be changed slightly each week by the customer. Other food sellers do everything for the customer from choosing the food and delivering on a set day.

So What Does This Mean For The Future of Subscription?

The continuing growth of the subscription business model shows that there is a demand from customers for services that can be paid for on a monthly basis. Businesses are also showing that the model can work and grow the business’ profit, customer acquisition and retention.

The model is also applicable to a number of different industries from pet supplies to software applications. The only limit is the imagination of business owners. Therefore, the future is bright for subscription businesses and will continue to be so in 2015.

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