6 Subscription-Based Business Models Gaining Traction In 2014

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Many businesses are now turning to the subscription-based business model to gain regular income from their customers. Everything from online magazines to cosmetics, are being sold by such a model and therefore you need to consider whether or not your business could implement one today.

A subscription-based business has several benefits which include:

  • A positive cash-flow: consumers pay up-front to receive their goods. Therefore you aren’t chasing invoices.
  • Higher profit margins: a subscription-based business can really cut down on some of the front end sale costs which are associated with a one-off sale.
  • Reliable income: most businesses which run a subscription-based business can predict what they are going to receive within 3% each month.
  • Effective planning: with a regular and stable consumer base you can plan more effectively on your costs such as personnel and supplies, nearly eliminating waste.

Could you have a subscription-based model in your business? Here are six models which are gaining traction in 2014:

1. Application

An application subscription-based service is unique and one which is available through applications on mobile devices such as Smartphones or through a website. The consumer pays up front for the use of the application which they can store information on, perform calculations and / or search for information on. An example of this model would be Hoover.com.

There is often no content, other than marketing, available to non-subscribers. Although sometimes a stripped down or reduced application is available for free users.

2. Reference

A reference subscription-based service is often confused as being a magazine, but yet it is not exactly that. A reference website is essentially the online version and replacement for the printed reference books which would be found in many libraries. New content is regularly placed upon the website for the consumer to access.

Consumer Reports is an excellent example of this business model. Although some content is free, you need to pay to gain access to the majority of the content over the website.

3. Membership

A membership website is a simple business model where a consumer buys a subscription to have access to certain features. Sometimes there is a free membership on offer which gives reduced services, some do not offer this. These are great if you have information and content to regularly give to your consumers and tools which can really help them.

Job sites and social media management websites are very common with this type of subscription-based service.

4. Newsletter / Magazine Subscription

A consumer who subscribes to a newsletter or magazine subscription will expect to receive a regular digital period which will provide excellent information. There are subscriptions for all sorts of magazines ranging from common hobbies to business magazines.

The content within this subscription has to have real value to the reader. There is often a free area which concentrates on the benefits of being a subscriber and subscribers are often offered additional exclusive content.

The newsletter is different from the reference as the copy is sent to the subscriber rather than being only on the website. Another factor is that reference sites are continuously being updated whereas newsletters are updated once in a specific period.

5. Community Subscription-Based

A community subscription-based model is one where subscribers pay for the ability to be part of a network or community of similarly minded people, e.g. personal relationships, hobbies or business networking. Social media is a basic example of this, although many of them are free.

Users on these sites can often upload and share a variety of content and communicate with each other in a number of ways.

6. Portal Subscription

A portal subscription is unique on this list. Portals are designed to build an audience with content from third party sources. They then collect information which can be used in SEO, email marketing, list building and lead generation.

Because of this, this style of subscription is financially free but instead costs time and information on the behalf of the consumer. The information is then used to sell the services or products of the provider to the consumer. The information can also be sold to third party sponsors for their own marketing activities.

Conclusion

There are a number of subscription-based models which you can take advantage of. Each one is unique and has its own benefits and drawbacks. Choosing the right one can give you a steady income and provide your business with financial security.

If you have any questions about subscription based business models, Fusebill or other items please contact us or leave your comments below.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Tags: Subscription Billing

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