The subscribe business model is a business model in which a customer has to pay a subscription price to have access to a product or service. This model was pioneered by magazines and newspapers, but is now used by many businesses and websites.
Video Subscription business model
Subscriptions
Instead of selling products individually, the subscriber sells a product or product on a regular basis (monthly or yearly or seasonally) or product, or, in the case of a nonprofit organization such as an opera company or symphony orchestra, sells tickets to all runs of sets (for example, five to five 12) performances scheduled for the entire season. Thus, a one-time product sale can be a recurring sale and can build brand loyalty. This is used for anything where the user is tracked in a subscription state and unsubscribes.
The cost of membership for certain types of organizations, such as unions, is also known as a subscription. Industries using this model include postal book sales clubs and music sales clubs, cable television, satellite television providers with pay-TV channels, satellite radio, phone companies, mobile phone companies, internet providers, software providers, websites (for example, sites web blogging), business solution providers, financial services companies, fitness clubs, lawn mowing and snow services, and pharmaceuticals, as well as traditional newspapers, magazines, and academic journals.
Renewal of subscriptions can be made periodically and activated automatically, so a new period fee is automatically paid by the pre-authorization fee to a credit card or checking account. A common model on the website, colloquially known as the freemium model, is to provide a single content tier for free, but limit access to premium features (for example, archives) to paid subscribers.
Type
There are different categories of subscriptions:
- Subscribe to a fixed set of goods or services, such as one copy of each newspaper or magazine issue for a specified period of time. Subtypes are:
- Paid circulation
- Circulation without payment
- Controlled circulation
- Subscriptions for unlimited use of services or service sets. Use may be private and non-transferable, for families, or in certain circumstances, for groups that use the service at one time.
- Your pay-as-you-go subscription where you subscribe to purchase products on a regular basis. It's also known as a convenience model because it's convenience for customers to not have to remember to look for their products and buy them periodically. This model has been popularized by companies such as Dollar Shave Club, Birchbox, and OrderGroove. Based on their success, many other retailers have begun offering subscription modeling services.
- For example, subscribing to a company's railroad may not be individual, but may permit all employees of that company to use the service. For goods with unlimited inventory and for many luxury services, this type of subscription is rare.
- Subscriptions for basic access or minimum service plus some additional fees depending on usage. The basic phone service pays a predetermined fee for monthly usage, but may incur additional charges for additional services such as long distance calls, directory services, and pay-per-call services. When basic services are offered for free, this business model is often referred to as freemium.
Maps Subscription business model
Effects
Vendor
Businesses benefit because they guarantee a predictable and constant stream of income from individuals who subscribe for the duration of the customer agreement. Not only does this greatly reduce the uncertainty and riskiness of the company, but it often provides prepayment (as is the case with magazines, concert tickets), while allowing customers to become heavily bound to use the service and, therefore, more likely to expand signing agreements for the next period is close when the current agreement expires. source from Johnson Cornel, university TUIR.
In an integrated software solution, for example, a subscription pricing structure is designed so that revenue streams from recurring subscriptions are much greater than revenue from a simple one-off purchase. In some subscription schemes (such as magazines), it also increases sales, by not giving customers the option to accept or reject certain issues. It reduces customer acquisition costs, and enables personal marketing or database marketing. However, the system requirement is that the business must have an accurate, reliable, and timely way to manage and track subscriptions.
From a marketing-analyst perspective, it has the added benefit that the vendor knows the number of active members, since the subscription usually involves a contract agreement. This 'contract' arrangement facilitates customer relationship management to a great extent because analysts know who the current and recent customers are.
Additional benefits include average average customer lifespan (ACLV) higher than non-recurring business models, greater customer inertia, and a more committed customer base because of the transition from purchasing to decision to opt-out, and more potential for upselling and cross selling of other products or services.
Some software companies such as Adobe and Autodesk have moved from the perpetual license model to the subscription model. This step has significant implications for sales and customer support organizations. Over time, the need to close large transactions will lower the cost of lower sales. But the size of the customer support organization is increasing so paying customers are happy.
Customer
Consumers can find a convenient subscription if they believe they will buy the product regularly and that they can save money. For repeated delivery of products or services, the customer also saves time.
Existing subscriptions to support clubs and organizations call their customers "members" and they are granted access to groups with similar interests. An example might be the Computer Science Book Club.
Subscription pricing can facilitate the payment of expensive items, as they can often be paid for a certain period of time and thus make the product look more affordable. On the other hand, most newspaper and magazine subscriptions are paid in advance, and this may actually prevent some customers from registering.
Unlimited subscription usage for fixed-price services can be an advantage for consumers who frequently use the service. However, it can be a disadvantage for customers who plan to use these services often, but will not. Commitment to pay for a package may be more expensive than a single purchase. In addition, subscription models increase the likelihood of key vendors, which can be very fatal to the customer if the business depends on the availability of the software: For example, without an online connection to the license server to verify the license status every once in a while, the software under the subscription model usually stops functioning or fall back to the freemium version function, so it is not possible (to continue) using software in remote places or in a very secure environment without internet access, once the vendor stops supporting the version or software, or even has left the business leaving the customer without the opportunity to update subscriptions and access their own managed data or designs with the software (in some businesses it is important to have full access even to the old files for decades). Also, consumers may find repeat payments to incriminate.
Subscription models often require or allow businesses to gather large amounts of information from customers (such as magazine mailing lists) and this raises privacy concerns.
The subscription model may be useful to software buyers if it forces suppliers to improve their products. Thus, a psychological phenomenon can occur when a customer renews a subscription, which may not happen during a single transaction: if the buyer is not satisfied with the service, he can easily leave the subscription expired and find another seller.
This is in contrast to many one-time transactions, when customers are forced to make significant commitments through high software prices. Some people feel that historically, the "one-time" purchase model does not give sellers an incentive to maintain relationships with their customers (however, why should they care after they receive their money?). Some who like the subscription model for the software do it because it can change this situation.
The subscription model must align customers and vendors toward common goals, as both will be profitable if the customer accepts the value of the subscription. Customers who receive more value may renew their subscriptions and possibly with increased rates. Customers who do not receive value will, in theory, return to the market.
Legal
Customers who are placed in jail or jail may be billed continuously for a subscription service that can make them without funds at the time of release.
Environment
Because customers may not need or want all goods accepted, this can cause waste and adverse effects on the environment, depending on the product. Larger production volumes, greater energy and natural resource consumption, and then greater disposal costs occur.
Subscription models can also create the opposite effect. This can be illustrated by subscribing services for mowing lawns. The effective use of a single cutting machine increases when cutting for home collection, instead of each family of their own lawn mower owners who are not used as much as services that provide a mower, the use of resources to produce lawnmowers is therefore reduced while the grass remains cut.
See also
- List of accounting topics
- List of economic topics
- List of financial topics
- List of marketing topics
References
Cat
Source of the article : Wikipedia
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