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The Subscription Economy: Building Recurring Revenue Streams for Your Business



The subscription businesses - Customer Retention . Xemoto Media - Influencer Marketing
Subscription economy - Influencer marketing

The subscription businesses weren't very popular in the past. However, in the last decade, these recurring revenue streams flourished extensively. According to the Subscription Economy Index 2021, the subscription economy had a massive growth of over 435% in the past nine years. There are tons of mutual advantages behind this massive surge.


If you haven't already incorporated this subscription aspect into your business, now's a good time! This blog will help you comprehend everything about building a recurring profit stream for your business. 


What Is A Subscription Business?


A subscription business charges recurring fees from its users at regular intervals. In return, the users are given access to the specific product or service for the designated time. This business revenue model brings multiple advantages for customers and business owners. 

You can well estimate its worth from the research, which says that all new software service providers and about 80% of historical vendors offer subscription-based business models. 


How Does It Differ From Traditional Business Economy


A subscription business isn't the same as a traditional company that is offering one-off purchases. With the subscription economy, you turn your customers into subscribers that add up to your monthly or yearly revenue. Let's discuss some primary differences between them:


Customer Retention


Regular businesses do not have to worry about customer retention at most. Customers buy their product once or twice, and that's it. But that's not the case with the subscription business. As their revenue is based on recurring payments, subscriber retention is the most vital aspect of their business plan. 


More Revenue


The subscription revenue model is a powerful plan that generates massive profits. According to a recent study, a repeat customer spends approximately 67% more than a new one. Moreover, the gross revenue compounds over time and with each new subscriber. But that's possible only if the rate of acquiring new users stays higher than the lost subscribers each month. 


Innovative Subscription Model Pricing: A Simpler Guide


The subscription business model shines with its adaptable pricing options. It's different from one-time sales because it can be customized to meet various customer needs. Let's explore some common pricing strategies:


  • Simple and Varied Tiers: Offer subscriptions at different levels, each with unique features. For instance, a basic plan might be affordable with essential elements, while higher-priced plans offer more perks. This method serves a wide range of customers and lets them pick what suits their budget and requirements.

  • Freemium Plans: Attract customers with a 'freemium' model. Provide an essential service for free and reserve advanced features for a paid subscription. This is especially popular in software, allowing users to test the service before buying.

  • Pay-As-You-Go: Charge customers based on their usage. Ideal for services with varying customer demands, like cloud storage. Customers pay only for what they use, making it a fair and transparent system.


Challenges in Subscriptions


While subscriptions have many benefits, they also pose cash flow challenges. Here are some issues and how to solve them:


Streamlined Payments: Use automated systems for consistent cash flow and less hassle in collecting payments.


Sync with Accounting Tools: Connect your subscription system with accounting software for better financial management. You can also try email marketing automation tools for real-time insights.


Reducing Customer Turnover: High churn rates can hurt revenue. Keep an eye on these rates and understand why customers leave. Strategies like personalized interaction, regular feedback, and improving services can help keep customers around.



Undoubtedly, subscription business transition is the perfect way to boost the revenue of your regular business. The above-discussed data is excellent to help you on the go. 

If you are ready to unlock more insights and elevate your business strategy, join our community at Xemoto Media. Subscribe for the latest updates and expert tips on subscription-based business models.

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