What Are The Main Benefits Of Using A Subscription Billing Model?

The internet has brought us so many things: cat memes, calamitous toxicity, and a swathe of fresh abbreviations, to name just a few notable additions. But it hasn’t just influenced culture. It’s also changed how people live, making remote working a mainstream option and granting us all-new options for making money. A budding entrepreneur today has a whole world of choices at their fingertips, and relatively few barriers blocking their progress.

This has naturally extended to the traditional realm of providing goods and/or services. Of all the models that have grown in popularity, it’s the subscription model that’s seen the most use in recent years. Countless companies now operate through subscription-based billing instead of offering items or pieces of software in isolation.

But why is this? What makes using the subscription model so advantageous? In this post, we’re going to run through the core strengths of this approach to billing, setting out some good reasons for you to give it a shot. If you already run a business, you should think about how it could work for you — and if you don’t, why not start one? Enough preamble: let’s begin.

It offers superb financial stability

Conventional ecommerce can be frustratingly inconsistent. You can do great business one month, raking in purchases and hitting record profitability, then hit a slump the following month and struggle greatly to attract visitors, let alone buyers. This makes planning and general admin hellishly difficult to manage. If you want to plot a course for your next year (even with a service like PlanGuru), you need a solid idea of your financial resources — and that requires stability.

Now, while it’s true that subscribers do leave on occasion, the rate at which they opt to exit corresponds with the overall quality of the service they’re given, which means your fate is in your hands. This isn’t exactly true with typical retail, where you can dazzle someone with the quality of your products and/or services, earn their loyalty, yet receive no business from them for years simply because they don’t need anything more from you.

Cancelling subscriptions is a hassle. If you can keep your service at a solid level, most of your customers will keep their accounts going indefinitely, giving you a firm financial foundation upon which you can expand your operation. So if you find the broad variability of business to be a key source of irritation, the subscription model might well suit you.

It needs little time for price tweaking

Keeping on top of a vast product inventory takes time and effort. Given the inevitable presence of various competitors, the cost of each item must be periodically reviewed to ensure that it doesn’t stray too far from the norm. You don’t want to be charging more than people are willing to pay, but you also don’t want to be charging less and ruining your profit margins.

There are ways to speed up this process, but they only go so far. That’s where the subscription billing model enters the picture. Through the simple process of restricting your wares to a modest selection of subscription tiers (or even just one subscription tier), you can greatly simplify matters and free up a lot of time to spend on other things.

This isn’t to say that pricing isn’t important for subscription businesses, though, because it certainly is. Even minor tweaks to fees and/or billing types can prove hugely consequential. Given that subscription management software à la Chargebee makes it trivial to test new pricing models, though, there’s little to stop you from maintaining a hands-off approach most of the time without risking your pricing falling out of contention.

It enables the potent free-trial tactic

When you sell individual products, you only have the option of providing samples, whether you’re sending full items to influencers or offering limited samples to prospective buyers in the hope they’ll want more. This leaves the golden free-trial tactic on the table. In the subscription world, you can easily use the first-month-free move to great effect. The potential customer can try the full service, and if they don’t like it then they can cancel before they’re charged.

Though some people will abuse free trials, most don’t. Once you’ve gone to the effort of signing up, it’s easiest to just let the subscription run. After all, monthly charges don’t feel so onerous, so there’s little compulsion to save money. On the whole, this may be the biggest reason to use the subscription model. Everything falls upon the sign-up process (once you’ve signed someone up, they’ll likely stick around), and being able to offer free trials lets your service speak for itself.

Should you use the subscription billing model, then? Well, it might not fit your business, so it really depends on what you offer — but if there’s a way to package your products and/or services into subscription tiers, and there’s a consistent market for your goods, then there’s every reason to at least give it a shot. It might be just what you need.