Subscription Business Models: What Are the Pros and Cons?

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Introducing a subscription product to your customers can come with advantages and disadvantages. So, before you set out doing this, be sure to weigh up the pros and cons to avoid falling victim to vulnerabilities.

In our latest blog, the FastPay team takes a closer look at what a subscription business model looks like.

What is a Subscription Business Model?

A subscription-based business model involves charging customers a recurring fee to access a product, rather than a one-time expense. Typically, this fee is paid on a monthly or yearly basis, and customers are usually given the option to choose the frequency at which they make their payments.

The Advantages of a Subscription Business Model

When it comes to the positives surrounding subscription business models, there’s quite a lot.

Steady and predictable income

When customers tie into subscription models, your business will be able to improve cash-flow and ultimately better forecast budgets.

Improved customer relationships

One-time sales don’t tend to do much for building a strong relationship with a customer, as they don’t engage long enough with your business and the services on offer. However, a subscription-based business model relies on repeated sales, therefore customers are interacting with your brand for longer and can even provide insightful feedback.

Operating in a consistent market

Seasonal and fluctuating market conditions can understandably cause businesses anxiety. But, with a subscription product, especially annual ones, the nature of the business model protects the product from the volatility others are perhaps experiencing or vulnerable to.

Laser focus on customer procurement

Thanks to a subscription business model, your business can better focus on customer procurement as you’re typically selling a single product. In turn, you can increase your marketing efforts and better target specific customer demographics.


The Disadvantages of Subscription Business Models

When making any new move with your business, comparing the pros and cons is vital, so it’s more than worth weighing up how the disadvantages could impact your business.

Keeping the product fresh

With subscription models, you’re going to have to consistently appeal to your customer base and meet their expectations. So, keeping your product offering desirable is key, but, this can be tricky if your original subscription model product is pretty simplistic.

High churn risk

We’ve already noted that a subscription-based business model can provide a steady and predictable income, but it does also run the risk of high churn due to subscription cancellations. However, you can try and combat this by maintaining strong customer relations and innovating your product to keep up with evolving consumer demands.

Trend fades

If your subscription model is based on current trends, e.g., a new way of dieting – you’ll need to map out a strategy that is ready for if and when this trend starts to phase out. Depending on your industry, it’s possible that you’ll be able to cater your business to move along with trends as they come and go, but this will require staying one step ahead of the curve all the way.

Customer contract aversion

Fundamentally, and unfortunately one of the major pitfalls of a subscription-based business model is the consumer’s natural aversion to being tied into a contract. This is often because people are unsure whether they’ll still require your product or service further down the line. But, if you get the marketing of your product right, you’ll be on the way to positively demonstrating the true value of the product or service.

Reliable Payment Collections from FastPay

If you’ve decided to go-ahead with a subscription-based business model, the FastPay team can help. Our experts regularly support businesses with regular payment collections, ranging from sector to sector, day after day.


For more information, contact our friendly team online or call us on 0161 737 5290.

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