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What is a subscription model?

You text a friend to tell them when you’re available for lunch today. You browse some financial news behind the firewall at Bloomberg.com. You head to the gym over lunch – it’s an upper body day. Later when you get home, a box from Stitch Fix is waiting on the front porch. After dinner, you catch up with the latest episodes of that show about dragons/midwives/spies or whatever you’re watching on Netflix these days, as the kids hang out on Insta and Snapchat and your spouse rewatches a movie on Amazon Prime.

The subscription model is all around us. We participate in multiple ways every day. What if you could use a subscription model in your business to smooth out your revenue with more predictable cash flow? What if, in doing so, you developed more loyal fans who appreciated the predictability of regular payments for access to the services they love? Your business may be in a great position to offer some kind of subscription model. Would that predictability and growth potential make a difference in your work?

That is the power of the subscription model. And, as you experience in your daily life, there are at least 9 types of subscription models. Let’s take a closer look at each, and consider which of these might fit for the products and services you offer.

  1. The Network Model – The network model is as common as Facebook, WhatsApp, and multi-user video games. The value of the network model goes up the more participants there are in that network.
  2. The Surprise Box Model – We’ve come a long way from the Fruit of the Month club. Now you can get a surprise box of clothing, clothing accessories, any beverage you can imagine, and pet care delivered right to your doorstep. You get the picture – a clearly defined and passionate group of customers interested in a particular category of goods.
  3. The All You Can Eat Library Model – This works great for educational or entertainment content. This can be as broad as Netflix, which seems to literally offer everything, and as niche as CuriosityStream, a service dedicated to presenting the best and brightest science documentaries out there.
  4. The Private Club Model – Exclusivity is the draw here. If you have something in limited supply that people are willing to pay a premium for, the private club model is something to consider. It might be a literal club, like a country club, yacht club or the like. It also might be an association of similar business owners.
  5. The Front-of-the-Line Model – When premium pricing gives you quicker access to problem-solving or greater resources, this is the front-of-the-line model at work. For instance, Salesforce offers memberships to all for a certain monthly fee, but a premium membership gets you faster access to support for mission-critical issues.
  6. The Membership Website Model – This one has lots of potential for niche markets who are looking for ongoing education about an area of interest. This can be in-depth industry news or education. Bloomberg offers premium access to business news behind a paywall. MarketingProfs offers access to training and education and reduced pricing for online and in-person conferences for people in that line of work.
  7. The Simplifier Model – These days, it seems that anything can be provided with the modifier, “as a Service”. That’s because providing specific areas of expertise as a service means simplifying the lives of other people. This is a big deal in the B2B market, where you can subscribe to get IT, AV, and any technical expertise you can imagine as a service for an agreed-upon price per month. This model is making inroads in B2C as well. A great example is Hassle Free Homes, where for a monthly fee, all your to-do list projects can be handled, from changing HVAC filters to replacing shower/tub caulk. Sounds like heaven to me!
  8. The Consumables Model – Nobody says, “Woo-hoo! Time to buy more toner cartridges!” That’s why subscriptions for consumables like printer ink, diapers, and razor blades are popular. Niche players like Dollar Shave Club, along with major players like Walmart and Amazon are offering services to replenish these and similar items you need regularly, but are not necessarily fun to shop for. If you are like Dollar Shave Club, you can make the subscription experience exponentially more fun than going out and shopping yourself through a cleverly-written newsletter.
  9. The Peace of Mind Model – Similar to the simplifier, peace of mind allows users to pay for a service and not worry about it. Lifelock is a prime example of this, where you pay for the company to stay ahead of threats to identity theft.

For a deeper dive into these 9 models, take a look at this white paper drawn from John Warillow’s work. And for an even deeper dive, check out Warillow’s book, The Automatic Customer.