Over the past ten years or so, the subscription-based business model has taken off. Prior to this major shift in how people consume items and information, people would pay one hefty up-front cost for items. The only major notable exception, of course, was the print media world of newspapers, magazines, and catalogues.
However, as e-commerce picked up and consumers wanted convenience, reliability, and flexibility, subscription-based business plans have boomed and taken over much of what once belonged to brick-and-mortar commerce. From meal kits to razors to music streaming to entire wardrobes, subscriptions have taken off as the natural physical extension of an increasingly online and mobile shopping experience.
Users report that they appreciate the ability to customize their experiences in subscription services based on their specific preferences, but also the flexibility to increase or reduce the size of their service depending on their financial situation or fluctuations in their lifestyles and habits. Makeup and fashion subscriptions, for example, offer various tiers of service based on your style and budget. Book subscriptions allow users to choose how many books they want and adjust the price accordingly.
As flashy and catchy as the industry is, it’s also volatile and vulnerable to the stock market and to swells and lulls in disposable income. Subscription services are easy to start and difficult to maintain if novelty wears off, and with this business model, customer retention is the name of the game.
Harvard Business Review did a case study on Blue Apron, once the giant of meal kit services that has now fallen on hard times. Using a bottom-up model, the reviewers realized that Blue Apron was on a treadmill of consumers — that is, they lost customers at nearly the same rate that they gained them, and as such, any relaxing on their aggressive advertising and marketing fronts would result in a potentially fatal decline of customers. And decline did their subscribers ever — as soon as the company went public, their stock plummeted as well.
Still, though, the subscription model is looking attractive to some more traditional businesses such as graphic design. The flexibility and customizability that a subscription offers compared against the rigidity of a contract is not only good for customers but also benefits the seller by making it more attractive for customers to stay on their plan. One Entrepreneur writer cited his own UX company and how the subscription model proved invaluable. On this model, clients were able to reduce their payments on website buildout or app creation when other things in their business demanded more attention and money, and they didn’t have to put their whole project on hold — they could simply hop down a tier on their subscription.
Time will tell whether the subscription model will be a sustainable one, but for now, they need a little tweaking for long-term sustainable success.