Understanding the Subscription Business Model

Subscription business require the user to make recurring weekly, monthly, or yearly payments to receive products or services. You are probably very aware of these businesses since they are in every industry. There are subscriptions for food services, gym memberships, entertainment such as music, movies, gaming, etc.

People sign up for subscription business for all reasons. Some of these reasons include not hearing ads when listening to music or having an unlimited library of movies right on their devices.

Subscription-based businesses also bring revenue each time recurring payments are due so that companies can rely on that security.

Let's look at two subscription-based companies to understand them a little better.

Spotify

Spotify is a music subscription mobile and browser app that contains an unlimited library of songs to choose from. Their product allows users to listen to music conveniently on their devices and create playlists specialized to their tastes. Users that want to skip those ads will make monthly payments based on their subscription plan to have that convenience.

Others who do not wish to pay for a subscription will listen to ads every few songs to generate revenue. This makes Spotify unique since users can test their product for free while not losing out on profit.

Netflix

Netflix is another subscription business service that provides users with a library of shows and movies to watch. There are various subscription plans to choose from, such as

• Basic $9.99
• Standard $15.49
• Premium $19.99

The different prices allow for additional benefits such as more screens you can watch simultaneously, HD video, and ultra HD video.

Users see the benefits of using streaming services like Netflix since they do not have to pay for each movie they watch or to go to the movie theater. This way, they are saving lots of money each month by using Netflix.