Online Subscription Business Model 101

When it comes to the success of a business, it’s important that owners familiarize themselves with each of the different models. These can help to determine whether or not a certain model might be beneficial to a company. 

Online subscription sales have increased exponentially in recent years. From beer subscription boxes, to streaming services such as Netflix, this sales format has increased by 435 percent in the last decade. 

Online Subscription Business Model 101

Many businesses might flourish from this kind of selling strategy, and therefore, owners should familiarize themselves with all of the different ins and outs. 

To find out more about online subscription business models, keep reading, as we take a closer look below. 

What Is The Subscription Economy? 

Subscription economy refers to the ‘relationship’ that exists between the seller and the customer. The growth of a business is dependent on the contract that exists between the seller and customer.

Whenever a customer signs up for a subscription, they are essentially entering into an agreement whereby they pay money on a recurring basis. 

The Different Types Of Subscriptions

There are several different types of subscription businesses, or businesses that also offer subscription services. Below, we take a look at some of these. 

  • News – These could either be newspapers or magazines that the subscriber has opted to receive on a weekly, monthly or daily basis. Most magazines are distributed every month to the consumer. 
  • Food – This has become increasingly popular in recent years. Services such as HelloFresh, or Gustos deliver fresh food to a customers door, along with the cooking instructions for different meals. 
  • Memberships – Another type of subscription is memberships, these could be for a specific club, or things such as theme parks. In addition, people will also pay for gym memberships, which are typically paid on a monthly basis. 
  • Computer Software – These include any kind of software subscription, including those which prevent viruses.
  • Streaming Services – Probably the most popular and recognizable, streaming services have become increasingly popular in recent years. Some of the most popular include Netflix, Disney Plus, and Amazon Prime. Customers will pay in exchange for a catalog of different movies and television shows to watch. 

What Are The Benefits Of Subscription Business Models? 

When it comes to the advantages of online subscription models, these can be found in plentitude. It is no wonder that subscription rates have grown by 435 percent in the last 10 years, as more and more people are becoming aware of the immense sales benefits. 

To find out more, simply keep reading below to see if it might be a good fit for your business. 

Insight Into Purchasers 

One of the main advantages of subscription business models (see also: Digital Business Models: All You Need To Know)is that you get direct insight into the people making the purchases.

You’ll be able to see directly what customers are interested in, unlike anonymous visitors that are simply dropping by on your page. 

Most people when they sign customers up for their subscriptions will require them to provide details about themselves. These include things such as age, which can be helpful when trying to gather information about your demographic. 

Once you gather enough information about your demographic, you can implement this into your marketing strategy.

For example, if your customers all appear to be of a particular age group, you could benefit immensely from tailoring your advertising directly to this group. 

Decrease In Cost

Another massive benefit of subscription sales is that it will ultimately save you a lot of money. It’s far more expensive to try and gain new customers, rather than maintain the ones that you already have.

In fact, it’s actually been shown that attracting new customers costs almost seven times as much. This is quite a significant figure. 

Once your customers have signed up for your subscription, you can rely on a steady stream of money.

They are also more likely to pay for more expensive subscriptions offered by you, for example, shifting from a standard subscription, to a more luxurious one. 

Steady Stream Of Money

Another great thing about subscriptions is that you know how much revenue you’ll be bringing in each month. You might not know how many more sales you might acquire, but you’ll have a base number to work from.

Over time, these will become more and more predictable, and make it easier for you to estimate sales. 

Although nothing is set in stone, and you can’t guarantee that some people will drop out of their subscriptions, this doesn’t happen very often.

Many people are subscribed to a whole host of different things and places, and become accustomed to the services that they offer. 

Make sure that you’re offering a quality service that is consistent each and every time, and customers will stay. 

What Are The Disadvantages Of An Online Subscription Business Model?

What Are The Disadvantages Of An Online Subscription Business Model?

Now that we’ve spoken about some of the key advantages of an online subscription model, we can talk briefly about some of the disadvantages. To find out more, keep reading below. 


One of the key disadvantages of online business models (see also: 3 Expert Business Consulting Models For Online Success)is that there is a lot of competition out there. There might be hundreds of other businesses that are offering the same kinds of services or products as you. 

You’ll need to make sure that you have an unique niche in the marketplace that sets you apart from the competition. As well as this, you’ll need to spend a lot of time developing your branding and marketing strategies.

Make your logos colorful and eye-catching to set them apart from the crowd. 


As we mentioned above, if you’re consistent with the quality of your services, you won’t likely lose subscribers. But, this does happen occasionally.

This means that you need to be prepared for cancellation rates, which can fluctuate according to the items you’re offering. 

You’ll need to make sure that the quality of your subscription is consistent throughout, as well as offering new and exciting items to keep your subscribers interested. 

You should always make sure that you make it as easy as possible for a customer to cancel a subscription they have with you. If you fail to do this, they might spread negative feedback about your business online. 

Coming Up With Ideas

It can be difficult to think of new and interesting ways to keep your customers interested. This means that it can be tricky when deciding what to give subscribers each month.

Constantly coming up with new ideas might prove to be exhausting. 

Final Thoughts 

To sum up, online subscription business models (see also: What Is A Direct Sales Business Model?)refer to when a customer subscribes to a specific organization or service. This might include things such as gym memberships, subscriptions to streaming services, or food or magazine subscriptions. 

The customer will pay a fee, normally on a monthly basis, and in return, receive a product or service that’s delivered to them on a consistent and continual basis.