We’re all well aware of the popular business model that is ‘X as a Service’ (XaaS) where by, typically a business, will pay for something like Software but it is delivered remotely, in the case of Software via a Thin Client rather than via Download or a CD (whatever those are). This means that users always have the latest version and resource intensive applications can be run on less resourceful devices. This is great for services where a physical product is not required but what about when there is?
Well, now there’s a business model that is growing massively in popularity and that is the ‘subscription economy’ or maybe it should be EaaSub (Everything as a Subscription)? There’s now hundreds, probably even thousands of businesses offering products via subscription and there’s really no limit as to what you can get. We all know about the usual ones like Netflix and Magazines/Newspapers but here’s some you may not know about:
- Clothes and Accessories
- Snacks, Meals, and Spices
- Beauty Products
- Razor Blades
- Private Flights
- Even iPhones
It’s even spawned new support businesses such as Zuora who now provide subscription management software to businesses.
For businesses this model has a lot of positives, it provides a predictable revenue stream and by encouraging customers to pay upfront it gives the cash flow required to support operations. In high competition industries it also locks in the consumer and stops them heading for the competition. For the consumer it’s a hassle free way to get the consumable products they require often.
It’s important though that there’s some flexibility as consumers don’t want to think they’re paying for something that they don’t need e.g. if they get a toothbrush monthly but only really need one every two months then they’re likely to cancel.
So what’s next for the subscription model, could we see typically service orientated businesses offering subscriptions, maybe something like unlimited Uber rides for £X/month? Subscription Hotel rooms? Could we see Apple expand it’s iPhone Upgrade Program to it’s other products, could Samsung start offering TVs and other large consumer electricals by Subscription?