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The Surprising Complexity of Subscription Based Models

Each year the average life moves to become more streamlined, more efficient, and more effective. There are countless ways in which this occurs, but most times it happens through innovation. Highways and cars are developed, smartphones are popularized, the internet is created. These things have drastically changed the way people lived their lives, primarily by making them easier.

A less obvious version of innovation comes in different models of consumption. Watching a movie has gone from an act reserved only to theaters to something entirely simple and cheap. The chain of progression was slow and steady, but the modern model is that of a subscription.

Subscription models have a few distinct benefits over past variations. Primarily, they are simple, cheap, and easy to use. There’s no doubt that watching a movie on any streaming platform is cheaper than buying a ticket to the theater. Although streaming also tends to be cheaper than cable, especially with the benefit of no ads. 

The biggest advantage though is most certainly the convenience of these platforms. The act of browning for a movie or tv show to watch has never been more prominent than today. There are so many more media pieces to look through and to watch at any moment. These also range across decades, rather than being reserved to modern movies. 

Although of course subscription models exist outside of the realm of movies and television, or even media at large. For example Amazon Prime is the single biggest subscription by user base. Amazon’s subscription model relies on the convenience and marginal lowering of costs. Amazon is still usable without it, but buying just a few products a month makes it worth the purchase. 

There are other massive companies who use similar models, think Nike or Best Buy for these. Yet some larger companies also rely entirely on their subscription model to operate. Big retailers like Sam’s Club and Costco cannot even be entered without a subscription. This centers the responsibility on the consumer to make use, not the store itself.

In terms of who’s using subscriptions, younger consumers are much more open to the idea. The rate from Baby Boomers to Gen X to Millennials increased steadily and noticeably. Gen Z is currently lagging behind, but is predicted to rise above the previous generations as they age.  A big force which brought a boom to subscription models was COVID. During this time people were forced to appreciate services which brought products to them.

This is why physical boxes and monthly packages have found so much popularity today. These businesses, alongside all subscription based businesses, grew over 10% during COVID. Many of these monthly boxes are based on entertainment and ease. The products in them will rarely measure up to the value of the box, but the surprise and convenience do.

Now what a subscription model can be is rapidly developing and changing, as are the products covered within them. Even things which are challenging to normalize into a monthly schedule are being made to work. Plants, for example, now have several monthly subscription models. Printing materials, toner and paper, can be covered under a subscription.

An important difference between various subscription models is how they’re billed. While some are a flat rate and have no variance, this can be rare. Sometimes there are tiers with distinct advantages. Sometimes there is a pay as you go model, the price matching the use of the subscription. And sometimes the user determines how much they need each subscription period.

It’s differences like these that give subscriptions the versatility to work. It can be jarring when subscriptions enter a new industry. It’s only natural to wonder how it may change the quality or output of the product in question. Yet subscription models are not inherently good or bad, they’re simply a tool. The difference seen today is that clearly this is a tool that is here to stay.

Not everyone will appreciate what subscriptions have to offer, in any context. Yet most will find at least one example of a subscription worth utilizing. This is why there are an average of 3.7 subscriptions per person. They may be different, they may serve entirely separate purposes, but the point remains, they’re popular.

Data shows subscriptions are here to stay

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