By The subscription billing economy has been here for a long time. Families used to rely on newspaper and milk subscriptions back in the 80s. Moreover, the superior traction came in the 2010s, with companies like Dollar Shave Club and Birchbox.
From there came the era of streaming platforms and the Software-as-a-Service (SaaS) industry. It gained popularity during the pandemic. Today, the digital subscription industry is worth USD 6.58 billion.
Companies trust this model because of its predictability, scalability, and ability to build consumer relationships. This payment model charges customers for services and products rendered at specific intervals. Customers can also access features like promotions, discounted offers, and free trials.
This blog will analyze the market and present the types, trends, and things to look out for in subscription billing. Read on to learn more.
The Types of Subscription Billing Models in 2023
With a subscription business model, the consumer lifetime value increases for any company. Automatic subscription billing allows companies to respond to market changes with agility. Moreover, it helps generate a cash flow followed by customer retention and loyalty.
What happens when entrepreneurs trust a company offering subscription billing software? In that case, there will be fewer failed payments and faster and more efficient payment processing.
Yet, one must understand the different types of subscription billing available before investing:
- Fixed usage subscription model: This has a standard fixed price for services or products. Examples include magazine subscriptions.
- Variable model: It includes hybrid, usage-based, and pay-as-you-go options. Examples include utility charges for specific products or beauty boxes.
- Unlimited usage subscription model: Individuals will have unlimited access to services. For instance, gym memberships or phone contracts.
- Freemium model: Mostly used by cloud-based service providers to offer limited access. For example, music or video streaming services.
With the increase in popularity of these subscription billing types, the SaaS market is set to reach a whopping USD 208 billion in 2023!
Top Subscription Billing Trends to Look Out for in 2023
With so many types of subscription billing software, the trends seem neverending. Some direct-to-consumer (D2C) enterprises have formulated business strategies based on specific industry trends.
Gartner predicted about 75% of D2C companies would offer such services by the end of 2023. Indeed, the face of digital eCommerce is set to transform forever. Even B2B companies have ventured into the subscription model and utilized the benefits offered.
Based on that, specific trends will escalate over the next few months of 2023. These include:
- The subscription industry is here to stay and grow in the SaaS avenue without bounds.
- With the increase in data privacy efforts, the software has become safe to explore.
- Digital transformation will contribute to the growing popularity of subscription billing software.
- The scalability and flexibility of subscription management will increase.
The competition is rising, and companies are catching up with these trends. Business owners must stay on top of these trends to generate sustained revenue.
Things to Consider About Subscription Management in 2023
A subscription business might sound easy to incorporate, but generating revenue from it takes time and effort.
The good news is that recurring payments from subscription services can amount to millions of dollars. In fact, the industry benchmarks suggest a 16.1% CAGR growth by 2030.
Due to this competition, entrepreneurs must implement the best subscription model to attract leads. But first, here are some considerations that one must look into before choosing a subscription business model:
- Focus on automating subscription billing for a smooth transactional workflow
- The recurring billing platform must have an extended customer lifetime guarantee
- This subscription economy is agile, so the model must create optimal revenue streams that are immune to disruptions
- The subscription management platform should have the right metrics to analyze performance based on demographics
Additionally, companies must pay attention to crucial details like predictability, recurring revenue options, and customer satisfaction. The ultimate revenue will depend on the user base, so ensure to analyze their needs and present solutions.
Only then can companies generate more subscription revenue in 2023. For example, Netflix presented a model at a minimal price for customers who wanted to stream videos on their phones, increasing their revenue worldwide.
The Bottom Line
After the pandemic, the digital industry has always grasped opportunities. And subscription management became the groundwork for that.
It has helped enterprises generate predictable revenue through flexible infrastructure and build customer loyalty. The subscription business model is here to stay, and companies that implement it right now will win in the long run.
Indeed, the future of this model is bright, and 2023 will be a stepping stone toward sustainable growth!
Author:
Tim Cook, Chief Customer Officer and Founder of BluLogix, a leading subscription billing platform for companies with complex recurring revenue models.
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