Industries That Take Full Advantage of the Subscription Business Model

What is the subscription business model, and how does it work?

The subscription business model is a recurring revenue model in which customers pay a fee at regular intervals for ongoing access to a product or service. It has been around for decades, evolving from traditional newspaper and magazine subscriptions to encompass a wide range of products and services today. 

Here’s how the subscription business model works for both customers and sellers:

• Customers: B2B and B2C customers pay a business at regular intervals for recurring access to a product or service. Customers can often choose a service tier based on features or delivery frequency and may have the option to add supplemental purchases. Reorders are typically automatic, and subscription pricing is often lower than the cost of repeated one-time purchases.
• Sellers: Subscription businesses receive regular revenue from recurring monthly fees and add-on purchases. While sales vary as customers sign up for and cancel their service, businesses enjoy relatively stable income, allowing them to allocate budgets appropriately for overhead costs, inventory, research and development, etc. Subscription companies can also access a wealth of user data to inform product and service decisions, keeping the business competitive. These companies focus on customer acquisition and providing sufficient value to keep users subscribed. 

How to implement a subscription business model

Implementing a subscription business model can be complex and, in some cases, costly. Before deciding whether it’s the right fit for your business, it helps to step back and answer a few key questions. If you can say “yes” to one or more of the following, a subscription approach may be worth exploring:

• Does your product or service address a recurring or ongoing need? Examples include data management tools for businesses or consumable products like protein powder for athletes.
• Can your offering appeal to customers over the long term? Products like vinyl records or curated wine and chocolate subscriptions often attract loyal audiences that return again and again.
• Does your offering support upselling or cross-selling opportunities? Upselling and cross-selling examples include a data storage subscription that allows customers to add extra capacity, or a meal subscription service that offers add-on entrées or desserts.

If your business aligns with the subscription model, the following six-step process can help guide implementation.

1. Evaluate demand for your product or service.

Before you build a subscription offer, make sure there’s sustained demand for what you sell. These steps can help you evaluate demand realistically:

• Look for competitors. Do you have competitors? If not, proceed cautiously. There’s been a major push toward subscription models over the past 20 years, so if no one offers one in your space, it may have been tested unsuccessfully before. That said, you may also be the first to spot a real opportunity.
• Research the competition. If competitors offer subscriptions, study how they structure them. What tiers do they have, and what does each include? Do they sell add-ons? How well does the model seem to be working for them?
• Analyze your target audience. Build customer personas to better understand who you’re selling to and why they’d choose you over a rival. Look for the value proposition that would feel compelling enough to keep customers subscribed.
• Collect customer insights. Gather survey data from existing customers to understand what they like, what they wish were different, and what would make them stick around. If you need deeper data, consider working with a polling or market research agency to develop a market research plan that gets to what your audience actually wants.

2. Choose the right subscription model.

Once you’ve confirmed there’s consistent demand for your product or service, the next step is choosing the right subscription model. Your offering will typically fall into one of the following categories:

• Membership subscriptions: Membership subscriptions give customers ongoing access to products, services or expertise. Common examples include gym memberships and private online communities like Summit Series or The Dad Edge.
• Software as a Service (SaaS): Many software products are sold through subscription pricing. For example, several of the best accounting software platforms and best email marketing services operate on a subscription basis, including Microsoft 365 and Adobe. Pricing is often tiered based on features, number of users or usage limits.
• Box subscriptions: Box subscription companies deliver physical products at regular intervals. Meal kits and fashion boxes are common B2C examples, while printer supplies and office essentials are more typical in B2B settings.
• Content subscriptions: Media and entertainment companies frequently rely on subscriptions to provide ongoing access to content. Well-known examples include Netflix, Disney+ and Amazon Prime. At a more niche level, many trade publications and industry journals also charge subscription fees.
• Usage-based subscriptions: With usage-based models, customers are billed based on how much they use a product or service rather than paying a flat monthly fee. Examples include Twilio, which charges based on message volume and calls, and Microsoft Azure, which prices services based on consumption. (Read our Twilio Flex review to learn more about this call center software solution for complex communication needs.)
• Freemium subscriptions: Freemium models offer limited access at no cost, with paid upgrades available for additional features or content. One example is the Daily Mail+, which provides basic access for free and premium content for paying subscribers.

3. Set your pricing and evaluate your financial situation.

The data and insights from your earlier research should guide decisions about which subscription model to offer and how to price it. When setting pricing and assessing your finances as a subscription business, keep the following factors in mind:

• How many service levels will you offer? Subscription tiers often vary by features, usage limits or number of users. If you’re just getting started, it may make sense to launch with a single tier and a fixed price. Many established subscription businesses followed this approach before expanding into multiple tiers and paid add-ons.
• What do your competitors charge? Benchmarking competitor pricing can be helpful, but price alone rarely convinces customers to switch. For example, if you’re competing with Netflix and charge $1 per month, customers still won’t subscribe if your content doesn’t meet their expectations, even if the price is dramatically lower.
• Have you considered your potential churn rate? New subscription businesses need to factor expected churn into their pricing strategy. Churn refers to customers canceling and no longer paying for your service. Competitor performance can offer useful benchmarks here. Your pricing must account for customer acquisition and onboarding costs, ongoing service expenses and the expected customer lifetime, while still leaving room for profit.
• Do you have sufficient operating capital? A subscription model is attractive because it provides high levels of recurring revenue. However, you won’t start out with enormous cash influxes. Subscription fees are relatively low, and it will take time to build and maintain cash flow. Consider finding a business investor to ensure you have operating capital and time to grow your business.

4. Set up your tech backend.

Your subscription business will only work as well as the technology supporting it. You’ll need reliable systems to manage customer information, process recurring payments and keep everything running smoothly as your subscriber base grows. Two areas are particularly important: your customer relationship management (CRM) software and your infrastructure.

• CRM: A flexible CRM system helps you track customer interactions, preferences and subscription details in one place. The best CRM software can support multiple pricing models, recurring billing and frequent plan changes as your offerings evolve.
• Infrastructure: Your infrastructure needs will depend on what you’re selling. For digital services, your systems must be able to handle subscriber demand during peak usage without slowing down or crashing. For physical products, infrastructure considerations often include warehousing, inventory management and fulfillment. If growth is part of the plan, make sure you have enough storage space and operational capacity to keep up with demand.

5. Build a seamless customer experience.

A subscription business only works if customers enjoy the experience enough to stay. From signup to renewal, every interaction should feel easy, intuitive and worthwhile. To create a friction-free experience across the customer journey, focus on the following areas:

• Friction-free onboarding: First impressions matter. Customers should feel confident about their decision the moment they sign up. A great customer experience starts with a simple signup process that’s fast and free of unnecessary steps.
• Automate essential processes: Workflow automation helps subscription businesses run efficiently behind the scenes. Set up automated welcome messages, billing, renewals and payment reminders. You should also have a clear, streamlined process for handling failed payments so issues are resolved quickly without frustrating customers.
• Enable easy account management: Connect your CRM with your e-commerce platform and mobile app so customers can sign up, update payment details and manage subscriptions without needing support.
• Send personalized marketing messages: Stay in touch with subscribers through personalized text messages and email marketing campaigns that share relevant product recommendations, usage tips or timely updates.
• Provide reliable customer support: Excellent customer service plays a major role in retention. Make it easy for customers to reach you through their preferred channels, including email, phone and social media. AI chatbots can also help answer simple questions or handle purchase-related inquiries.
• Offer self-service resources: An FAQ section or knowledge base allows customers to solve common issues on their own while learning more about your products or services.

6. Develop and implement a retention strategy.

Subscriber churn is one of the biggest risks for any subscription business. Once a customer signs up, the real work begins: giving them enough ongoing value to keep them subscribed. That requires consistent attention, smart use of data and a willingness to adapt as customer needs change.

Start by using data from your CRM to inform your customer retention strategy. Pay close attention to key performance metrics such as:

• Monthly recurring revenue (MRR)
• Annual recurring revenue (ARR)
• Churn rate
• Customer lifetime value (CLV)
• Customer acquisition cost (CAC)

Look for the following in the data you gather: 

• Patterns and correlations: Trends in your metrics can signal early warning signs. For example, if MRR remains steady but CAC continues to rise, it may indicate increased competition or a need to revisit your marketing strategy.
• Usage frequency and engagement: Look at how often subscribers use your product or service, which features they rely on most and how they interact with your email newsletters or in-app messages. CRM data can help identify disengaged or at-risk subscribers, giving you an opportunity to intervene with targeted offers, education or support and improve customer loyalty.

Ultimately, your data tells the story of what customers value and where you may be falling short. Long-term success depends on continuing to refine your offering so customers clearly see the ongoing benefit of staying subscribed.

Four industries that thrive with the subscription model

Not every industry is a natural fit for subscriptions, but the model works well in more places than many businesses expect. Below are four industries where subscriptions have proven especially effective.

1. Online learning

Traditional education typically centers on in-person instruction, fixed schedules and printed materials. While that model still has a place, online learning has expanded access to education by allowing people of all ages to learn on their own time and at their own pace.

Here are some top examples of online learning platforms: 

• Educator.com: This platform offers middle school, high school and college-level courses taught by qualified educators for a monthly fee. It’s commonly used as a supplemental learning tool for students and lifelong learners alike.
• Treehouse: Treehouse provides unlimited access to coding and technology courses for a flat monthly price. The platform also offers a free trial, making it easy for users to explore before committing.
• Udemy: Udemy hosts more than 250,000 courses covering business, design, marketing and other topics. While it offers multiple pricing options, subscriptions allow learners to explore a wide range of content without purchasing individual courses.

Subscription-based learning platforms make it easy for users to build new skills and explore unfamiliar subjects without leaving home or the office. With a flat monthly fee, learners can access as much content as they want, similar to a buffet-style approach to education.

2. Streaming entertainment

Streaming entertainment was an early success story for subscription pricing, particularly in music. That model helped normalize paying a recurring fee for ongoing access rather than individual purchases. By late 2025, Apple Music was estimated to have about 108 million paid subscribers worldwide, while Spotify reported 281 million paid subscribers and more than 700 million monthly active users globally.

The same shift happened in video streaming. Platforms such as Netflix, YouTube TV, HBO Max, Hulu and Apple TV+ removed the need to buy individual titles and offered ongoing access for a flat monthly price. For many viewers, the predictability and flexibility of subscriptions quickly became the preferred way to watch.

The rapid growth of streaming subscriptions closely mirrors the rise of internet-connected devices. Smartphones, smart TVs, tablets and gaming consoles have made it easy to stream content anywhere, at any time. With that convenience, subscription pricing feels natural (and often preferable) to one-time purchases.

3. Beauty and health products

The beauty and cosmetics industry is uniquely suited to the subscription model. Birchbox was one of the first leaders in the field. It launched in 2010, delivering boxes of curated samples directly to doorsteps for just $10 per box. It now offers an array of personalized beauty and skincare products with a range of subscription options.

The subscription-based health and beauty arena has since exploded, with businesses like the following:

• Billie’s razor sets and skincare products
• Flamingo Estate’s at-home spa products
• The Detox Market’s ethically sourced beauty products in monthly boxes
• Skylar Scent Club’s monthly fragrance deliveries
• Petit Vour’s vegan beauty boxes
• IPSY’s personalized makeup and skincare subscriptions
• FabFitFun’s quarterly boxes featuring beauty, wellness and lifestyle products

These are just a few examples of the myriad beauty and health products available on a subscription basis. Consumers can find the products they need and subscribe so they never run out.

4. Food and beverage

The food and beverage industry has made significant gains with the subscription business model, with new services launching every year. This category benefits heavily from convenience, helping busy consumers eat well, save time and keep their kitchens stocked without constant reordering.

Here are some examples of mail-order ingredient and meal services: 

• Sunbasket
• Snap Kitchen
• Dinnerly
• HelloFresh
• Daily Harvest
• Home Chef

Beyond full meals, subscriptions are also common for everyday consumables. Many consumers now subscribe to regular deliveries of coffee, wine, beer, tea, spices, barbecue sauces, vitamins and other pantry staples, ensuring they don’t run out while avoiding last-minute store trips.

Tips for taking advantage of the subscription model in your business

By now, you’re probably already thinking about how a subscription model could work for your business. When you’re ready to get started, keep these practical tips in mind:

• Survey your customers. Start with your existing customer base to understand what they’d want from a subscription offering. Customer surveys can reveal preferences, pricing tolerance and feature ideas that help shape a subscription model people will actually use.
• Create an attractive price point. While profitability matters, pricing still needs to feel approachable. An entry price that’s easy to say yes to can lower the barrier for customers, especially those signing up for a subscription for the first time.
• Make subscribing seamless. The easier it is to sign up, the more likely customers are to stick around. Build a friction-free signup experience into your website design and use email marketing to promote subscription options clearly.
• Deliver consistent value. Subscribers are more likely to stay — and recommend your business — when they feel they’re getting real value. Consider offering subscriber-only perks or occasional bonuses to reinforce that relationship.
• Automate where possible. Automation reduces manual work and improves the customer experience. Look for opportunities to automate payments, renewals, notifications and basic user tracking so your team can focus on higher-value tasks.
• Offer a free trial. While free trials can increase customer acquisition costs, giving people a week or two to test your service may be enough to convert them into long-term subscribers.
• Consider a freemium model. Some businesses succeed by offering a limited free version of their service, with incentives to upgrade for premium features. HubSpot is a well-known example of a company that has used this approach effectively (read our HubSpot CRM review to learn more).

Benefits of the subscription business model

The subscription approach owes its success to the balance of value it offers the company and the customer. Customers get desired products or services conveniently, while businesses can rely on recurring sales to help predict revenues.

Specific benefits for businesses and their customers include the following:

1. The subscription model offers easy scalability.

The subscription approach is a scalable business model that benefits both customers and businesses.

• Customers: For customers, subscriptions allow flexibility. For example, someone with a subscription for 20 prepackaged meals per week can scale back their order if they’re traveling or temporarily need fewer deliveries.
• Businesses: From a business perspective, the subscription model makes it easier to scale operations in response to demand. If weekly demand increases from 500 units to 1,000, the company can adjust inventory and production accordingly.

2. The subscription model brings predictability.

Customers and businesses benefit from the subscription model’s predictable nature.

• Predictability benefits customers. Busy consumers juggling work, family and other responsibilities rely on subscriptions to deliver the products they need on a regular schedule. Because deliveries are consistent, customers are less likely to run out of essential products or services.
• Predictability benefits businesses. A subscription model gives businesses steadier revenue from month to month. By tracking active subscriptions and recent growth trends, companies can estimate what they’re likely to bring in next. That makes it easier to plan ahead. If a business expects about $20,000 in profit in a given month, it can set some of that money aside for a new project or initiative.

3. Subscription services build relationships.

Subscription services can strengthen trust and long-term customer relationships.

• Consumers gain trusted partners. When customers receive products or services on a regular basis, familiarity builds over time. Consistent delivery helps customers feel confident they can rely on the brand to meet an ongoing need. For many people, signing up for a subscription — and agreeing to recurring payments — reflects a level of trust they wouldn’t extend without a positive experience.
• Businesses gain loyal customers. Subscription models encourage repeat business by keeping customers engaged over time. As loyalty grows, customers are more likely to stick with a brand instead of shopping around. Loyal customers also tend to recommend businesses they trust, which can help drive referrals and support steady growth as sales increase.

4. Subscription data improves personalization.

Subscriptions give businesses ongoing insight into customer preferences, which can be used to tailor products, services and communications.

• Data collection benefits businesses. Subscription data helps companies see what customers use, reorder or respond to over time. That insight can guide product updates, inform marketing decisions and help teams anticipate demand so they can operate more efficiently.
• Personalization benefits customers. Using that same data, subscription businesses can offer more relevant recommendations and options. Customers receive suggestions that match their needs instead of generic offers, making the experience more useful and less intrusive.

5. Subscriptions pay for continual improvement and innovation.

More predictable revenue gives subscription businesses room to refine what they offer over time.

• Continuous improvement benefits customers. Steady income allows businesses to update features, improve service quality and roll out enhancements without asking customers to make a new purchase each time. Customers benefit from incremental improvements and upgrades built into their subscriptions.
• Innovation benefits businesses. With more consistent cash flow, companies can reinvest in product development and testing. That makes it easier to experiment, introduce new features and stay competitive without taking on unnecessary financial risk.

6. Flexible subscription models extend market reach.

Offering multiple subscription tiers and optional add-ons allows businesses to appeal to a wider range of customers while increasing overall revenue potential.

• Tiered pricing benefits businesses. Many streaming services use basic, standard and premium tiers to serve different audiences. Some plans include ads, while others offer exclusive content or features. This approach makes subscriptions accessible to price-sensitive customers while allowing businesses to generate more revenue from subscribers willing to pay for added value.
• Customized bundles benefit customers. The shift from traditional cable packages to streaming services showed that customers prefer choice. When subscribers can build packages around a core tier and select add-ons they actually use, they avoid paying for services they don’t value.

The future of the subscription business model

The subscription business model will continue growing as customers and businesses benefit from the setup. Look for the following trends:

• A rise in global subscription revenue: According to Zuora’s 2025 Subscription Economy Index, companies built around recurring revenue grew 11 percent faster than the broader market, underscoring the continued momentum behind subscription-based models. In terms of scale, Grand View Research estimated the global subscription economy at about $556 billion in 2025, reflecting how large — and still active — the market has become.
• Potential move toward subscription bundles: As subscription fatigue grows, many consumers want simpler ways to manage their services. According to Horowitz Research’s State of Media, Entertainment & Tech: Subscriptions 2025 report, 66 percent of U.S. consumers say they would likely switch to a single bundle from one provider that includes services such as streaming TV, home security, fitness, smart home and music subscriptions, highlighting ongoing interest in unified subscription packages.
• New subscription model: Running a subscription business can be complex, and some direct-to-consumer (D2C) brands are responding by partnering with subscription-focused platforms instead of managing everything themselves. In a B2B2C-style arrangement, the brand continues to create and deliver its product or service to the end user, while the partner handles the behind-the-scenes subscription operations — including billing, recurring payments, customer support and account management. This lets the brand focus on product development and customer acquisition, while relying on specialized systems to run the subscription business efficiently.

Although rising revenues show that consumers and business decision-makers are far more willing to consider a subscription service than before, this is still a tough market to crack. Your future success may rely on bundling some or all of your services with competitors’ offerings on a platform managed by an industry consortium or third-party provider.