Subscription Models: Recurring Revenues for Lasting Growth

This note offers a comprehensive exposition to subscription revenue models and aims to explain their recent rise. It covers the advantages to firms of employing a subscription-based approach to monetization (as opposed to “one-off” upfront payment), as well as the benefits to consumers from the arrangement. The note further provides a typology of the different subscription models used in practice, and outlines the various considerations involved in designing an effective subscription service. Also covered are the key performance indicators (KPIs) and metrics companies should use in order to track the performance of the subscription design they have elected to follow. Lastly, common challenges firms may face when implementing a subscription model are highlighted. The note is replete with examples that illustrate the concepts and ideas presented.