Last updated: April 10, 2023
Let’s face it, we live in a subscription-crazed world. From binge-watching Seinfeld and Friends on Netflix to getting a monthly subscription of socks and cheese, it seems there’s no end to the things we can subscribe to. So, why should your business miss out on all the fun?
As companies like Amazon and a growing number of Shopify stores have shown, subscription services are the icing on the modern consumer’s cake. And with the subscription economy set to grow to an incredible $1.5 trillion by 2025, integrating subscription services into your business is a win-win!
In this article, we’ll provide a comprehensive guide for businesses looking to start a subscription service, covering the subscription plans available and their benefits. Join us at Upscribe as we dive head-first into subscription services!
What are subscriptions payments?
Subscription payment plans are the different pricing structures businesses offer when providing subscription services. Often referred to as recurring payments, subscription services typically charge customers on a monthly or yearly basis.
Selecting the right subscription pricing plan is crucial to the success of your subscription service, as it directly impacts how your customers engage with your brand – including customer satisfaction, retention, and revenue generation.
Common types of subscription payment plans include:
- Monthly payments: Customers pay a fixed fee every month for a service or product.
- Annual payments: Customers pay a lump sum once a year. Annual subscriptions are usually set at a discounted rate compared to monthly payments.
Choosing the best subscription business model
There are three primary categories of subscriptions available: curation, replenishment, and access. Each has its advantages and disadvantages, making it necessary to choose the right option for your ecommerce business needs (no pressure!).
To help with your choice, let’s look at each subscription model:
The curation model
If you’re looking for the most popular model, you’ve found it! In this approach, subscribers regularly receive a customized assortment of items – designed to cater to their individual needs and preferences.
As everybody loves a unique experience, the curation model is a fan favorite. Every month, consumers receive a subscription box of handpicked items – making subscribers feel super appreciated and acknowledged!
With every delivery, there’s an element of surprise! It’s also an excellent opportunity for customers to explore new products. For example, Pura Vida Bracelet Club delivers hand-selected bracelets monthly, with early access and exclusive online-only jewelry.
The replenishment model
The replenishment model centers around providing convenience and cost savings. It’s the second most popular subscription approach, focusing on the regular delivery of essential items that customers use and consume on an ongoing basis.This model aims to simplify the process of restocking in–use products by automating the delivery. Staple and convenient items such as razors, diapers, and pet food are a match made in heaven for the replenishment model.
Examples of replenishment services include Amazon Subscribe & Save and Dollar Shave Club which supplies a monthly subscription for men’s grooming products and razors.
The access model
Lastly, in access-centric subscription models, subscribers pay a monthly fee to secure enticing members-only benefits, including exclusive discounts or free shipping. This model is particularly prevalent in the digital space and thrives on the appeal of exclusivity.
The access model enjoys popularity in the fashion, apparel, and food industries. But if you really want to see it in action, check out digital subscription models like Netflix and Amazon Prime, which grant exclusive content to their subscribers (Squid Game, anyone…).
Benefits of subscription plans
Providing customers with the option to subscribe presents a treasure trove of benefits for your business. With that in mind, let’s take a look at some of our favorites:
- Steady ongoing earnings: Subscription models bring a steady income stream that promotes long-lasting customer relationships and enhances customer lifetime value (CLV). Furthermore, your business can concentrate on delivering value and customer satisfaction rather than being on a never-ending quest for sales.
- Hassle-free entry points: By letting customers spread large purchases over time, it makes it feel much more manageable. Also, customers enjoy instant access to products and services with a hassle-free entry point. You can attract new clients with free trials or discounted rates.
- Subscription billing boosts returns from customer acquisition costs: With subscription billing, the ongoing payments from customers makes investing in new customers a no-brainer! As they continue to pay regularly, your investment in acquiring them pays off even more, helping your business grow faster.
How to set up a first-rate subscription service
Using these seven easy steps, here’s how to launch your own subscription service and enhance your ecommerce business revenue:
1) Fine-tune your subscription options
Define your subscription options by assessing your customer needs using market research and customer surveys. With this data, choose the best subscription model (curation, replenishment, or access) based on your target audience and product or service.
For example, the curation model would be perfect for customers who enjoy trying new varieties of coffee beans from various regions or roasters. On the other hand, if you’re a company that offers monthly skincare products like makeup removal wipes, the replenishment model is for you.
2) Choose a subscription management platform
A subscription management platform streamlines billing, customer management, and compliance, making your business more efficient and accurate. Additionally, as your company grows, these platforms easily scale to accommodate more subscriptions and customizability options.
To get the most out of your subscriptions, Upscribe helps businesses grow their subscription services without the added stress. From white-gloved onboarding to seamless migration, Upscribe treats your subscribers like the VIPs they are.
Take a look at how we helped Caldera + Lab decrease their subscription help tickets by a massive 50%!
3) The price is always right
Within your preferred subscription management platform, input pricing details for each tier and set up billing intervals and terms and conditions (how auto-renewal works and cancellation policies).
Consider any discounts or promotions for new or long-term subscribers. Within this step, it’s necessary to consider the logistics involved in sourcing, packing, and shipping. Pricing too low may result in a loss, while too high may discourage potential subscribers.
If your business allows, incorporate personalization features like delivery frequencies or add-ons. More importantly, regularly evaluate, test, and refine your subscription plans using customer feedback.
4) Integrate payment processing
One of the most crucial steps is setting up a system that allows your business to accept and process payments from your subscribers.
To integrate payment processing, you’ll need to choose a viable payment processor. PayPal or Braintree, for instance, can handle transactions between your subscribers’ payment methods (credit cards, debit cards, or digital wallets) and your business bank account.
Once you’ve successfully integrated payment processing, your customers can seamlessly complete transactions on your website, and you can manage and monitor the payments through a dedicated dashboard (provided by your payment processor).
Check out our recent post on Shopify checkout optimization tricks for more info.
5) Create a checkout flow
To create a checkout flow for your subscription plans, you’ll need to provide a wealth of information about your options. Build a landing page or web form that outlines details such as pricing, billing frequency, and what customers can expect from each tier.
Remember to keep the checkout flow simple. With a brilliant checkout flow, potential customers can sign up for your subscription plans without any unwanted surprises.
6) Customize subscription emails
As you want to offer your subscribers a personalized experience, customizing subscription emails goes a long way. Automated emails can be sent at specific intervals, such as sign-up, renewal, or payment failure.
Additionally, these emails can welcome new subscribers, highlight promotions, and remind subscribers of upcoming payments or feedback requests. By creating personalized and timely communication, you’ll build stronger relationships and create a compelling online subscriber experience.
Simply put, they’re an effective marketing strategy that helps build and maintain your customer base.
7) Monitor and optimize
As you embark on your subscription journey, keep a watchful eye on your subscriber metrics. Metrics like churn subscription rate and revenue per use provide valuable insights into how your business is performing. They also help you make better decisions for the future.
For example, a high churn rate could indicate that your pricing may be too expensive (78% of customers look for a fair price when selecting a company to buy from), or that your product or service isn’t meeting customer expectations.
By keeping a close eye on your metrics, you can identify areas for improvement and make the necessary changes.
Kickstart your subscription service with Upscribe!
As you can probably already tell, subscription services are like the gift that keeps on giving (for both businesses and customers). By offering subscription plans, you create a steady stream of revenue that keeps coming month after month. Plus, your customers benefit from having your product or service delivered right to their door!
Now that you have a better understanding of how subscription services can benefit your business, here at Upscribe, we encourage you to take action and start offering them to your customers.
To better understand what integrating with Upscribe looks like, schedule a demo with us today and start exploring!