Shopify Ecosystem

A Comprehensive Guide to Recurring Billing

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Over the past several years, the subscription business model has exploded, becoming one of the single most effective strategies for sales growth since it became popular.

 

What is the subscription business model?

 

When a company offers a product that can be purchased on a recurring basis, they offer plans to the customer that will save them money if they sign up with a subscription to the item. This model has been very prominent in subscription box markets, but has also found its way to major platforms like Amazon.

 

Not all markets have a call for subscription marketing, making it important that a company’s niche have a place for a subscription based product. For example, a smartphone manufacturer couldn’t feasible offer a monthly subscription to purchase a new phone, but a company selling makeup could.

 

Essentially, the product being sold as a subscription should be consumable and/or perishable. For instance, a company selling hair products could easily implement a recurring payment system, as people generally need to purchase their favorite hair products once every few months or so when they run out.

 

Services can also be sold on a subscription basis, such as online teaching courses. In fact, almost every niche has room for subscription-based purchases, but it may take some creativity to find a good match.

 

It’s a common misconception that setting up subscription billing is difficult, whereas many eCommerce entrepreneurs agree that it’s a fairly easy process. There are a number of free apps that can be used to set up recurring billing on the major eCommerce store platforms, such as Shopify. One of our favorites is Chargify, which works seamlessly with most Shopify stores.

 

There should be some “wow-factor” that makes the subscription worth purchasing. For single items, a simple discount is usually enough, however companies looking to sell subscription boxes must be sure to create an experience with their product, as buyers are wanting more than just an item when they sign up for subscriptions. Subscription boxes should contain unique items that stand out against those of competitors, and should deliver a unique experience that is unmatched by other companies in the same field.
Finally, it’s important that any company looking to establish recurring billing have a system of checks and balances in place to prevent issues with payment in the future. Credit cards can expire or be canceled at anything, making it important that a system be in place to prevent any issues from arising as a result of these unexpected changes.

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