Understanding Subscriptions

What is a subscription based business model?

A subscription is a business model where customers pay a recurring fee to access a product or service from the vendor over a specified period. The access to the product or service continues until the subscription is cancelled or expired. Unlike one-time invoices, subscriptions involve ongoing payments, which could be made weekly, monthly, quarterly, annually, or on any other frequency that suits the customer or business.

What types of businesses use subscription-based model?

A subscription-based model is suitable for businesses that offer products and/or services on a recurring basis, allowing customers to pay for ongoing access or delivery over time. This model is popular across a wide range of industries because it provides predictable revenue streams, enhances customer retention, and simplifies the buying process. Below are some examples of offline and online businesses that commonly use subscriptions to drive their operations.

Offline Subscription Models

These are some of the offline business models that use subscriptions for their operations:

Newspapers and magazine subscriptions - Customers receive physical copies of newspapers and magazines on a regular basis for a monthly, quarterly, or annual subscription. The business also typically includes a delivery charge along with the subscription fee. This is ideal for businesses which provide news, entertainment, or specialized content.
Gym or fitness membership - Customers pay on a recurring basis (usually monthly or annually) to access fitness centers or gyms till their subscription term ends. The fitness centers or gyms can also offer multiple levels of plans to their customers, such as basic access, premium classes, and personal training.
Coffee or tea subscriptions - Customers subscribe to receive regular shipments of specialty coffee or tea. This can include a selection of beans, ground coffee, or loose-leaf tea, often curated for the customer’s preferences. This model works well for businesses catering to gourmet or artisanal beverages.
Book or DVD Rentals - Subscribers pay a regular fee to rent physical books, DVDs, or Blu-rays. These services may allow for a set number of rentals each month or unlimited access for the duration of the subscription for different plans.
Subscription Boxes for Physical Products - Customers receive curated boxes of physical products on a regular basis. These can include a variety of categories, such as beauty products, snacks, toys, or artisan goods, delivered monthly or quarterly.
Pest control services - Customers can sign up for regular visits from pest control experts to prevent or address pest infestations. Vendors can offer multiple subscription plans to cater to different customer needs, such as basic, standard, and premium options. These plans can vary in terms of service frequency, coverage (e.g., specific pests or seasonal treatments), and the level of service provided, allowing businesses to offer tailored solutions based on the frequency and complexity of pest control requirements.
Water delivery services - In places with limited access to drinking water, customers can sign up for regular delivery of bottled water or water cans for a weekly or monthly subscription. The pricing plans can depend on the frequency and quantity of water delivery required. This business model is common for products that require regular replenishment.
Laundry and dry-cleaning services - Customers can subscribe to a monthly, quarterly or annual subscription for regular laundry and dry-cleaning services, with pickup and delivery services. The vendor can set different pricing plans for regular laundry and dry-cleaning services, along with their frequencies, to provide flexibility to their customers.
Health and wellness products - Customers can sign up for regular and recurring delivery of health products, such as vitamins, supplements, or wellness products, based on their health needs. The vendor can set the pricing plans can depend on the quantity and frequency of the delivery of health products.
Art and craft supplies - A subscription model where vendors send regular shipments of art and craft supplies to their customers for a monthly, quarterly, or annual payment. The supplies can include paint, brushes, knitting supplies and DIY project kits, based on which vendors can set multiple plans.

Online Subscription Models

These are some of the online business models that use subscriptions for their operations:

Software-as-a-Service (SaaS) companies - This is the most commonly used subscription models used by multiple businesses. Customers subscribe to access software applications hosted on the cloud, usually on a monthly or annual basis. This model is often used by companies to provide business solutions such as - project management, accounting, or customer relationship management (CRM). Businesses can offer multiple plans, such as basic, professional, and enterprise levels, with varying features and user limits to suit different customer needs.
Streaming media services - Customers subscribe to gain uninterrupted access to large libraries of content, such as music, movies, TV shows, or podcasts. Businesses can create multiple tiers, such as basic plans with limited content and premium plans with exclusive access or higher-quality streams.
Online learning platforms - Customers can subscribe to gain access to educational courses, webinars, and training materials, for a range of subjects, from professional development to personal interests, often with self-paced learning options. Businesses can offer different plans, such as individual course access, all-access memberships, or packages bundled with additional resources like certifications.
Digital news and magazines - Like offline newspaper and magazine subscriptions, publishers often offer news and magazines in a digital format, through email or their app, which customers can access through a monthly or annual payment. Providers can offer multiple plans, ranging from free plans with limited access for occasional readers to premium plans with unlimited articles and archives for more frequent readers.
Cloud storage services
- A subscription model for cloud-based storage, where users pay for a certain amount of space to store and back up their files, including documents, photos, videos, and other media.
- Businesses can offer tiered plans based on capacity, such as offering limited storage for basic plans and premium plans offering larger space and additional features like enhanced security.
Online Fitness Classes
- Customers can subscribe to gain access to virtual fitness classes, including yoga, cardio, and strength training. These platforms can offer live classes as well as on-demand content, allowing users to work out at their convenience.
- Fitness centers can offer various monthly or annual plans for customers, such as basic plans for access to on-demand classes to premium plans for live sessions, personalized coaching, and personal diet charts.
Subscription-based e-commerce
- A subscription model where customers receive recurring deliveries of specific products such as beauty products, healthy snacks, or pet supplies. These can include personalized options based on preferences or needs.
- Businesses can offer multiple plans with generalized products for basic plans, or premium plans offering personalized options and quantity.
Online gaming memberships
- Customers can subscribe to online gaming subscriptions for a lower monthly, quarterly, or annual price to access a library of video games, exclusive content, or multiplayer features on gaming platforms.
- Businesses can offer membership plans to its customers, varying from basic plans with access to a library of games or multiplayer features to premium plans with access to a library of premium games with special in-game benefits.
Stock photography and media libraries
- Customers subscribe to gain access to a vast library of digital assets, such as stock photos, illustrations, videos, and audio files, usually licensed for use in marketing, design, or content creation.
- Media libraries can offer varying plans based on quality and quantity, such as basic plans with access to limited downloads per month and higher plans offering unlimited downloads of higher resolution files.
Virtual support or counseling services
- Customers subscribe for ongoing access to regular professional services such as counseling, virtual therapy, or coaching through digital platforms, often on a weekly or monthly basis.
- Businesses can offer different plans based on number of sessions and priority, such as basic plans offering limited number of sessions per month and premium plans offering unlimited access, priority scheduling and personalized support.

How does the Subscriptions module work in Zoho Billing?

In Zoho ERP, you can create a subscription by selecting a customer, adding the number of trial days, required plans, addons and coupons, and defining the payment terms. Depending on your workflow, you can create an autocharge enabled or autocharge disabled subscription and associate a payment method.

Once created, subscriptions follow a clear lifecycle reflected through their statuses. A subscription begins as a trial, moves to Live once the trial is over, invoices are saved as draft or sent automatically, based on your preferences, and updates automatically as payments are received. For autocharge disabled subscriptions, such as payments received through cash, bank transfers, or external gateways, you can manually record the payment to ensure your records remain accurate and the subscription continues smoothly.