What to Know Before Launching a Subscription-Based Business

When you think of a subscription-based business, there are probably images of monthly boxes and recurring payments that come to mind. However, a subscription-based business is any company that offers customers the option to subscribe to their product or service on a continuous basis. But before you start building your own subscription-based business, it’s essential to know what you’re getting into! We outline some things for you to consider when launching a new subscription-based company.

Payment:

Recurring payments remain an essential aspect of the subscription-based business model. Factoring in the various ways in which payment can be disrupted is key. For instance, a missed credit card payment is all it takes for a customer’s recurring payment to be declined. Having a backup form of payment on file is a way to prevent payment disruption. Another option would be to notify the customer of declined payment via text or email and provide a brief grace period for them to get back on track. When designing your company’s business model, there are several factors you should consider, particularly regarding the length of your subscription, cost, and how customers will be billed. You also need to decide whether or not you’ll offer refunds, what the cancellation policy will be for subscribers who wish to remove themselves from your services. These are all critical factors that can affect how well a subscription-based business is received by customers!

Box deliveries:

Let’s explore some examples, starting with eCommerce products that you might find on subscription boxes sites like Birchbox or Ipsy! These companies have customers subscribe to receive makeup, beauty supplies, and other items for an agreed-upon amount each month.

Subscription boxes are also available for other types of products, like food! There are subscription box services that will send you a monthly shipment of different snacks. This works particularly well if your brand reaches certain niche markets – the more specific and unique to their audience, your product is, the better it can be marketed on these sites. You might also want to consider a subscription box service if you’re looking to expand your sales into the food industry without having to invest in manufacturing and shipping costs.

This doesn’t just apply to companies that ship products, though! Many services are available on subscription-based sites, such as software development for businesses or app design. If you provide these services, it might be a good idea to try out subscription-based pricing.

The company’s value proposition:

First, you need to know your company’s value proposition! What problem does your product or service solve for customers? If several different benefits come with using the product, what would be most valuable? This is important because consumers will want to see precisely why they should subscribe. Knowing this before beginning marketing efforts will be beneficial in helping you attract the right audience.

The target market:

Second, it’s important to identify your target market! A big part of any marketing strategy is knowing who to target – and this applies to subscription-based businesses even more so. You must know where your customers are most likely to come from and how to approach them. For example, suppose you’re creating a subscription box for fashion lovers who are also college students. In that case, it might be more effective to target that audience on campus rather than in an online advertisement or social media campaign!

The business model:

When designing your company’s business model, you should consider several factors, particularly regarding the length of your subscription, cost, and how customers will be billed. For example – you need to decide whether or not it makes more sense for customers to pay every month (referred to as ‘continuous billing’), only at the beginning of their subscriptions (referred to as ‘single payment’), or some combination thereof. You also need to decide whether or not you’ll offer refunds, what the cancellation policy will be for subscribers who wish to remove themselves from your services. These are all crucial factors that can affect how well a subscription-based business is received by customers!

In conclusion, the key to launching a successful subscription-based business is knowing your target audience, how they will be billed for their subscriptions, and whether or not you’ll offer refunds. Identifying this information early on in the designing process can help ensure that your company’s value prop is maximized when it comes time to launch!

Justin Weinger

A married father of three, Justin Weinger works in private equity as a Corporate Finance Manager, he is also an avid blogger and personal finance enthusiast with a strong history of working in the automotive and publishing industry.