[Recurring Revenue Series] 9 Ways to Set Up a Subscription Business Model - Exit Advisory Group

[Recurring Revenue Series] 9 Ways to Set Up a Subscription Business Model


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It’s the ultimate dream, living the lifestyle you want because your business is on autopilot. Your subscription business model creates recurring revenue, which means you can relax, knowing you have a steady stream of income hitting your bank account.

Before you say that it sounds lovely, but it just doesn’t apply to your line of work or industry. You’d be surprised, subscription business models are opening up amazing new opportunities across all industries, and the time has come to re-examine the way you do business.

In this series we will cover the 9 Models of Recurring Revenue, including the The Network Model, The Subscription Box Model, The Content Subscription Model, The Private Club Model, The Front-of-the-Line Model, The Membership Website Model, The Simplifier Model, The Peace of Mind Model and The Consumables Model.

Truth be told, it doesn’t matter whether your business is 100% online, bricks and mortar or service based – there is a new economy emerging.

Gartner predicts that by 2023, 75 percent of organisations selling direct to consumers will offer subscription services.

Who is switching to the subscription model?

It’s not only the big behemoths like Amazon, Apple and Microsoft that have adopted subscription models. It’s more than likely you have recurring payments for at least one or a few combinations of newspapers, music, cloud storage, accounting software and video-streaming to name a few. While we’ve become familiar with the big multinationals and SaaS companies taking the lead, it’s a model that’s been accelerating at great speed across different industries and sectors. These days we can buy a subscription for everything from cases of wine to dog treats and kids craft packs!

businesses tripping over themselves to introduce a subscription model

So why are businesses tripping over themselves to introduce a subscription model into their business?

Businesses with recurring revenue have a double advantage.

Not only do they enjoy a steady, predictable stream of income, but this in turn impacts the value of the business.

Why? Because acquirers will pay a premium for the predictability of the income.

Forward-looking revenue models are powerful, you can plan your growth knowing that you have the income to support it. You can also discover much more about your customers and their behaviours and calculate your Customer Lifetime Value (CLV). These factors combine to reduce risk, something that is very appealing to investors.

Whether you are thinking about an exit strategy, or perhaps you just want to focus on growth – if you embed a subscription model into your business, you will be targeting ‘value driven growth’, that is the kind of growth that also contributes to increasing the value of your business.

In terms of business valuation, there are few things more important than recurring revenue.

It’s the best damn business model in the world… it’s got great predictability for planning, which helps you as an entrepreneur sleep at night.”

Mike McDerment

CEO & Co-founder, freshbooks.com

Not sure how to implement a subscription model in your business?

Stay tuned. As mentioned above, in this series, we’ll outline 9 different models to drive recurring revenue. It will open your eyes to a number of different options that are working for other businesses.

As you read it, stop yourself from thinking, “That would never work in my industry”. Instead, choose to ask the questions, “How could this model apply to my industry?” and “What part of this model could I borrow for my company?”

You'll discover that subscription models can work in the most unlikely of businesses and industries. If you have an open mind, it could change the way you do business forever!

Keep an eye out for our next article where we’ll dive into the first model of recurring revenue – The Network Model.

If you can't wait to read about the rest of the models, we've listed them here:

Recurring Revenue Series: A Guide to Recurring Income – The Network Model

Recurring Revenue Series: Surprise and Delight People with The Subscription Box Model

Recurring Revenue Series: Create Content That Pays with the Content Subscription Model

Recurring Revenue Series: How to Create a Private Club Model

Recurring Revenue Series: Jump the Queue with a Front-of-the-Line Subscription Model

Recurring Revenue Series: The Membership Website Model: Is it Right for You?

Recurring Revenue Series: Simplify Peoples Lives with this Powerful Subscription Model

Recurring Revenue Series: A Subscription Model for Peace of Mind

Recurring Revenue Series: How to Create a Subscription Model That Solves Everyday Problems

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