What are subscription-based businesses all about?

Do you hesitate to press on “subscribe” options? Not sure if you want a particular service so badly you can imagine yourself paying for it for the next few years? Have you ever calculated how much you pay for subscription services per year? Have you ever had a struggle with unsubscribing from services? You don’t have to worry anymore — Revuto has a solution for you! You can easily control your subscriptions with 3 options within the Revuto app:

• Block
• Snooze or
• Approve

subscription charges or any other recurring payments as they occur.

Use Revuto to APPROVE and pay only when you decide so

By using the Revuto app you can easily choose between your credit or debit cards to APPROVE a specific payment and to protect yourself of unwanted subscription charges.

BLOCK and Unsubscribe in a second

When the payment is due, with the Revuto app you can BLOCK payment to any subscription or a free trial using a single tap.

If you ever decide to reactivate a subscription, simply UNBLOCK it. It’s that easy.

SNOOZE to pay when it suits you the best

When payment is due, only with the Revuto app, you can choose to SNOOZE a payment up to 7 days simply by sliding your finger.

If you decide to reuse the service, UNBLOCK it. It’s that easy.

History of the Subscription Business Model

Subscriptions and recurring payments nowadays seem to be mostly part of online payments, but the truth is the subscription business model was build up by publishers of books and periodicals back in the 17th century.

Definition of a subscription-based model

“The subscription business model is a business model in which a customer must pay a recurring price at regular intervals for access to a product. Subscriptions offer monthly, yearly, or seasonal access to a product or service, instead of selling products individually.”

Wiki, 2020.

What are subscriptions all about?

• A one-time sale of a product can become a recurring sale and can build brand loyalty;
• Renewal of a subscription may be periodic and activated automatically so that the cost of a new period is automatically paid for by a pre-authorized charge to a credit card or a checking account. A common variation of the model in online games and on websites is the freemium model, in which the first tier of content is free, but access to premium features (for example, game power-ups or article archives) is limited to paying subscribers;
• Businesses benefit because they are assured a predictable and constant revenue stream from subscribed individuals for the duration of the subscriber’s agreement. In integrated software solutions, for example, the subscription pricing structure is designed so that the revenue stream from the recurring subscriptions is considerably greater than the revenue from simple one-time purchases;
• Additional benefits include a higher average customer lifetime value (ACLV) compared with nonrecurring business models, greater customer inertia and a more committed customer base as it transitions from purchase to opt-out decisions, and more potential for upselling and cross-selling other products or services. Some software companies such as Adobe and Autodesk have moved from a perpetual licensing model to a subscription model, known as “software as a service”. However, the size of the customer support organization increases so that the paying customers stay happy;
• Consumers may find subscriptions convenient if they believe that they will buy a product on a regular basis and that they might save money. For repeated delivery of the product or service, the customer also saves time.

Psychological Effects

Subscription pricing can make it easier to pay for expensive items since it can often be paid for over a period of time and thus can make the product seem more affordable. A subscription model may be beneficial for the software buyer if it forces the supplier to improve its product. Accordingly, a psychological phenomenon may occur when a customer renews a subscription, that may not occur during a one-time transaction: if the buyer is not satisfied with the service, he/she can simply leave the subscription to expire and find another seller.

There’s another factor at play, too, and that’s the psychological effect subscriptions have on customers. If someone pays for a subscription service, they’ll feel obligated to use the service and justify that expense in their mind. Businesses will gladly exploit the sunk-cost fallacy (Forbes, 2019).

You can find some interesting recently published statistics about the subscription business model and the impact they’re having on the global economy in the article: https://blog.fusebill.com/interesting-recent-statistics-on-the-subscription-business-model

Control Your Subscriptions with Revuto!

If you want to control your subscriptions — sign up to the Revuto app: https://revuto.com/, get early access, and use it for free. You can also join our Referral Program and earn up to 600 Revutokens!