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Also known as: subscription business, recurring revenue model

Subscription Model

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Definition

Subscription Model: A subscription model charges customers recurring fees for ongoing access to a product or service. Subscriptions create predictable revenue, improve customer lifetime value, and align company success with customer retention. Most SaaS companies use subscription pricing, typically billed monthly or annually.

Example Usage

“Moving from one-time purchase to subscription increased our LTV 4x. Annual plans improved cash flow and reduced churn 30%.”

Common Misconceptions

Subscriptions work for everything. Some products are better as one-time purchases; match model to usage pattern.
Monthly billing is always better. Annual plans reduce churn, improve cash flow, and signal commitment.
Just add recurring billing. Subscription success requires continuous value delivery and customer success focus.

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