Successful product development: Optimizing your business model

Rethink your offering: subscription models with a future

With a little creativity, many products can be transformed into an attractive subscription model. Here are the most common models with examples for SMEs:

Access model:

• Customers pay a recurring fee to access products or services.
• Example: A medium-sized tool manufacturer offers craftsmen a flat rate for tools including maintenance and repair.

Replenishment model:

• Products that are regularly consumed are automatically replenished.
• Example: Razor blade or coffee subscriptions.

Surprise box model:

• Customers regularly receive a box with personalized products.
• Example: A fashion retailer sends out a monthly “style box” with items of clothing tailored to customers’ individual tastes..

Membership model:

• Customers pay for a club membership and benefit from exclusive advantages.
• Example: Fitness studios or management consultancies that offer exclusive consulting services as part of the club membership

Software-as-a-Service (SaaS) model:

• Use of a software or platform for a monthly fee.
• Example: cloud storage or business software.

Pay-per-use model:

• Billing based on actual usage.
• Example: A print shop where customers receive a fixed quota of printing services for a flat rate.

Freemium model:

• Basic version free of charge, extended functions for a fee.
• Example: Newspapers, magazines, software or online games.

Affiliate model:

• Partners advertise products and receive commissions for successful referrals.
• Example: Online marketing or complementary products such as printers and toner.

License model:

• Customers acquire usage licenses limited in time or quantity.
• Example: Software or copyrighted content.

Franchise model:

• Use of an established business model in return for fees and revenue shares.
• Example: gastronomy or retail.

Checklist: Is your product suitable for subscription?

Before you decide on a subscription model, you should answer the following questions:

• Recurring demand:
  Is your product or service needed or consumed on a regular basis?
• Value proposition:
  Does a subscription offer clear added value compared to individual purchases (e.g. convenience, cost savings, exclusivity)?
• Customer relationship:
  Does the product or service foster a long-term customer relationship?
• Differentiation:
  Does a subscription help differentiate you from your competitors?
• Scalability:
  Is the business model scalable to serve a growing volume of subscribers?
• Logistics:
  Can the delivery or provision of the product or service be organized efficiently and reliably?
• Payment processing:
  Is a system for recurring payments in place or can it be implemented?
• Customer management:
  Is there a way to manage customer data and subscriptions?

Software support for your subscription business

Managing subscriptions involves special challenges such as billing, customer management and dunning. Specialized subscription software helps you to automate the processes involved and maintain an overview.

Advantages of subscription software:

• Efficiency:
  Automated invoicing, payment processing and reminders.
• Flexibility:
  Various subscription models and price options.
• Transparency:
  Overview of subscribers, sales and key figures.
• Integration:
  Connection to CRM and accounting systems.

Subscription software in practice

There are numerous solutions available on the market. It is important that your software can be seamlessly integrated into your existing systems, such as Microsoft Dynamics Business Central.

This is exactly what bill-to is made for. Find out in our webinar how you can optimize your subscription offering with the help of our add-on for Business Central.

Register now! To the webinar overview