Transformation in retail: future trends in the subscription business

The retail sector is undergoing fundamental change. New technologies, changing customer requirements and the desire for more flexibility are presenting companies with new challenges.
Subscription models in particular are evolving: they are becoming increasingly flexible, individualized and consumption-based. The focus is on providing a seamless shopping experience and personalized service.

Subscription models: more flexible and individual


Subscription models play an interesting role in the retail transformation process. Up to now, they have mostly followed a rigid interval and therefore lack flexibility. However, according to the “Trends in Retail 2025” study, the next generation of subscription models will be increasingly individualized and consumption-based. Companies will benefit from this: services such as rental and hire offers rank third in the study in terms of the likelihood of new shopping concepts being used.

Target group of the future: young, tech-savvy, high-income

19 percent of respondents already use such models or can imagine using them. Young, technology-savvy men with medium to high incomes are a particularly attractive target group. They are keen to experiment and are willing to invest in smart solutions. Nevertheless, companies should also address other customer groups in order to be successful in the long term.

What are usage-based subscriptions?

One example of usage-based models are mobile data contracts where customers only pay for the data volume they actually use. Such models are also established in the IT sector, for example with software-as-a-service (SaaS) or cloud storage services. Innovative approaches are also possible in other areas: for example, coffee machine manufacturers could cooperate with coffee suppliers to automatically deliver fresh coffee.

Sustainability and flexibility: a strong duo

Usage-based models promote sustainable consumption. Customers can use products without owning them. Examples such as car sharing, city cars or the combination of rail subscriptions and rental bikes show how environmentally friendly such approaches can be.

The advantages for companies and customers

Usage-based subscriptions offer numerous advantages:

  • Flexible prices: Pricing models can be customized. Frequent users often pay less per unit than occasional users, as is the case with most streaming services. If resources are scarce or peak usage times need to be cushioned, as is the case with transportation, intensive users can also pay higher prices.
  • Greater customer loyalty: Convenient and transparent billing models strengthen customer loyalty.
  • Lower decision hurdles: Flexible models take away customers’ worries about paying too much or too little.
  • Better customer understanding: Usage data enables companies to optimize their offers and tailor them to individual needs.

Successful variants of usage-based subscriptions

There are three common models:

  • Tiered model: costs rise or fall depending on usage, such as with electricity tariffs.
  • Flat rate per unit: A fixed price per unit used, such as with some mobile phone contracts.
  • Hybrid model: A combination of basic fee and usage-based costs, typical for many SaaS services.

The choice of model depends on the customer’s needs and willingness to pay.

The challenges of implementation

Despite the advantages, there are a few hurdles that companies need to overcome:

Usage recording and billing

  • Accuracy: Usage must be recorded precisely. Inaccuracies lead to customer frustration and billing problems.
  • Complexity: Measuring usage is technically demanding, especially for high-tech products. What exactly does “consumption” mean for a smartphone, for example? Are users prepared to transfer their data over the long term? Is data transmission sufficiently protected against misuse?
  • Data quality: Incorrect data jeopardizes the entire billing process.

Pricing and customer acceptance

  • Transparency: Customers must understand how prices are calculated. Models that are too complicated are a deterrent.
  • Predictability: Fluctuating prices can cause uncertainty. Companies should communicate clear price ranges.
  • Understanding of value: Customers must recognize the added value of the subscription in order to accept attractive pricing.

Technical requirements

  • IT infrastructure: A scalable, secure infrastructure for data processing is essential.
  • Security: Data protection must be a top priority, especially when dealing with sensitive user data.

bill-to: How to master the challenges

Our bill-to 365 software supports you in this. It integrates seamlessly into Microsoft Dynamics Business Central and facilitates usage recording and secure billing.
Would you like to find out more? Visit our next webinar! We will show you in a practical way how you can make the most of the advantages of usage-based models with bill-to 365. Information and registration here.

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