Ready to Enjoy the Benefits of the Subscription Opportunity?

3 min read

A subscription business model is characterized by a product or service that is paid for by the customer or consumer on a continuous, periodic basis. It includes ongoing access to content, products or services for the duration of the subscription agreement.

Selling subscriptions is nothing new. In fact as I recently read in a very interesting interesting article, it has been around for centuries. But the subscription business model has become mainstream in recent years. Interest in subscription management is being spurred on by the need to serve a new customer type that demands a totally new experience in how products and services are acquired and consumed and the proliferation of mobile devices that encourage the consumption of applications, movies, publications, data and related digital content.

Companies from different industries, even selling physical products or services, are all adapting their business models to encourage the growth of premium subscription services. Dropbox or Salesforce.com are clear examples of successful SaaS companies using a subscription model. The Honest Company that was expected to bring in $150 million in revenue in 2014 or the Dollar Shave Club are two impressive examples.

For customers, subscriptions mean convenience, since they remove the thinking out of a purchase decision and usually having a flat rate, subscriptions help customers stay within their budget, always. For companies, subscriptions offer an opportunity to build strong, long-term relationships with their customers as well as increase the predictability and profitability of their revenue.

The main challenge for these companies is to ensure customer loyalty and control churn. To achieve that, companies must continuously provide higher value to customers while competing effectively with other existing players. This means to manage more complex and dynamic pricing and billing models that allow them to adapt more efficiently to the highly demanding consumer.

Companies are then trying to adapt their business solutions to manage the business processes required by a subscription model. A task a lot of companies are struggling with, since they own legacy solutions that are not well-suited to support the new requirements. Not strange then to see why according to MGI Research, companies will invest between 0,5% to 1,5% as a percentage of total revenue in modern billing solutions during the coming years, resulting in a market size in 2021 for these solutions of about $8.2B.

Some of the most important capabilities offered by these solutions include:

  • Support to multiple business models that result in a combination of subscriptions, limited time offers, perpetual ownership, prepay/pay down, post-pay/usage base billing or one-time transactions, that can be defined in multiple currencies and together with a powerful promotions and discounts engine to gain higher market share
  • Easily manage accounts, contracts and subscriptions, with rapid creation of new contracts and full control over the subscription life cycle, from sign-up till cancellation.
  • Adapt to complex billing scenarios allowing flexible billing periods that include weekly, monthly, quarterly, and annually, and preparing companies for metered billing, while enabling a better automated process for invoicing, collections and dunning
  • Support specific product and services revenue recognition models and facilitate final integration with accounting

There are plenty of available solutions today that try to cover these needs, with leading companies like Zuora or Aria, but also many others like Metratech, Recurly, Chargebee or Fusebill.

At Openbravo, we help companies with our Subscription and Recurring Billing Solution. A comprehensive out-of-the-box functionality from pricing definition to automatic revenue recognition and accounting, which is very easy to use and extend and which is highly interoperable with legacy systems and channels. Built on top of a highly scalable web architecture and the option to be deployed both On Cloud or On Premise.

If you want to know more, check out our Subscription Management and Recurring Billing solution and attend our next webinar, to find out about its key capabilities and why it was recently chosen by a software and technology giant, after competing against other leading solutions like Zuora.