Editing Subscription business model (section)

==Effects==
===Vendors===
Businesses benefit because they are assured a predictable and constant revenue stream from subscribed individuals for the duration of the subscriber's agreement. Not only does this greatly reduce uncertainty and the riskiness of the enterprise, but it often provides payment in advance (as with magazines, and concert tickets), while allowing customers to become greatly attached to using the service and, therefore, more likely to extend by signing an agreement for the next period close to when the current agreement expires.<ref name=":1">{{Cite web |last=BlackCurve |date=March 9, 2016 |title=The Power of Subscription Pricing |url=https://blog.blackcurve.com/the-power-of-subscription-pricing |access-date=January 9, 2024 |website=BlackCurve}}</ref>

In an integrated [[Software release life cycle|software]] solution, for example, the subscription pricing structure is designed so that the revenue stream from the recurring subscriptions is considerably more significant than the revenue from simple one-time purchases. Some subscription schemes (like magazines) also increase sales by not allowing subscribers to accept or reject any specific issue. This reduces customer acquisition costs and allows [[personalized marketing]] or [[database marketing]]. However, the system requires that the business have an accurate, reliable, and timely way to manage and track subscriptions.

From a marketing-analyst perspective, the vendor has the added benefit of knowing the number of currently active members since a subscription typically involves a contractual agreement. This so-called 'contractual' setting facilitates [[customer relationship management]] to a large extent because the analyst knows who is an active customer and who recently churned.<ref>{{cite journal |url=http://econpapers.repec.org/paper/rugrugwps/05_2F348.htm |author=J. Burez & Dirk Van den Poel |title=CRM at a Pay-TV Company: Using Analytical Models to Reduce Customer Attrition by Targeted Marketing for Subscription Services |journal=Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium |year=2006 |publisher=econpapers.repec.org |access-date=2007-01-07 |archive-date=2007-03-03 |archive-url=https://web.archive.org/web/20070303002903/http://econpapers.repec.org/paper/rugrugwps/05_2F348.htm |url-status=live }}</ref>

Additional benefits include a higher average [[customer lifetime value]] (ACLV) than that of 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.<ref>{{Citation | title = Subbly.co: Best Practices for Online Business Models | url = http://www.subbly.co/blog/10-best-practices-for-online-subscription-business-models/ | access-date = 9 July 2014 | archive-date = 24 August 2017 | archive-url = https://web.archive.org/web/20170824181102/http://www.subbly.co/blog/10-best-practices-for-online-subscription-business-models/ | url-status = live }}</ref>

Some software companies such as [[Adobe (company)|Adobe]] and [[Autodesk]] have moved from a perpetual licensing model to a subscription model, known as "[[software as a service]]". This move has significant implications for sales and customer support organizations. Over time, the need to close large deals decreases, resulting in lower sales costs. However, the size of the customer support organization increases so that the paying customers stay happy.<ref>{{Citation | title = Software Pricing Trends | url = https://www.pwc.com/us/en/technology-innovation-center/assets/softwarepricing_x.pdf | access-date = 14 August 2016 | archive-date = 27 August 2016 | archive-url = https://web.archive.org/web/20160827131306/https://www.pwc.com/us/en/technology-innovation-center/assets/softwarepricing_x.pdf | url-status = live }}</ref>

===Customers===
Consumers may find subscriptions convenient if they believe they will buy a product regularly and might save money. The customer saves time for repeated delivery of the product or service.<ref name=":1" />

Subscriptions which exist to support clubs and organizations call their subscribers "members" and they are given access to a group with similar interests.<ref name=":1" />

Subscription pricing can make it easier to pay for expensive items since they can often be paid for over time and thus can make the product seem more affordable. On the other hand, most newspaper and magazine-type subscriptions are paid upfront, which may prevent some customers from subscribing. Fixed prices may be an advantage for consumers who frequently use those services. However, it could disadvantage a customer who plans to use the service frequently but later does not. The commitment to paying for a package may have been more expensive than a single purchase. In addition, subscription models increase the possibility of [[vendor lock-in]], which can have fatally business-critical implications for a customer if its business depends on the availability of software: For example, without an online connection to a licensing server to verify the licensing status every once in a while, a software under a subscription-model would typically stop functioning or fall back to the functionality of a freemium version, thereby making it impossible (to continue) to use the software in remote places or particularly secure environments without internet access, after the vendor has stopped supporting the version or software, or even has gone out of business leaving the customer without a chance to renew the subscription and access his data or designs maintained with the software (in some businesses it is important to have full access even to old files for decades). Also, consumers may find repeated payments to be onerous.<ref name=":1" />

Subscription models often require or allow the business to gather substantial amounts of information from the customer (such as magazine mailing lists), and this raises issues of [[privacy]].<ref name=":1" />

A subscription model may benefit 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 leave the subscription to expire and find another seller.<ref name=":0">{{cite web |url=http://news.cnet.com/2100-1012-5169536.html |author=Alorie Gilbert |title=Software Execs Bash Their Industry's Approach |publisher=news.com.com |date=March 3, 2004 |archive-url=https://archive.today/20120527035007/http://news.cnet.com/2100-1012-5169536.html |archive-date=May 27, 2012 |url-status=dead }}</ref>

===Environment===
Because customers may only need or want some of the items received, this can lead to waste and an adverse effect on the environment, depending on the products. Greater volumes of production, greater energy and natural [[resource consumption]], and subsequently greater disposal costs are incurred.{{Citation needed|reason=Reference to this theory or any literature |date=August 2022}}

Subscription models also create the opposite effect. This can be illustrated by subscribing to a service for mowing lawns. The effective use of a single mower increases when mowing for a collection of homes; instead of every family owning a lawnmower that is not used as much as the service-providing mower, the use of resources for producing lawnmowers, therefore, decreases while lawns stay cut.{{Citation needed|reason=Reference to this theory or any literature |date=August 2022}}