Editing Subscription business model (section)

===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>