Subscription Business Model


I have a system where you are guaranteed to make money! Before I tell you, you must watch this short 20 minute video, and then there is a seminar focused directly at you! It only requires 15 minutes a day, but you need to follow this exact procedure which we will show you at the seminar…

Honestly, I have a system, but I’m not going to make you watch a seminar, and there is no magic to it. It simply comes down to how you model your business and how you can convert a one-time or infrequent customer into a regular revenue stream.

Customers fall into two big buckets: one-time customers or subscription customers. Of course there are sub categories galore—regular one-time customers and subscription customers that don’t renew—but we’re just sticking with the big picture here. Just in case you’re wondering, it doesn’t really matter what you sell, it just depends how you structure your business.

Let’s give a few examples:

Starbucks uses a one-time customer model. Each time a customer goes there, they must pay directly for the purchase made. The same customer can come back every day, and each time they pay the current price for their drink. If they decide they no longer want Starbucks, the relationship ends and Starbucks no longer makes any revenue. You cannot purchase an “all you want in a month” card.

The massage place down the street allows one-time customers at $100 per two-hour massage OR you can become a member and prepay the year, which allows two massages a month (non-cumulative) for a discount of 20% or $1,920 for the year. Who doesn’t want to save 20%? So of course quite a few customers sign up—not all—but some.

For the massage place they now have a significant percent of their revenue that comes in monthly, whether or not the customer actually shows up, which smooths out their revenue. This in turn allows them to focus more on providing an improved customer experience—more than acquiring a new customer or incentivizing an existing customer to make the next appointment. Basically it shifted the immediate burden of getting the massage to the customer and frees up a lot of revenue headaches in the process.

This isn’t new. Microsoft is moving from a purchase model to a subscription model with Office 365 and Windows 10. How about something big? When you lease a car, that’s a subscription and at the end of this subscription, they heavily incentivize the customer to renew the subscription by ignoring mileage overages if you renew. Now how about something really big like airplanes? A leasing company usually owns airplanes and leases them to the airlines. It’s not a direct subscription, but more of a man in the middle subscription plan. Health care? Insurance is a subscription plan, especially if you have an HMO where they own the hospital too. There is a carwash near me that has a subscription plan too: you pay a monthly fee and get to drive through as many times as you want per month.

So now you know the key to this system. You get people to subscribe. The catch is that it’s not so easy to get people to subscribe to your service. Face it: getting someone to prepay for a years’ worth of massages is not an easy task. But what if you took a crawl-walk-run strategy?

Let’s say you invested in a car-detailing trailer and you are a professional car washer. Don’t laugh—a cleaning cars is a $5.8 billion industry with about 8 million cars washed per day. They are not getting rich from me, but the little woman is making a significant contribution and some. So you now have a choice: attract your customers one by one through tried and true marketing methods, coupons or offer some sort of subscription along with your regular methods. It could be a percentage: 50% are subscriptions 50% are one-time customers (or any percentages as you feel more comfortable).

So what would that look like?

First of all, I’m going to assume you’re a solo operation and you have some regular customers and the rest are one-timers. It’s also pretty easy to understand a regular customer is not always regular. Instead of washing every month, sometimes it stretches to five or six weeks. In those cases you just offer a sizable discount with some type of pre-pay incentive for a regular once a month wash and detail. A six-month deal for 15% discount or an annual deal for 25% off has to be significant for them to sign up, otherwise there is no incentive on their part.

If they averaged five weeks between washes before at $150 each you would make a projected $1,500 from them over the year. If they signed up, you would make a guaranteed $1,350 for the year. This is where you need to ask yourself: is a guaranteed revenue stream of $1,350 worth $150 to you? In both cases you’re covering your costs, so that isn’t really a factor. It just comes down to how you look at it. If taking the variability away from the customer and “locking them in” for the year is worth $150, a subscription model could be just the thing you’re looking for.

Of course this also comes down to work factor and a few other things. You do not have to offer this to everybody; it’s not rocket science to offer this to business people with $50k+ cars and not offer it to the soccer mom with three kids. The variations and ways to spin this are endless, but it will always come down to a basic premise of giving the customer a discount for purchasing goods or services in the future for a payment or promise of payment now.

I’ve always wondered why hair and nail salons don’t embrace this model more; they know your hair is going to grow, 95% of the costs are fixed, and with the market being highly fragmented (customers have lots of choices) you would think they would want to lock in customers for the year. On the other hand, they have a pretty high failure rate, maybe this explains why. Just a random curiosity.

So back to where I started: I have this system and it only takes 15 minutes a day.

The next time you’re working with a somewhat regular customer and the conditions are favorable ask them if they would like to save 25% off your service in exchange for prepaying for a year. It will only take a minute or two, and they might say “No” but on the other hand they might say “Yes.”


About Author


Hi, I am Aaron Moss, the driving force behind The Logical Entrepreneur website and social presence. I thank you so much for stopping by and hope you enjoyed your visit.