6 Things to Consider When Adopting a Subscription-Based Model

With so many successful companies offering subscription-based services to customers, it's easy to follow suit. But before you change your revenue model, consider the following tips from these six entrepreneurs.

A. Create a Fake Button


Before launching a subscription model, we created a button that said "Subscribe," then directed people to a page that said, "Thank you for your interest in subscribing. Enter your email and we'll get back to you once this item is available for subscription." That helped us enormously in validating the interest for subscriptions before we put a lot of effort into making it happen. - Lisa Curtis, Kuli Kuli

A. See If You Can Offer a Low Monthly Cost


A great way to know whether you should adopt a subscription model in your business is to look at what the current model is and how it's working for your competitors. Another option is to offer a low, recurring monthly subscription that allows for access to those who can't afford the full price upfront, but also adds to your bottom line in the process. After so many months, this would be pure profit. - Zac Johnson, How to Create a Blog

A. Look for Steady and Continual Demand


You need to assess your product or service. Will it be of temporary benefit? Will the majority of the benefit be recognised in the initial period with lesser benefit thereafter? Or will your product or service provide a straight line continual benefit for the customer? If the latter, a subscription may be the best model. It's less upfront (but of great value in the long term), secure, and locked in revenue. - Tom Chalmers, IPR License

A. Find Out Whether Client ROI Supports It


If you are going to create a recurring revenue model for any product/service, make sure you can justify the value and ultimately show an ROI on an ongoing basis. If you want sustainable revenue, you have to be able to justify it versus other recurring costs for your clients. If you offer something essential, this may be a good fit. Otherwise, you may need to restructure your offering. - Christopher Rodgers,Colorado SEO Pros

A. Consider a Mixed Strategy


Look at your product portfolio and ask what fits. Are consistent support and regular updates viable? Does your product lend itself well to a subscription (i.e. an enterprise software platform)? Keep in mind that this is not an either/or decision. You could adopt a mixed strategy: sell your products, then offer consumers a subscription for additional services. - Steven Buchwald, Buchwald & Associates

A. Ask Yourself if There's Value


Determine whether your customer will actually see value in receiving your content or product on a recurring basis. My team and I are talking through this decision right now. For us, it means keeping people coming back to interact with our digital and physical games. This doesn't just mean putting the games out there. It also means keeping people engaged through updates to this content on a regular basis. - Coy Yonce, Mantis Digital Arts

These answers are provided by members of FounderSociety, an invitation-only organization comprised of ambitious startup founders and business owners.