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Everything as a Service

The Triumph of the Subscription Model and How the Billing Succeeds

t3n 14/12/2020The worldwide trend of renting instead of buying  is growing, for both customers and companies profit from subscription models. Read on to find out which models they are and what you have to look out for in the billing process.

The subscription economy marks the transition from an owner-economy to subscription services. Initially this trend was related primarily to books and music – in the meantime it has reached almost all sectors of the economy. Experts speak in this context of a customer-driven economy, as it is above all the change in customer behaviour that has made it necessary to adapt the existing business models.

Software as a service has long been a significant topic in the world of IT, with companies increasingly turning to external service providers for their IT applications. The key word: cloud. The culminating point of this development can be described as Everything as a Service, whereby companies that companies no longer operate their own systems internally, and instead obtain their services externally. We haven’t reached that far yet, but the trend is pointing in this direction.

There are already many different models with which products and services of all kinds can be offered in a subscription.

Via Netflix the providers stream movies, documentaries, and series. The Dollar Shave Club delivers razorblades and care products to the doorsteps of its subscription customers at regular intervals. In this way the buyers profit from low prices and don’t have to take care of replenishment themselves anymore. Amazon offers Subscribe and Save and enables low-cost and regular ordering of food, household products, and toiletries.

Many of the Netflix generation no longer place any great value on owning their own car and see the future of mobility in subscription. The advantages here: If you agree on a flat rate, you don’t have to worry about taxes and insurance anymore. And subscriptions are much more flexible when it comes to using your car. The necessary costs for repairs and inspections are also included in the subscription price.

A basic rule applies here: Anything that can be offered in a subscription will one day be offered by companies in a subscription. And if at first glance products don’t seem suitable for being sold in subscription, sooner or later a new subscription model for these very products will be developed.

Choose between these Subscription- and Billing Models

So far, the following subscription models have been popular:

What to look out for:

  • Rental subscription:  The customer rents your product for a specific time and also remains flexible regarding long-term use.
  • Consumption subscription: The principle of car-sharing is a classic example for this subscription model, where your customers only pay for what they actually use.
  • Replenishment subscription: At defined intervals, your company sends the same or similar products to its customers. This is primarily useful for food or goods that are used every day.
  • Club membership: As club members, the subscribers receive access to exclusive content or profit from concessions. This model is well-known among gym users.

Billing can be complicated with subscription models. At the moment three main billing types are used:

  • Use-based billing: The customers only pay for the service they have actually used.
  • User-based billing: A flat fee is charged, which is independent of the actual duration or intensity of use.
  • Freemium: The customer starts with a free rate and then decides later whether to opt for a premium subscription with even more functions.

nexnet Provides a Platform for Subscription-Management

You want to be able to meet the changing requirements and wishes of your customers, and to try out new monetizing strategies with your products or services? Then you should think about transitioning to a subscription model – or to multiple subscription models! If you need support in this, nexnet will be happy to help.

nexnet’s experts have been involved in business process outsourcing for over twenty years and are at your service for any questions you might have on the topic of subscription billing – that is, the billing of subscription services. Its available service modules include contract- and customer management, payment processes, and the monitoring of incoming payments. In addition, with nexnet you can be sure that your data will be protected according to DIN 9001. Unlike providers from the USA or China, nexnet offers its GDPR-compliant solutions for the subscription economy exclusively in Germany, and thus only uses high-performance and scalable data centres in Germany.

If you decide in favour of a subscription model, nexnet will support you in the secure and efficient implementation of all relevant transactions. You’ll be in good company here, because nexnet counts among its client well-known companies from a variety of sectors, such as e-commerce, the media and streaming services, as well as retail groups or large telecommunications companies. The range of areas underlines the fact that more and more companies are migrating to subscription models and that new solutions will continue to establish themselves.

You’ll have to decide for yourself whether the introduction of a subscription model makes sense for your company. If you take this step, nexnet will support you in everything relating to billing. Further information on subscription models and the suitable types of billing can be found in nexnet’s free Subscription-Management-Report.