The triumph of subscription models and how billing works

t3n from 14.12.2020: The trend worldwide is toward renting instead of buying, because both customers and companies benefit from subscription models. Read here which models are available and what you have to pay attention to when billing.

The subscription economy marks the transition from an ownership economy to a subscription economy. Initially, this trend was mainly related to books and music – but now it covers almost all industries. In this context, experts speak of a customer-driven economy, because it is primarily the change in customer behavior that makes it necessary to further develop existing business models.

Almost everything can be offered on a subscription basis

Software as a Service has long been a significant topic in the world of IT, as companies increasingly use external services for their IT applications, keyword: cloud. The end point of this development could be described as Everything as a Service: This would mean that companies would no longer operate their own systems internally and would instead procure all services externally. We are not at this point yet, but the trend is pointing in this direction.

There are already numerous different models with which products and services of all kinds can be offered on a subscription basis.

Via Netflix, providers stream movies, documentaries and series. Dollar Shave Club regularly delivers razor blades and grooming products to its subscription customers’ doorsteps. This way, buyers benefit from favorable prices and no longer have to worry about replenishment themselves. Amazon offers a money-saving subscription, making it possible to order groceries, household products and drugstore items on a regular basis at a reasonable price.

Many members of the Netflix generation no longer attach great importance to their own vehicle and also see the future of mobility in subscriptions. Advantages here: Anyone who takes out a flat rate no longer has to worry about taxes and insurance. And the subscriber is also much more flexible in the use of his vehicle. The necessary costs for repairs and inspections are also included in the subscription price.

The rule is: what can be offered on a subscription basis, companies will eventually actually offer on a subscription basis. And even if products are not suitable for subscription sales at first glance, sooner or later a new subscription model will develop for these very products.

These subscription and billing models are available for selection

So far, there are the following common subscription models:

• Rental subscription: The customer rents your product for a fixed period of time and remains flexible even for long-term use.
• Consumption subscription: The principle of car sharing is a classic example of this subscription model, where your customer only pays for actual usage.
• Replenishment Subscription: Your company sends the same or similar products to customers at specific time intervals. This is especially useful for food or items of everyday use.
• Club membership: As a club member, the subscriber receives access to exclusive content or benefits from discounts. This model is known from the gym.

Billing is not entirely straightforward for subscription models. At the moment, these are the main types of billing used:

• Usage-based billing: The customer only pays for the service actually used.
• User-based billing: A flat fee is incurred that is independent of the actual usage time or intensity.
• Freemium: The customer starts with a free plan and may later opt for a premium subscription with even more features.

nexnet offers a platform for subscription management

Do you want to meet the changing demands and desires of your customers and also try out new monetization strategies with your products or services? Then you should think about transitioning to one or more subscription models! If you need support with this, nexnet is your contact.

The experts at nexnet have been dealing with business process outsourcing for over 20 years and are available to answer all your questions about subscription billing, i.e. the billing of subscription models. The available modules include contract and customer management as well as payment transactions and monitoring of incoming payments. Furthermore, with nexnet you can be sure that your data is optimally protected according to DIN ISO 9001:2015. Unlike providers from the USA or China, nexnet operates its DSGVO-compliant solutions for the subscription economy exclusively in Germany and thus only high-performance and scalable data centers in Germany are used.

If you choose a subscription model, nexnet will support you in the secure and efficient execution of all relevant transactions. You’ll be in good company, because nexnet counts well-known companies from various industries such as e-commerce, the media industry and streaming service providers as well as retail groups or large telecommunications companies among its customers. The range of areas once again shows that more and more companies are moving to subscription models and new solutions will continue to establish themselves.

It’s up to you to decide whether introducing a subscription model makes sense for your business. However, if you take this step, nexnet will support you in everything to do with billing. You can find more information on subscription models and the appropriate billing methods in nexnet’s free Subscription Management Report.