The triumph of subscription models and how billing works
The global trend is towards renting instead of buying, as both customers and companies benefit from subscription models. Read here to find out which models are available and what you need to pay attention to when billing.
The subscription economy marks the transition from an ownership economy to subscriptions. Initially, this trend mainly related to books and music - it is now affecting almost all sectors. In this context, experts speak of a customer-driven economy, as it is primarily the change in customer behavior that necessitates the further development of existing business models.
Almost everything can be offered as a subscription
Software as a Service has long been an important topic in the world of IT, as companies are increasingly using external services for their IT applications - keyword: cloud. The end point of this development could be described as Everything as a Service: This would see companies no longer operating their own systems internally at all and instead procuring all services externally. We have not yet reached this point, 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.
The providers stream films, documentaries and series via Netflix. Dollar Shave Club regularly delivers razor blades and grooming products to its subscription customers' doorsteps. This means that customers benefit from low prices and no longer have to worry about replenishing their supplies themselves. Amazon offers a savings subscription, enabling customers to order groceries, household products and drugstore items at low cost and on a regular basis.
Many members of the Netflix generation no longer attach great importance to owning their own vehicle and also see the future of mobility in subscriptions. The advantages here: If you take out a flat rate, you no longer have to worry about taxes and insurance. And subscribers are also much more flexible when it comes to using their vehicle. The necessary costs for repairs and inspections are also included in the subscription price.
The rule of thumb is that companies will at some point actually offer what can be offered as a subscription. And even if products are not suitable for subscription sales at first glance, sooner or later a new subscription model will develop for these same products.
These subscription and billing models are available
The following subscription models are currently available:
- Rental subscription: The customer rents your product for a fixed period of time and remains flexible even with long-term use.
- Consumption subscription: The car sharing principle is a classic example of this subscription model, where your customer only pays for what they actually use.
- Replenishment subscription: Your company sends the same or similar products to customers at certain intervals. This is particularly useful for food or everyday items.
- Club membership: As a club member, the subscriber receives access to exclusive content or benefits from discounts. This model is familiar from the gym.
Billing is not entirely straightforward with subscription models. At the moment, these billing methods are mainly used:
- Usage-based billing: The customer only pays for the service actually used.
- User-based billing: A flat fee is charged that is independent of the actual duration or intensity of use.
- Freemium: The customer starts with a free tariff and may later opt for a premium subscription with even more functions.
nexnet offers a platform for subscription management
Do you want to meet the changing requirements and wishes of your customers and also try out new monetization strategies with your products or services? Then you should think about switching to one or more subscription models! If you need support with this, nexnet is your point of 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 processes and the monitoring of incoming payments. With nexnet, you can also be sure that your data is optimally protected in accordance with DIN ISO 9001:2015. In contrast to providers from the USA or China, nexnet operates its GDPR-compliant solutions for the subscription economy exclusively in Germany, meaning that only high-performance and scalable data centers in Germany are used.
If you opt for a subscription model, nexnet will support you in the secure and efficient execution of all relevant transactions. You'll be in good company, as nexnet's customers include well-known companies from various sectors such as e-commerce, the media industry and streaming service providers as well as retail groups and large telecommunications companies. The range of sectors shows once again that more and more companies are switching to subscription models and that new solutions will continue to establish themselves.
You have to decide for yourself whether it makes sense to introduce a subscription model for your company. However, if you take this step, nexnet will support you with everything to do with billing.
