Subscription Business Model: How to Switch Your Customers to Monthly Payments

12 min read

The subscription business model continues to emerge as a popular option for aspiring entrepreneurs and is here to stay. This fast-growing business strategy surpasses the retail and S&P 500 sectors when it comes to revenue. In the past few years, recurring billing has grown five times faster than both of these, making it an appealing business model for new and already established sellers.

As more consumers today rely on monthly subscriptions and home delivery for most of their goods, we see a big increase in companies making the switch to this popular marketing model. This growing interest goes back to the model’s focus on buyer retention, and its promises of great growth and stability for businesses that choose to adopt it.

We hope to set you up for success by helping you have a clear understanding of how you can take advantage of this growing model. We also strive to provide you with the necessary resources to get your customers started on monthly payments today. Continue reading below and you’ll be surprised at how easy it is to switch to a recurring billing method.

What Exactly Is the Subscription Business Model and How Does It Work?

The subscription business model relies on the selling of a product or service in a recurring manner to the same customers. Sellers can charge their customers on a weekly, monthly, or yearly basis, it will all depend on your specific business needs.

As briefly mentioned above, this emerging business tactic focuses on customer retention more than anything else. Yes, new customers are always needed and welcomed, but unlike many other businesses out there, that require constant advertising and customer reach due to their one-time purchase nature, the subscription business model focuses on the creation of long-term buyers and supporters. Ultimately, its main goal is to turn customers into subscribers to produce recurring and steady revenue.

Due to its long-term nature, the subscription business model is great for selling products that require consistent purchasing like deodorant, razors, meal boxes, cleaning products, basically anything that is considered essential and destined to run out.

This constant buying and replenishing of a specific product or service are some of the main reasons many prefer, or sometimes demand, a subscription payment method. This way they can save money and have the items delivered to their homes, without having to worry about running out.

In the end, besides customers’ preferences and demand, this business model offers sellers recurring revenue and stronger customer relationships, making a win for both sides.

How to Plan for Switching to The Subscription Business Model

Thanks to the recurring billing model’s ability to offer customers lower purchasing costs and higher customization of their purchases, many are already excited that the switch is happening. But besides the enthusiasm of many of your customers, it is important to acknowledge that you’ll be venturing into a completely new sector, and it can be a radical shift that must be taken seriously.

The reasons are many for customers to make the change to subscription purchases; all you need to do is find the proper way to communicate these to your customers and stakeholders.

Yes, stakeholders should also be aware and on board with the change. There is a possibility of a transition period where sales and revenue could be affected and your decision might suddenly seem like a bad idea. Warning your stakeholders about this will help them understand more about the temporary nature of this event. This only occurs as you no longer need to charge the original prices established on the one-time purchase model. Things should be back to normal, or better than before, in a matter of time.

Key Points for a Smooth Transition

Make sure the transition offers value to your existing customers. As these are hit with the news, they could soon become defensive and overwhelmed. This could come to them as a way for you to get more money out of their pockets, and could significantly impact their relationship with the company. To prevent this, the value of the transition must be clearly established and communicated.

Communication will become your most powerful strategy. Find the best way to properly inform them of the value behind this change and how this will benefit them in the long run. A tailored marketing message explaining why this is of benefit to the subscribers, why should they continue to choose you from the competition, and why the change is happening, is a great way to clarify and address any misunderstanding.

Never push customers to subscribe, this must be a decision that comes naturally to them, this is the only way you can get them to stay.

Things to Know Before You Start a Subscription-Based Business

The recurring billing method is truly creating a lot of buzz in the digital business world, currently being one of the hottest business trends. It is undeniable that more and more companies are making the switch as customers continue to demand this kind of business service. But before you decide to make the transition, it is important to consider a few things.

Make sure your product or service works with recurring billing as it is not for everyone

While the subscription model works perfectly for many, this is not always the case. Before making the switch, pay close attention to your business insights, find out what customers want, make sure you have already discarded the possibility of a better option, and last but not least, follow your intuition.

At the end of it all, whether the recurring billing method is worth it or not for you, will depend on your business needs and market.

Avoid plain and boring products or services

Most customers are attracted to the subscription-based business model mainly because of the experience it has to offer them. They could easily buy the same product at a local store on a one-time purchase basis, but instead, they choose to subscribe due to the loyalty and partnership created when subscribing to a company they trust.

Make sure you are willing to offer your customers reasons to subscribe, and that you are willing to stay connected, whether this be through a newsletter, blog, etc. For you to be successful, you must be willing to offer your customers a unique opportunity and experience they can’t find elsewhere.

Avoid difficult and unreliable billing systems

You need to make sure you have access to the right billing tools. It is essential to provide your customers the necessary technology and services that enable them to have the best experience possible and see the value behind the subscription.

Most modern billing software services come with a variety of complex features and issues, opening a door to customer dissatisfaction This ties back to the idea of customer experience and can be detrimental to your business goals.

It surely can be scary to choose from such a dense variety of billing services out there, especially when many lack reliability or cost a fortune. Thankfully, this is easily accomplished with Ecwid’s recurring payments for one or more items. You can set the billing cycle to daily, biweekly, monthly, quarterly, or annually, at absolutely no cost.

With the use of Ecwid’s recurring billing, you can start a subscription business out of basically anything you’d like, from meal boxes, cosmetics, to even donations. All you need to do after creating your online store is to connect the Stripe payments found on our Ecwid App Market. You can learn more about how recurring subscriptions work with Ecwid right here.

How to Set Up Subscription Method with Ecwid

To start recurring billing, we recommend using a Stripe payment method. This allows storage of card details so customers can be charge later and continuously.

Here is how you can add subscriptions to your Ecwid store:

Go to the Ecwid App Market.
Look for Stripe and connect it to your store.
Add terms and conditions for subscribers in your store’s Terms & Conditions, so they know exactly what they are subscribing to.
From your Ecwid admin, go to Settings —> General —> Cart & Checkout.
Turn on the Product Subscription option.
Go to Catalog —> Products to create a new product or select an existing one to add a subscription option.
Look for the pricing section and click Manage pricing options. Once you have clicked on it, choose Sell by subscription to enable this option.
You’ll then be asked to select a billing period. This is where you can choose to charge customers on a weekly, monthly, or yearly basis. You’ll notice multiple options, choose the best one for your business and product.
Click Save.

If you’d like to offer your customers the option to purchase without a subscription, you can. Stripe allows sellers the ability to offer their customers one-time purchases or a subscription at the same time. All you have to do is tick the allow purchase without subscription box when prompted to set a billing period.

The Takeaway

Making the switch to the subscription business model is now easier than ever. When you connect Stripe payments to your Ecwid store, you can easily offer your customers the option to subscribe to your products or services. Under this recurring billing method, customers can cancel whenever they need to, they will also receive a confirmation email after they have subscribed, and they can easily log in to their accounts and manage their subscriptions if they need to change the delivery address or card number.

Start subscription payments today with Ecwid and become part of the thousands of sellers currently experiencing great success as they rely on the recurring billing model to sell their products.

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Apr 28, 2021

About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.