Infographic: Subscriptions as a business model

The rise of subscriptions has brought about exciting and dramatic changes for the commercial world. These business models are transforming the market due to their creative layout, affordability, and ease of use for users.

With an average of 3.7 subscriptions per person, 61 million users in the United States alone are taking advantage of 225 million offerings on the market. There is no indication that their adoption will be slowing down any time soon. It is anticipated that subscription models will continue to grow at a rate 3.7 times faster than S&P 500 firms.

The two primary forms of these models are business-to-business (B2B) and direct-to-consumer (DTC). There are three main categories of these subscriptions: replenishment services, curated content, and membership/access. 55% of the market is made up of curated subscriptions for individual users.

32% of subscriptions are for replenishment services, which include items that are used on a consistent basis, such as groceries or office supplies. Membership/access services make up 13% of subscriptions, including popular options such as Best Buy, Sam’s Club, and Amazon Prime. Even though they serve different needs, each of these services relies on recurring payments, rather than a one-time expense.

Subscription-based models are attractive to users because they are convenient, transparent, and have an interactive interface. Users are drawn to predictability in terms of both time and money. Certain replenishment-style subscriptions use usage-based pricing, which means that users will only be charged for how much they use.

The popularity of subscriptions is also influenced by shifting demographics, as younger generations are increasingly familiar with these methods. Millennials are the most common users, with 39.3% of their population having at least one. Subscription services saw an additional boost from the COVID-19 outbreak, expanding by 11.6% as lockdowns upset customary consumption patterns.

Infographic: Subscriptions as a business model