A subscription company is a business that sells its products on a scheduled time basis often, monthly, or quarterly. The subscription business model has gained immense popularity in recent years, offering convenience, value and customization, providing a recurring revenue stream, predictable cash flow, and long-term customer relationships.

From curated subscriptions to digital services and software-as-a-service (SaaS) offerings, the subscription economy continues to thrive, attracting entrepreneurs and established businesses alike. In this comprehensive guide, we explore how to start a subscription business and then how to scale it up successfully, consider the essential steps from choosing the right business model to optimizing customer support and feedback management and highlight some examples of subscription businesses which are enjoying success.

Types of subscription business

The subscription billing model continues to go from strength to strength with almost everything now being sold on a subscription basis. The most common types of subscription business are:

• Software: SaaS is the go-to business model for software that is provided by suppliers and normally charged on a monthly basis. The ways in which companies price may vary but all SaaS companies rely on recurring revenue as a business model. Building a great product, gating that product through a paywall, and keeping customers that go past the paywall around for as long as possible will ensure SaaS success.

• Boxes: A curated box of products delivered to customers on a scheduled time basis. Becoming increasingly popular over recent years, almost every product is now offered on a monthly/quarterly subscription basis. Examples are: HelloFresh (meal kits), makeup (Birchbox and Sephora) FabFitFun (fitness and lifestyle) and BarkBox (pet) .

• E-commerce: commercial transactions conducted electronically on the internet. For example, recurring orders of household products like paper towels, books, and plane tickets.

• Services: Access by subscription to content or products. For example, Netflix is currently the most popular streaming service. Its competitors include Amazon Prime, Disney+, Hulu, HBO Max, Apple TV and Spotify. A monthly subscription is payable for on-demand entertainment, and/or one-day shipping.

Steps to Start and Scale a Subscription Business

Starting and scaling a subscription business requires careful planning, strategic execution, and continuous iteration. By following some key steps, you can navigate the complexities of starting and growing a successful subscription business:

• Choose the Right Business Model: Evaluate different subscription business models, such as curated boxes, replenishment services, or access-based subscriptions, to determine the best fit for your niche, target audience, and value proposition.

• Build a Brand Identity: Develop a strong brand identity, messaging, and visual identity that resonate with your target market and differentiate your subscription offering in a competitive landscape.

• Price Your Subscription Right: Conduct market research, analyze pricing strategies, and optimize your pricing model to maximize revenue generation, profitability, and customer value.

• Set Up Your Online Storefront: Create a user-friendly online storefront with seamless subscription billing and payment processing capabilities to facilitate transactions and provide a frictionless shopping experience for customers.

• Plan for Distribution and Fulfillment: Establish efficient distribution channels, optimize inventory management, and streamline order fulfillment processes to deliver subscriptions to customers accurately and on time.

• Validate Your MVP with a Pre-launch Campaign: Test your Minimum Viable Product (MVP) with a pre-launch campaign to gauge market interest, collect feedback, and refine your subscription offering before the official launch.

• Scale Your Subscription Business: Invest in scalable infrastructure, expand product offerings, optimize marketing and customer acquisition, and enhance customer experience to drive growth and profitability.

• Ensure Legal and Regulatory Compliance: Navigate legal and regulatory requirements, including business licensing, tax compliance, intellectual property protection, and data privacy regulations, to operate your subscription business legally and ethically.

• Prioritize Customer Support and Feedback Management: Deliver exceptional customer support, actively solicit feedback, and foster a customer-centric culture to enhance customer satisfaction, loyalty, and retention.

Let’s look at each of these key steps in detail.

Choose the Right Business Model

First, selecting the right business model is crucial for the success of your subscription business. Consider factors such as your target audience, product niche, and value proposition when choosing a business model that aligns with your goals and resources. Utilizing a subscription management service can streamline this process. Some popular subscription business models to consider, facilitated by such services, include:

• Curated Subscriptions: Curate a selection of products or experiences based on specific themes, preferences, or customer profiles and deliver them to subscribers on a recurring basis. Examples include beauty boxes, meal kits, book clubs, and lifestyle subscriptions.

• Replenishment Services: Offer convenience-driven subscriptions for essential products that customers use regularly, such as household goods, personal care items, or pet supplies. Simplify the replenishment process and automate deliveries to ensure seamless access to everyday essentials.

• Access-based Subscriptions: Provide subscribers with access to exclusive content, digital services, or members-only perks and benefits for a recurring fee. Examples include streaming platforms, software subscriptions, membership clubs, and online communities.

• Hybrid Models: Combine elements of different subscription models to create a unique offering that meets the diverse needs and preferences of your target audience. Experiment with hybrid models that blend curated boxes with replenishment services, subscription bundles, or tiered pricing plans to maximize customer value and flexibility.

By choosing the right business model and tailoring it to the needs and preferences of your target customers, you can create a compelling subscription offering that drives customer acquisition, retention, and loyalty.

Build a Brand Identity for Your Subscription Business

Building a strong brand identity is essential for establishing credibility, attracting customers, and fostering brand loyalty in the competitive subscription market. Here are some key elements to consider when building your brand identity:

• Define Your Brand Values and Mission: Clarify your brand values, mission statement, and unique selling propositions (USPs) to communicate your brand's purpose, beliefs, and differentiation to customers.

• Create a Memorable Brand Name and Logo: Choose a catchy, memorable brand name and design a distinctive logo that reflects your brand personality, aesthetics, and values.

• Develop Consistent Branding Assets: Create cohesive branding assets, including color palettes, typography, imagery, and visual elements, that convey your brand identity across all touchpoints and channels.

• Craft Compelling Brand Messaging: Develop clear, concise brand messaging that resonates with your target audience, communicates your value proposition, and inspires action and engagement.

• Establish Brand Voice and Tone: Define your brand voice and tone to ensure consistency in your communication style and messaging across marketing materials, website content, and customer interactions.

• Build Brand Trust and Credibility: Prioritize transparency, authenticity, and reliability in your brand communications and interactions to build trust and credibility with customers.

By investing in brand identity and differentiation, you can stand out in a crowded market, build emotional connections with customers, and establish a loyal subscriber base for your subscription business.

Price Your Subscription Offering Right

Pricing your subscription competitively and strategically is critical for attracting customers, maximizing revenue, and ensuring long-term profitability. Here are some key factors to consider when optimizing your pricing strategy:

• Understand Your Costs: Calculate your product costs, packaging expenses, shipping fees, and overhead costs to determine the minimum price needed to cover your expenses and achieve profitability.

• Research Market Pricing: Conduct competitive analysis and market research to benchmark your pricing against similar subscription offerings in your niche and identify pricing trends, ranges, and strategies.

• Determine Your Value Proposition: Evaluate the unique value proposition of your subscription offering, including product quality, exclusivity, convenience, and customer experience, to justify your pricing and differentiate your offering from competitors.

• Test Different Pricing Strategies: Experiment with different pricing strategies, such as tiered pricing, dynamic pricing, or value-based pricing, to assess customer willingness to pay, price elasticity, and revenue potential.

• Offer Promotions and Discounts: Use promotional offers, discounts, and incentives strategically to drive customer acquisition, retention, and conversion. Offer discounts for annual subscriptions, bundle deals, referral rewards, or limited-time promotions to incentivize sign-ups and boost sales.

By adopting a data-driven approach to pricing strategy, you can effectively position your subscription offering in the market, attract customers, and maximize revenue while maintaining profitability and sustainability.

Set Up Your Online Storefront

Creating a user-friendly online storefront is essential for showcasing your subscription offering, facilitating transactions, and providing a seamless shopping experience for customers. Here are some steps to set up your online storefront effectively:

• Choose an E-commerce Platform: Select a reliable e-commerce platform or subscription billing software that meets your business requirements, budget, and scalability needs. Consider platforms like Shopify, WooCommerce, BigCommerce, or Magento that offer subscription billing functionality and customizable storefront templates.

• Design a Responsive Website: Design a visually appealing, mobile-responsive website that showcases your subscription products, brand story, and value proposition effectively. Optimize your website layout, navigation, and user interface (UI) for easy browsing, shopping, and checkout experiences across devices.

• Implement Subscription Billing and Payment Processing: Integrate subscription billing and payment processing capabilities into your e-commerce platform to automate recurring billing, manage subscription plans, and securely process payments. Billsby is a billing subscription software which offers flexible billing options, revenue recognition, and subscription management features.

• Create Compelling Product Pages: Create informative, persuasive product pages for your subscription offerings that highlight key features, benefits, and value propositions. Use high-quality product images, descriptive product descriptions, and customer testimonials to engage and convert visitors into subscribers.

• Optimize Checkout Experience: Streamline the checkout process and minimize friction points to reduce cart abandonment and increase conversion rates. Simplify the checkout flow, offer guest checkout options, and provide multiple payment methods to accommodate customer preferences and facilitate seamless transactions.

• Implement Security Measures: Ensure the security of your online storefront and customer data by implementing SSL encryption, secure payment gateways, and compliance with Payment Card Industry Data Security Standard (PCI DSS) requirements. Display trust badges, security seals, and privacy policies to reassure customers and build confidence in your website's security measures.

By setting up a professional, user-friendly online storefront, you can attract visitors, convert them into subscribers, and provide a positive shopping experience that encourages repeat purchases and customer loyalty.

Plan for Distribution and Fulfillment

Efficient distribution and fulfillment processes are essential for delivering subscriptions to customers accurately, reliably, and on time. Here's how to plan for distribution and fulfillment effectively:

• Choose Fulfillment Partners: Partner with reputable fulfillment centers, logistics providers, or third-party logistics (3PL) companies to handle order processing, inventory management, and shipping logistics for your subscription business. Evaluate fulfillment partners based on factors such as location, capacity, shipping rates, and service levels.

• Optimize Inventory Management: Implement inventory management software or systems to track stock levels, replenish inventory, and forecast demand for your subscription products. Use inventory analytics, demand forecasting algorithms, and reorder triggers to maintain optimal inventory levels and prevent stockouts or overstock situations.

• Streamline Order Processing: Streamline order processing workflows, automate order routing, and use barcode scanning technology to improve order accuracy and efficiency. Integrate your e-commerce platform with fulfillment systems to synchronize order data, reduce manual errors, and expedite order fulfillment.

• Choose Shipping and Delivery Options: Offer flexible shipping and delivery options to accommodate customer preferences and shipping needs. Provide standard and expedited shipping options, offer flat-rate or free shipping thresholds, and partner with multiple carriers to provide reliable delivery services at competitive rates.

• Communicate Shipping Policies and Tracking Information: Clearly communicate shipping policies, delivery times, and tracking information to customers during the checkout process and post-purchase communications. Provide order tracking updates, shipping notifications, and delivery confirmations via email or SMS to keep customers informed and engaged throughout the fulfillment process.

• Monitor and Optimize Fulfillment Performance: Monitor fulfillment performance metrics and key performance indicators (KPIs) to assess operational efficiency, accuracy, and customer satisfaction. Track metrics such as order processing times, pick and pack accuracy rates, shipping speed, and delivery performance to identify areas for improvement and optimization.

By planning for distribution and fulfillment strategically, you can ensure smooth order processing, timely delivery, and exceptional customer experiences that drive satisfaction, loyalty, and repeat business for your subscription business.

Validate Your MVP with a Pre-launch Campaign

Before officially launching your subscription business, it's essential to validate your Minimum Viable Product (MVP) with a pre-launch campaign to gauge interest, collect feedback, and refine your offering based on customer insights. Here's how to validate your MVP effectively:

• Define Your MVP: Identify the core features, benefits, and value propositions of your subscription offering to create a Minimum Viable Product (MVP) that addresses the most critical customer needs and pain points. Focus on delivering a simplified version of your subscription concept that demonstrates its viability, feasibility, and desirability to potential customers. Prioritize essential features, products, and functionalities to streamline development and testing processes and minimize time to market.

• Create a Landing Page or Pre-launch Website: Build anticipation and generate buzz for your subscription business by creating a dedicated landing page or pre-launch website to showcase your MVP and collect pre-launch sign-ups. Craft compelling copy, visuals, and calls-to-action (CTAs) that highlight the unique value proposition of your subscription offering and encourage visitors to subscribe or join your waitlist. Include an email capture form or subscription opt-in to collect contact information from interested prospects and nurture leads throughout the pre-launch phase.

• Develop Pre-launch Marketing Collateral: Create pre-launch marketing collateral and promotional materials to generate awareness and attract attention to your subscription business. Leverage digital marketing channels such as social media, email marketing, influencer partnerships, and content marketing to reach your target audience and drive traffic to your pre-launch landing page. Tease your subscription concept, share sneak peeks, and offer exclusive incentives or rewards to incentivize early adopters to sign up and spread the word within their networks.

• Run Pre-launch Campaigns and Contests: Launch pre-launch campaigns, giveaways, or contests to generate excitement, engagement, and virality around your subscription business. Encourage social sharing, referrals, and user-generated content (UGC) by offering incentives such as free subscriptions, exclusive access, or branded merchandise to participants. Leverage hashtags, contests, and challenges to amplify reach, foster community engagement, and build anticipation leading up to your official launch date.

• Collect Feedback and Iterate: Gather feedback from pre-launch subscribers, beta testers, and early adopters to validate your MVP, identify areas for improvement, and refine your subscription offering iteratively. Solicit feedback through surveys, polls, interviews, and user testing sessions to understand customer preferences, pain points, and expectations. Use qualitative and quantitative data insights to iterate on your product assortment, pricing strategy, packaging design, and overall customer experience to better align with market demand and customer preferences.

• Measure Pre-launch Performance: Track key performance metrics and pre-launch engagement indicators to assess the effectiveness of your pre-launch campaign and validate customer interest in your subscription business. Monitor metrics such as website traffic, conversion rates, email sign-ups, social media engagement, and referral activity to gauge audience engagement, sentiment, and intent. Analyze pre-launch data and feedback to refine your launch strategy, marketing tactics, and product positioning for maximum impact and success.

By validating your MVP with a pre-launch campaign, you can assess market demand, gather valuable customer insights, and refine your subscription offering to maximize its appeal, relevance, and value proposition before officially launching to the public.

Scale Your Subscription Business

Once you've successfully launched your subscription business and validated your MVP, focus on scaling your operations, expanding your customer base, and driving sustainable growth. Here are some key strategies for scaling your subscription business effectively:

• Invest in Scalable Infrastructure: Prepare your business for growth by investing in scalable infrastructure, systems, and technologies that can support increased demand, volume, and complexity as your subscriber base grows. Upgrade your e-commerce platform, subscription billing software, and fulfillment capabilities to handle higher transaction volumes, optimize operational efficiency, and enhance customer experiences at scale.

• Expand Product Offerings: Diversify your subscription offerings and product portfolio to appeal to a broader audience, cater to different customer segments, and capitalize on emerging trends or seasonal demand. Introduce new subscription tiers, product variations, or add-on options to provide customers with more choice, flexibility, and customization options.

• Optimize Marketing and Customer Acquisition: Refine your marketing strategies and customer acquisition channels to reach new audiences, drive website traffic, and convert prospects into subscribers efficiently. Leverage digital marketing tactics such as search engine optimization (SEO), pay-per-click (PPC) advertising, social media marketing, influencer partnerships, and affiliate marketing to increase brand visibility, generate leads, and acquire customers cost-effectively.

• Enhance Customer Experience and Retention: Prioritize customer experience and retention initiatives to nurture existing subscriber relationships, reduce churn, and maximize customer lifetime value (CLV). Implement personalized communication, loyalty programs, and subscriber perks to incentivize repeat purchases, encourage engagement, and foster brand loyalty among your subscriber base.

• Leverage Data Analytics and Insights: Harness the power of data analytics, customer insights, and business intelligence to inform strategic decision-making, optimize operations, and drive business growth. Utilize subscription billing software and analytics tools to track key performance metrics, analyze subscriber behavior, and identify growth opportunities, trends, and patterns that can inform product development, marketing campaigns, and customer retention strategies.

• Expand Distribution Channels and Partnerships: Explore new distribution channels, sales channels, and strategic partnerships to expand your reach, enter new markets, and diversify revenue streams. Collaborate with complementary brands, retailers, or platforms to cross-promote your subscription offering, tap into their existing customer base, and access new distribution channels or sales channels.

By implementing these strategies and focusing on scalability, efficiency, and customer-centricity, you can accelerate the growth and success of your subscription business and unlock its full potential in the thriving subscription economy.

Legal and Regulatory Compliance

Operating a subscription business entails various legal and regulatory considerations to ensure compliance with relevant laws, regulations, and industry standards. Here are some important things to consider about legal and regulatory compliance for subscription businesses:

• Business Entity Formation: Choose the appropriate legal structure and entity type for your subscription business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Consult with legal and financial advisors to assess the tax implications, liability protection, and governance requirements associated with each entity option and choose the one that best suits your business needs and objectives.

• Business Licensing and Permits: Obtain the necessary business licenses, permits, and registrations to operate your subscription business legally in your jurisdiction. Research local, state, and federal regulations governing retail, e-commerce, sales tax, and product safety to ensure compliance with applicable laws and avoid legal penalties or fines. Consult with legal experts or regulatory agencies to understand licensing requirements, filing deadlines, and ongoing compliance obligations for your specific business activities.

• Tax Compliance: Comply with tax laws and regulations governing sales tax, income tax, and business tax obligations for your subscription business. Register for a sales tax permit in states where you have nexus or economic presence, and collect and remit sales tax on taxable transactions accordingly. Keep accurate records of sales, expenses, and tax filings to facilitate tax reporting and compliance audits, and consult with tax professionals or accountants to navigate complex tax issues and optimize tax planning strategies.

• Intellectual Property Protection: Protect your intellectual property assets, including trademarks, copyrights, and patents, to safeguard your brand identity, products, and proprietary content from infringement or unauthorized use. Register your trademarks and copyrights with the United States Patent and Trademark Office (USPTO) or other relevant authorities to establish legal ownership and enforce your rights against infringing parties. Implement policies and procedures to monitor and enforce intellectual property rights and take prompt legal action against infringement or misappropriation of your intellectual property.

• Data Privacy and Security: Comply with data privacy and security regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), to protect customer data and privacy rights. Implement robust data protection measures, encryption protocols, and access controls to safeguard sensitive information collected from subscribers and website visitors. Provide clear privacy policies, consent mechanisms, and opt-out options to inform users about data collection practices and ensure compliance with legal requirements.

• Subscription Terms and Conditions: Draft terms and conditions, subscription agreements, and policies to govern the terms of service, billing practices, cancellation policies, and dispute resolution procedures for your subscription business. Clearly communicate subscription terms, pricing details, renewal policies, and cancellation procedures to subscribers upfront to manage expectations and mitigate disputes or chargebacks. Consult with legal counsel to draft legally enforceable agreements that protect your rights and liabilities and ensure compliance with consumer protection laws and regulations.

By prioritizing legal and regulatory compliance, you can minimize legal risks, protect your business interests, and build trust and credibility with customers, investors, and stakeholders in your subscription business.

Customer Support and Feedback Management

Delivering exceptional customer support and actively soliciting feedback are critical components of building a successful subscription business. Here's how to effectively manage customer support and feedback:

• Offer Multi-channel Support: Provide multiple channels for customers to contact your support team and seek assistance with inquiries, issues, or feedback. Offer support options such as email, live chat, phone support, and social media messaging to accommodate diverse communication preferences and ensure accessibility for customers across different platforms and time zones. Monitor and respond to customer inquiries promptly, professionally, and empathetically to resolve issues and maintain high levels of customer satisfaction.

• Implement Self-service Resources: Empower customers to find answers to common questions, troubleshoot problems, and resolve issues independently through self-service resources and knowledge bases. Create an FAQ page, help center, or support portal on your website that addresses frequently asked questions, troubleshooting tips, and product guides. Provide instructional videos, tutorials, and step-by-step guides to assist customers with setup, usage, and troubleshooting of your subscriptions and related services.

• Collect and Act on Customer Feedback: Actively solicit feedback from customers through surveys, feedback forms, product reviews, and social media engagement to gather insights into their experiences, preferences, and pain points. Use feedback management tools and customer feedback platforms to collect, analyze, and categorize feedback data systematically. Identify recurring themes, trends, and actionable insights from customer feedback to inform product improvements, service enhancements, and strategic decision-making.

• Resolve Customer Issues Proactively: Proactively address customer issues, complaints, or dissatisfaction to prevent escalations and mitigate negative reviews or churn. Implement customer service protocols, escalation procedures, and service level agreements (SLAs) to prioritize and resolve customer inquiries and complaints in a timely manner. Empower frontline support staff with training, resources, and authority to resolve common issues independently and escalate complex issues to specialized teams or management for resolution.

• Testimonials and Reviews: Encourage satisfied customers to share their positive experiences, testimonials, and reviews to amplify social proof, build credibility, and attract new customers. Prompt customers to leave reviews, ratings, and testimonials on your website, social media profiles, or third-party review platforms. Offer incentives, discounts, or loyalty rewards to incentivize customers to submit reviews and referrals and showcase them prominently on your website or marketing materials to build trust and credibility with potential customers.

By prioritizing customer support and feedback management, you can enhance customer satisfaction, loyalty, and retention, foster brand advocacy, and drive sustainable growth and success for your subscription business.

Conclusion

Starting and scaling a subscription business requires careful planning, strategic execution, and a customer-centric approach. By choosing the right business model, building a strong brand identity, pricing your subscription competitively, setting up an online storefront, planning for distribution and fulfillment, validating your MVP with a pre-launch campaign, and prioritizing customer support and feedback management, you can navigate the complexities of the subscription economy and build a thriving and sustainable business.

About Us

Billsby is a sector-leading cloud-based subscription billing software engine, helping businesses manage the issuing of invoices and the collection of recurring payments, whilst providing award-winning customer service support. Ranked by G2 as the Number 1 subscription billing platform, Billsby streamlines billing operations, offers flexible subscription management, integrates with various systems, and provides real-time analytics, enhancing efficiency and scalability. Billsby provides the simplest and easiest solution for businesses choosing to adopt a subscription billing model, helping them to maximize their subscription revenue potential. For more in-depth guidance and bespoke solutions, visit www.billsby.com today.