subskription

Subskription is a business model in which customers pay recurring charges at regular intervals to receive ongoing access to a product or service. It is used for digital services, software, physical goods, media, and more, and is a core element of the so-called subscription economy.

Core features include recurring payments and auto-renewal, defined billing cycles such as monthly or yearly, tiered pricing, and options for free trials, upgrades, downgrades, and cancellations. Subskription arrangements often involve different plans or bundles to match varying usage levels and commitment.

Advantages include predictable revenue and higher customer lifetime value, ongoing engagement, and opportunities for personalization and data-driven optimization. For providers, recurring billing can improve cash flow and enable more accurate demand planning. Challenges include customer churn, cancellation and cancellation friction, price sensitivity, and the obligation to continuously deliver value to justify ongoing payments.

Key metrics used to manage Subskription businesses include monthly recurring revenue (MRR), annual recurring revenue (ARR), churn rate, customer acquisition cost (CAC), and lifetime value (LTV). Pricing, renewal terms, and trial strategies strongly influence these indicators.

Implementation considerations cover payment processing, secure handling of payment data, and compliance with regulations such as PCI DSS and data protection laws. Clear cancellation and refund policies, proration on plan changes, and licensing or content rights for different regions are also important.

Examples range from streaming services and software as a service to subscription boxes and news outlets. The term Subskription is used in several languages to describe this recurring-delivery model.