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How to Make Money by

Starting a Subscription-model Business

You must be familiar with subscription-based businesses. Netflix, Amazon Prime, and Dropbox (paid service) are some popular examples of businesses that operate on a subscription revenue model. What you should know is the subscription industry is on a rise and has been for the past decade. So, if you are planning to start a new business that makes real money, a subscription-based business is a great option to consider.


Subscription-based businesses are not just limited to entertainment and media. There are many things and different types of content that you can offer on a subscription basis. And it’s as easy as anything, thanks to technology and the internet. Moreover, starting a subscription-based business is not even going to cost you a lot of money. All you need is access to some brilliant quality, unique content that can sell and a platform where you can sell it.


However, to make real money, you need to sell content that people would want to pay for. And it’s anything but easy. That’s why we are writing this detailed guide that includes everything you need to know about starting a subscription-model business, including how to choose the best type of content to sell and how to get subscribers that pay.

Subscription Business Money Calculator
Guide to Starting a Subscription-based Business

Here’s everything you’ll learn in this guide.

  • What is a subscription-based business?

  • How does a subscription business generate revenue?

  • Types of subscription-based businesses

  • Starting a subscription-based business (steps)

Subscription Business Money Calculator
Subscription Business Money Calculator
What is a Subscription-based Business?

A subscription-based business is one that charges a recurring fee at regular intervals from its subscribers or users. Netflix, for example, is a subscription-based digital streaming service that requires its users to pay a monthly fee to access and watch content on the Netflix website and/or mobile app.


The subscription-based business model is not new but has been in use forever. From your weekly/monthly newspaper to a swimming course, gym membership and college, many businesses are based on a subscription model. Even your favourite social media site Twitter is now planning to start levying a subscription fee from its blue-tick (verified) users, which is proof that this business model is on the rise.

How Does a Subscription Business Generate Revenue?

A subscription business is different from a regular business. While a normal business generates revenue every time it sells a product or service, a subscription-model business earns recurring payments from its existing customers irrespective of the amount of sale (of the content itself). The focus of a subscription business should be on getting more subscribers and retaining its existing users by consistently providing them with great-quality content.


Remember, what you will earn in a subscription business is not sales but relationships with customers, which is what will keep them coming back to you and paying every month to access/watch your content. This also means that it can take some time for you to make profits from your subscription-based business.

Subscription Business Money Calculator
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Types of Subscription-based Businesses

Now, you must be wondering about the options you have when looking to start a subscriber-based business or what kind of subscription service you should start. Well, here are the four most common types of subscription businesses you can do:


1. eCommerce

Here, the users can subscribe to receive items on a weekly/monthly basis from an e-commerce site. Amazon already has a subscription service for its grocery store and some other segments.


2. Subscription for Access

Here, users will pay a monthly fee to get access to premium content on platforms like Netflix and OnlyFans. This is similar to subscribing to access on-demand content.


3. Subscription boxes

For most of your monthly household needs, you can subscribe to this service, where you’ll receive a box of the items you ordered in exchange for a monthly payment.


4. SaaS subscription

Many software companies nowadays are offering their online software applications on a subscription basis (Software-as-a-Subscription) to allow customers to access the most premium software in a segment by paying a low monthly fee rather than having to buy an expensive software package.

Starting a Subscription-based Business (steps)

Now that you have some idea of what a subscription business is and how it works, you’re probably ready to learn about starting one yourself. Here’s the step-by-step process to do the same.


1. Make A Plan

First of all, you need to decide the type of subscription business you want to start. It can be related to your current job or business or whatever industry you have experience in. Once you’ve done that, next you need to set goals in terms of how much revenue, customers and subscription you want in a certain period. At the same time, you need to identify a target audience based on the content or service you are planning to offer.

To keep things simple, set goals in terms of time, i.e. what you want to achieve in the next 6 months and so on.


2. Market Analysis

Before you get into the business of subscription-based content/service, you must research the market, including other businesses providing similar services to know more about your target audience and what kind of content they like the most. At the same time, you need to list down the limitations of each of your competitors so that you can create your product to overcome these limitations as far as possible.

After you have a good idea of what your competitors are offering, you can figure out what else you can offer or how you can offer a better service to attract their customers. For instance, a competitor might be offering services at a very high price and you can consider offering similar services at a reduced price to offer customers an affordable alternative.

Another thing you need to find out is whether there is an actual demand for this kind of service in the target market. You should probably not start a business where there are already too many providers of the same service (too much competition) unless, of course, you have something extraordinary to offer.


3. Identify your target audience

Now that you have some idea of the type of customers you want to target, make a detailed profile of an ideal person who would be willing to subscribe to your platform for a fee.


4. Identify your Value Proposition

Every business has a value proposition, i.e. the value they can offer to their customers. Identify or build yours. Include how your subscription will be different from that of the competition.


5. Set a price

Since you’re just starting, make sure that your subscription model price is competitive or if possible, the lowest among the competition. This will give you a good chance to get customers looking for great content at lower rates.

Some of the popular price models you can choose from include fixed-rate, per-user, per-view, content quality, usage-based, and freemium.


6. Analyze and adapt

So, you have built the perfect product based on your idea of what your audience wants and the type of content/service that will have a great demand in your industry, what’s next? Well, before you get all excited and are ready to launch your subscription business, the most important step is testing.

Besides in-house testing during and after the development of the project, you can consider beta testing, which involves finding people from your target audience who would be willing to test your product and share useful feedback about their experience. Based on the feedback you receive from beta testing, you can consider making appropriate changes to make your product more attractive. Then, test it again.

Testing shouldn’t be limited to before the launch of the product. Rather you should continue testing your subscription business and its performance throughout its lifetime. Here are a few metrics that you can track to get a good idea of the performance of your subscription-based business.

Marketing your subscription-model business is equally important, particularly when there is already a lot of competition in the space. You can try and use basically any marketing strategy for the online promotion of your new business. Some options include email marketing, social media marketing, content marketing, public relations, influencer marketing, video marketing, free trials, and paid advertising.

Now, you have all the information you need to start planning your own subscription-based business. There are many options you can consider – an OTT platform, email subscription, online course, or membership subscription, among others.