Should I Add a Subscription to My Business?

Starting a subscription-based business can be a smart move for those who find it difficult to juggle the demands of a small business with the everyday operations. Here's what to consider:
Redde Payments
4 min to read

Building a successful business takes hard work, dedication and passion. If your business is more than just a part-time endeavor but you are finding it hard to juggle the day-to-day operations with all the other things you need to handle, the idea of adding a subscription might seem tempting. However, before signing up new clients and adding subscriptions there are several factors that you should consider – pros and cons of adding a subscription to your existing business.

Subscription businesses are a growing trend and a great opportunity for entrepreneurs. According to a 2017 report, subscriptions accounted for roughly $5.5B in revenue, which is an increase of 9% from 2016. This trend shows no sign of slowing down. The number of companies taking this route continues to rise due to the many benefits that come with running a subscription-based business. One of the most attractive aspects of a subscription-based business is the continuous cash flow or recurring monthly income it creates.

What to consider for a subscription-based business?

It's important to remember that subscriptions are just another tool in your toolbox. However, all tools are not created equal, and this one is best suited for companies that offer products or services that clients use on a regular basis. It's also important to consider whether your clients will have a recurring need for what you offer—if not, they won't stay subscribed. In order to determine whether subscriptions are right for you, you should consider some of the following questions:

  • Do you have a product that is in need of regular replenishment? Is there a potential for repeat use?
  • Is your product/service one that people would be likely to continue using over time?
  • Are there other companies offering subscriptions for similar products? Would they be considered competition, or is there room for more options?
  • What would the logistics of implementing this type of business model look like? How much extra work would it require?

You should also consider whether or not you have a team member who could manage subscriptions, and if not will you need to hire someone? It's important to weigh the pros and cons of adding a subscription before diving in. You don't want to add subscriptions to your business half-hazardously. Customers who decide to enroll in a subscription tend to monitor the service or product replenishment closely. If your customers notice that your subscription offering isn't up to par, this can leave a bad taste in their mouth, which you should try to avoid.

If a subscription-based business is right for you?

If your company fits the bill, a subscription model could be a great way to boost revenue without losing out on quality service. Clients who pay a monthly fee tend to be more committed than ones who pay per purchase: 84% of subscribers stay with the company; 60% of non-subscribers do not return. And those loyal customers can mean big business. The subscription economy is worth over $2 billion worldwide and growing at over 100% per year. At the same time, it's more cost effective: you don't have to advertise as much because clients keep coming back, and subscriptions help you predict cash flow because you know how many people will buy your product/service each month.

If you do decide that a subscription is right for your business, here are some things to consider:


  • How much will people pay each month?
  • Is there an introductory price?
  • What should customers expect in each package?
  • Are there different levels of subscriptions available at different prices?


  • How often will customers receive their subscriptions? (every month, every three months, etc.)

Challenges that subscription-based businesses face.

Additionally, loyal customers are very often proponents of subscribing—it's convenient and provides them with the opportunity to save money over time. However, there are also challenges in having a subscription business model. Let's explore the hurdles below:

  1. Subscriptions are only profitable if you have strong customer retention. If customers are not using their subscriptions, they will cancel them, which will cause you to lose money, potentially increasing your costs of obtaining a new customer to replace them.
  2. There's a bit more accounting work that comes into play. Accounting for subscriptions can be difficult, as you'll want to track any free trials and/or discounted rates separately from paid subscriptions, as well as any cancellations. You may want to consider hiring an accountant to assist you during tax season.
  3. Recurring billing can be problematic with some payment methods if they are declined. You'll need to have an efficient way of handling billing issues so that the problem doesn't fall on the customer.
  4. Subscription-based businesses tend to have a pricing structure that's a bit more complicated. You'll need to put some heavy thought into what you want to charge your customers. Customers tend to lean towards subscriptions when they feel like there is an added value or benefit over purchasing a one-time fee. Make sure you price your subscriptions at a rate that reflects the value you are providing. Otherwise, your customers will only enroll or subscribe once.

A good payment provider is crucial to subscription-based businesses!

If you're considering adding a subscription service to your business, then it's important to consider the value of a good payment processor. A good payment processor will not only help you set up your recurring billing system, which is one of the most important factors in making sure your customers retain their memberships. Processing subscriptions isn't always easy, but it doesn't have to be difficult. The right payment provider can help you set up a plan for your business that works for you. Redde Payments has over 15 years of payment processing experience and we know what it takes to make subscription processing easy. So, relax and take a load off as the experts at Redde Payments help you take your subscription operation to the next level.

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