Business models
What is a subscription business model?
A subscription model charges customers on a schedule, such as monthly, for repeat delivery of a product or ongoing access to a service.
A real store example
Kiki Milk plant milk collection: over 10 Meta ads linked here.
Kiki Milk offers subscribe and save on its plant milk collection, at 20% off. A standing discount for repeat delivery trades a little margin on each order for many more orders per customer.
Put subscription model to work
Ask Replo: "show subscriber count and cancellations by month".
Subscription model questions
- What products work well as subscriptions?
- Things people use up on a schedule: coffee, supplements, pet food, razors, skincare and cleaning supplies. If customers reorder on their own every month or two, a subscription saves them the step.
- What's the biggest risk in a subscription business?
- Churn. If subscribers cancel faster than you win them, growth stalls, and a subscription discount only pays if customers stay long enough to make up for it.
Related terms
Browse the glossaryChurn rate
Churn rate is the share of customers or subscribers who stop buying in a given period.
LTV
LTV (customer lifetime value) is the total revenue or profit you expect from one customer over the whole relationship.
Contribution margin
Contribution margin is what's left of revenue after variable costs like product, shipping, fees and ad spend: the money that pays for fixed costs and profit.
DTC
DTC (direct to consumer) is a brand selling straight to shoppers through its own site instead of through retailers or wholesalers.