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What's Behind The Increase In Software Subscription Models?

There was once a time when a subscription was reserved for a newspaper, magazine or other periodical. Later the subscription model moved to gym memberships and some cable channels. Today, it seems there is a subscription for everything, including TV shows, music, food, household items, software and beauty products. Amazon, the world’s biggest online store, offers “Subscribe and Save” on an increasing number of items. It seems there is no escape from the subscription. Today we examine what’s behind this surge in subscriptions and why are so many software companies forcing are customers into their own subscription model. We look at some of the reasons why subscriptions have become so popular and how big brands are drawing lessons from this shift.

First, how did we get here? You may not associate Costco with supporting this subscription tidal wave we find ourselves in today, but the company was among the first to instigate a subscription for their customers. They built the business by limiting customer access. At first, business owners paid to access Costco stores. After that, Costco welcomed individual members who were willing to pay an annual fee for access to goods that were cheaper than they could get from Costco’s competitors. Costco tapped into a formula that allowed them to sell products at lower prices while keeping profitable through recurring membership fees. The unintended consequence was customer loyalty and retention.

Today, both startups and long-established businesses are using the subscription model to grow their customer base. This includes many of the software vendors small and medium-sized businesses rely on, such as Microsoft, Adobe, QuickBooks and Salesforce. As it turns out, there are several important reasons why these, and many more software suppliers, are moving towards subscription-based models.

While there are many benefits for the software vendors, is there any benefit to the small and medium-sized business community? The answer is yes! Small and medium-sized businesses can benefit greatly from a software subscription model in several ways.

Predictable Expenses

Just like vendors use subscriptions to predict their revenue, small businesses can use them to budget and forecast their software expenses, as they know exactly how much they will pay each month or year. This helps avoid unexpected expenses and better manage cash flow.

Lower Upfront Costs Subscriptions typically require lower upfront costs compared to traditional software licenses, which can make it easier for small businesses with limited budgets to access the software they need and at the right level.

Access To The Latest Features

Subscriptions often include access to the latest features and updates, which can help small businesses stay competitive and better serve their customers. Flexibility With a subscription model, small businesses can easily add or remove users as needed, without the need to worry about buying more licenses or dealing with complex licensing agreements.

Access To Ongoing Updates and Support

With a subscription, customers typically receive ongoing software updates and customer support, which can help ensure that the software continues to meet their needs over time. The built-in support could prove especially helpful for small businesses that may not have dedicated IT staff. Software subscription models can prove a win-win for vendors and small businesses alike, but only if they are correctly set up, subscribed to, supported and managed. This is increasingly important because many software vendors will soon force their customers into a subscription model of some kind.

If your business is questioning the right time to move to a subscription model and has concerns about long term consequences, contact us to understand how we can help your business maximize a software subscription and avoid long term commitments.

 

We offer white glove, personalized technology services and support. Roark Tech Services is an expert in fit-for-purpose technology solutions exclusively for Small and Medium-Sized Businesses. Always consult with us first. If you don’t have an IT Partner that you can trust to give you the right support and advice, we’d love to help. Contact us.


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