The subscription business model is certainly in vogue at the moment, however judging by the marketing spin of some vendors you could be excused for thinking it was a radical new invention. Leonardo Hodgson looks at the rebirth of the subscription business model based on innovative new Cloud technology.
The origins of the subscription business model can be traced as far back as the seventeenth century
, however it has inevitably had to evolve to cope with constant changes and innovations required by the new generation of products and services that consumers demand. The latest wave of interest in subscriptions is being driven by the rise of digital services, the advancement of Cloud technology and a new generation of consumers that are becoming receptive to the subscription model.
The early adopters of the subscription business model were mainly centred on printed media delivery. Magazine and newspaper publishers ruled this space using the simple but still very effective monthly recurring subscriptions. Today the media and publishing industry is still is one of the strongest sectors using subscriptions, however it has been forced to rapidly substitute its printed publications in favour of newer digital formats to survive.
Another example is that not so long ago, quite sophisticated software products had a rather medieval sales and distribution process: product developed, manufactured (recorded on to CD-ROM), packed, shipped and then stacked on shelves waiting for a buyer – pretty much like any commodity product that has been traded for hundreds of years.
The maturing of Cloud technology has brought this process very much back to the future
, shifting the old product-centric model with its high upfront costs, to a service that is available in seconds, over the internet. Don’t just buy the product, subscribe to regular product updates online and pay by recurring subscription. The internet has also brought into the mainstream viable ways for convenience subscription models, where consumers subscribe to physical or ‘non-digital’ goods from razor blades to nappies, and from beauty products to underwear, paying comfortable monthly fees.
As evidence of this success, more recently even the Payment Gateway providers, originally involved only in the last step of the sales checkout process, have started to realise the potential of this market and have thrown their hats in the ring with basic subscription ‘billing’ offerings. However, this type of all-in-one solution often lacks even the most straightforward of billing features such as calculating variable monthly fees or the ability to group multiple subscriptions on one invoice, never mind the more sophisticated features demanded for B2B service offerings.
Cloud technology undoubtedly lowers the barrier to entry for entrepreneurs looking to monetise their latest business ideas. However, it equally makes it easier for competitors to mimic successful business models and commoditise the market. Innovation is therefore paramount for these businesses to create more value in the services they provide, and flexible billing is a key tool to enable differentiation from lower cost competitors.
The Cloud billing market includes many different types of solution for different types and sizes of business, but only a few can provide the experience of an established billing company that understands the real necessities of modern commerce. Cerillion has been in the business of flexible billing for more than 20 years, and with the launch of Cerillion Skyline we are bringing to bear not only vast experience and expertise, but also the performance and scalability of a billing platform unparalleled in the Cloud billing market today. Cerillion Skyline really can bring your subscription business back to the future.