Last editedDec 20223 min read
While it was traditionally a business model reserved for gyms and mobile phones, the subscription payment model has become more and more popular for all kinds of businesses. Nowadays, consumers are paying for everything from streaming services to toiletries through subscription payments.
Because it’s such a popular model, it’s important to understand how subscriptions work, and whether they’re an appropriate option for your business.
What exactly are subscription payments?
The definition is fairly simple: customers pay a fixed amount for a product or service on a recurring basis.
This tends to be monthly, but other options such as quarterly, weekly or annual bills are also possible. This helps to break down costs for consumers and can be an attractive option as automated billing allows them to conveniently make repeat purchases.
Is a subscription payments model right for my business?
While it may be a key trend in consumer payment preferences, subscription payments are not the best option for all businesses. Consider the product that you offer and how your customer makes purchases.
It's definitely an option!
Subscription services work best for products that customers use up and therefore repeatedly buy, such as toiletries, food and household necessities such as cleaning supplies. In addition, the subscription payment model is well suited to services that customers frequently access, such as streaming platforms and online education platforms.
On the other hand, subscription billing might not be the best option for one-off purchases or items that customers tend to use again and again without having to purchase a new one. Look at consumer behavior and the product or service you offer to decide whether it’s the right option for you.
How can I set up a subscription payment model?
The first step is to decide whether a subscription model would work for your business. If you think that it’s the right choice, then subscription billing software is a straightforward way to achieve your goals.
The process of subscription billing is fairly complicated as it deals with various factors: who should be billed, how much they should be billed and when, how to collect payments, and how data should be reported for analytics and accounting.
Subscription software makes this simple, managing your subscribers and their preferences and helping you to collect and record payments. The software tends to be intuitive, helping business owners to understand and execute processes that would otherwise require developers.
It's important to use a payments solution that is suited for subscription payments. GoCardless offers the perfect service for collecting recurring payments, using bank debit technology to save businesses time, stress, and money.
What subscription payments service should I use?
It’s hard to say which is the best subscription payment service, as each will be adapted better to the needs of certain businesses.
Some platforms can be more expensive than others, and there are a variety of different features that may make a given platform best for your business. It’s important to do a cost benefit analysis to decide which is best for your business and analyze what advantages it could bring to you.
There are a number of questions that you should ask yourself when selecting a subscription billing platform. These include, but are not limited to:
Does the service allow for a variety of different pricing options and lengths? Is there an option to modify payment schedules to make them weekly, monthly, quarterly, etc.?
Is there a possibility for the consumer to pay for add-ons or benefits on top of the base subscription price?
What kind of support is offered when bugs and errors occur? Some platforms offer self-service which can be convenient when you need to quickly resolve an issue.
Is it easy for customers to re-activate or cancel their subscriptions?
How are the invoices delivered? Is it possible to integrate this delivery with different applications? Can the invoices be customized to include client branding?
Bear these points in mind and your specific needs, and you’re sure to find the best subscription payment service for your business.
GoCardless unlocks subscription payments
Benefits of using GoCardless for your subscription payments
Get paid on time, every time. Bank debits have a much higher success rate than card transactions. On the odd occasion one might fail, our Success+ feature automatically retries the payment at the next best time - reducing overall failures and admin time for you.
One-time set up for recurring payments. It's quick and easy to get your customers set up with an ACH authorization. Once it's established, neither you nor your customer need to raise a finger - we take care of taking and settling the payment for you both.
Cheaper than cards. With their high fees, reducing the amount you depend on cards to get paid can significantly reduce your overheads. Make the most of your time and money by switching your subscription business to GoCardless.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.