The Recurring Revenue Revolution

Do you feel the freemium or the subscription model is better? If you don’t know, see the article below.

“Usage-based billing is revolutionising the ecommerce industry as consumers demand ever more flexibility in the way that they buy, and pay for, goods and services. With technology increasingly making it possible for consumers to pay only for what they use, we are set to see significant changes across sectors in 2015 and beyond. Digital services businesses should be looking to integrate at least one method of usage-based billing in their business model in order to tap into new revenue streams and maintain customer satisfaction in an increasingly competitive environment.

As we move away from the traditional model of single purchase and use, and enter the usage-based billing age, what monetisation models should companies be looking to implement? There are two main models businesses should consider – subscription and freemium.

Subscription models: a big but valuable shift
Most people will be familiar with the subscription model, whereby the customer pays a set price for access to a product or service over a set period. This can be a weekly, monthly or yearly subscription, and examples would include Netflix and The Times online website.

 Freemium: perfect for SMBs:
Freemium is a model that has been particularly successful with early-stage software companies. A freemium model will make a product or service, typically a digital offering such as software, media or web services, available free of charge as standard but with a fee (premium) charged for additional features or functionality. Early-stage market entrants and market disrupters will often use this model in order to allow users to try the service for free and once the benefits have been realised the sale of additional features becomes a simpler process.”

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Photo By Sean Davis