Towards a Typology of Subscription-based Business Models

• Subscription-based business models are increasing in popularity, outgrowing nonsubscription-based businesses. Many companies want to explain themselves as “a Spotify for X” focusing on highlighting the similarity to the well-known music streaming service. We arguethat there are distinct differences between subscription businesses that need to be articulatedand aim at providing a common language to use when talking about subscription-basedbusiness models. Supported by business model theory, with a specific focus on profitability,we explore and exemplify how customer activity relates to variability in revenues and costs.The subscription typology illustrates meaningful differences between subscription businessesin their variance in customer activity, and to what degree customer activity is linked torevenue and cost. Through the profit equation, customer activity is linked to profitability.Profit variability is shaped by volume- or choice-driven cost variability and upgrade- orinvestment-driven revenue variability. In this study, the expectation that the customerinteract with the product is seen as key for a subscription business. We define subscriptionsas recurring, advance payments for a product or service with which the customer activelyengages, highlighting the customer behavior aspect.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

Business Model

Subscription

Typology

Profitability

Customer activity

Recurring payment

industriell ekonomi och organisation

Industrial Economics and Organisations

Publikations- och innehållstyp

vet (ämneskategori)

kon (ämneskategori)