A new report from Forrester Research explains how e-commerce is impacted by the burgeoning subscription economy. It provides readers an overview of the key solutions that are available to e-commerce companies who need support in managing their recurring billings. These subscription commerce platforms are especially pertinent to the growing market of cloud products and its dependence on recurring, predictable revenue.
Continue reading for a brief summary of its contents.
Subscriptions: The Holy Grail of Business
A New York Times article on the growing popularity of subscription products states, “C.E.O.’s are beginning to appreciate the value of recurring revenue in a way I’ve never seen before…I think that the software industry adopted it, which caught people’s attention. Now you’re seeing companies in just about every kind of industry embracing it.”
In other words, “subscription models are…the holy grail of business.” If you sell digital goods, whether they are on-premise or hosted products, you should be considering alternatives to perpetual licensing. These alternative business models ensure predictable revenue and loyal, long-term customers.
Business Models: A Menu of Variety
The report also identifies a number of the alternative business models that depend on a steady diet of recurring revenue, including:
- Service tiers
- Trials and freemium
- Usage-based billing
Billing Solutions: Subscription vs. Full Service
Some software companies might find it beneficial to build an in-house solution to manage all their payment and order information. More often than not, however, software companies prefer to spend their resources focused on building great products while outsourcing their e-commerce needs to specialists. The Forrester report breaks down the different types of solutions available to companies looking for support in managing their subscription products.
Essentially, these solutions are divided between platforms that focus specifically on subscriptions products and platforms that offer companies a comprehensive digital commerce solutions in addition to subscription and recurring billing management.