Subscription Box

I’ve always wanted to start a recurring subscription business. Imagine having a number of customers paying you X amount of dollars every month for a service?

I’d come across recurring subscription business in many forms in different forums. For instance, in BHW (Black Hat World), I would usually see guys renting links to high PR sites for $X per month.

I have also seen the SEO and inbound marketing agencies offering service packages for X amount of dollars every month or over a certain period. And then, of course, there are the numerous membership sites online.

I’ve subscribed to a couple of subscription based services in the past and for the most part, I found myself not using the services/tools. For instance, there was a time I kept my subscription for private proxies from a company on for more than one year. And then there was a time I rented a VPS for 8 months and perhaps only used it about  four or five times during the period.

What kept me subscribed to the services/tools was the low price. I mean, I was paying about $12 and $24 per month for the private proxies and VPS services per month. This isn’t a lot of money. But when you do the math over a year, you realize I just gave someone over $100 of my hard earned money and I wasn’t getting any value from them i.e. I wasn’t using their services.

When it came to subscription renewal, I always thought to myself: “This month, I’m going to use the service maximumly”. But you know, stuff happens. There are clients waiting for their articles from me and using the tools wasn’t going to earn any money for my rent et al.

Anyway, the whole point is I’ve lost quite some money staying subscribed to services that I did not need. Luckily, I pulled the plug on the subscriptions and now have other places where my money is going.

So, why would I want to start a subscription business?

Benefits of Subscription Business

The obvious benefit of having a subscription business is the almost guaranteed income you will have at the end of the month. If you have 10 customers paying $X, then you know every month you will have $10X in revenue.

There are a number of things that you should be on the lookout when dealing with subscription business. The most important are growth and customer retention. First, you want to grow to increase your revenue. At the same time, you don’t want to lose customers that have already subscribed to your service or else your revenue will decrease.

In the subscription world, losing customers is known as churn and every business should expect some percentage of churn. Your focus should be on keeping churn as low as possible.

I learned more than a few things about subscription business a year or two back when I was writing the articles for a payments startup that I cannot name due to contract obligations.

However, the content I got for the startup came from different sources. Here are two websites I consider authorities in the subscription world:

http://www.chaotic-flow.com

http://www.forentrepreneurs.com

If you are serious about subscription business, these two resources are my go-to places for advice and education.

Subscription Box Based Businesses

There are many types of subscription based businesses to start. But while most of the business I have touched on in the previous paragraphs are purely  online related, there is another category that is offline related.

You may even be a customer to a subscription service that delivers products or services online. For instance, if you have gym membership that is renewable per month or year, then you are a customer to a subscription service that is offline.

However, perhaps majority of you know about “subscription box” services. With these services, you receive some products that you are interested in every month for a fixed fee. The products are usually much more worth than the subscription fee you pay.

A good example of a subscription box company is Birchbox. However, there are hundreds of these box subscription companies, catering to all niches from pet supplies to personal grooming, teas to Japanese toys.

So, that’s what I’m looking at now. Starting a subscription box business. I’ll talk about it on my next post.

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