Subscription Model

Also called Subscription

Charging customers a recurring fee, monthly or yearly, for ongoing access to a product or service, rather than a one-time purchase. The backbone of SaaS.

Why it matters

Subscriptions create predictable, compounding recurring revenue that markets and investors prize, but they demand you keep earning the renewal. The model lives and dies on retention, which is why churn matters so much.

For example

Netflix charges a recurring monthly fee for ongoing access, turning one-time buyers into predictable recurring revenue it must keep earning.

Worth your time

Subscription Models vs One Time Purchase: Bridge the Debate
Subscription Models vs One Time Purchase: Bridge the Debate YouTube · article A first-timer usually gets the abstract pitch (recurring revenue is predictable) without seeing what that means for the cash in the bank next month. This video walks through both sides on screen, the upfront lump sum of a one-time sale versus the slow, compounding, retention-dependent trickle of a subscription, so you can picture the cash-flow and churn differences before you commit. Treat it as a framing of the tradeoff, then run the numbers against your own usage and acquisition cost. Watch on YouTube youtube.com →

Related terms

MRR Usage-Based Pricing Churn

Go deeper

See how founders actually handle this on Growing and marketing, part of the Starting Up hub.

eChai Partner Brands