Subscribification

Subscribification means to change a pricing scheme from what used to be a one-time purchase (or an act of sale/purchase) to a new agreement where the buyer agrees to pay a regular (weekly, monthly, yearly) subscription (usually a flat fee) for a service that gives them access to the object he'd traditionally purchase. This basically means changing the rules of the game in sales - what previously was a one-time thing now is a regular thing. And both parties benefit. And yes, I'd like to believe I invented the word. But probably I didn't :-)
Subscribification
Let's start with good "old" subscriptions

We know subscriptions very well: our phone plan, our insurance policy, our cable TV contract... every one pays some of these. Regularly. On and on and on. This is why these companies strive - they collect our money in regular intervals and benefit from having not only fixed costs (like most companies) but also fixed income (like most employees). It's a brilliant situation for them. And for us... well, kind of.

Subscriptions in software

In software, when you'd download a shareware program, you'd buy it once and that'd be it. With web-based applications (like my very own Nozbe) you pay for a monthly access to the program - your benefit - you can access it from anywhere you want, you don't have to worry about updates, backups, etc. and the company collects a small subscription fee every month or year. This model was new 10 years ago, but now it's very common. I've written a small guide to subscriptions for startups a while ago on this blog.

Subscribification in action = example of books

While selling access to web-based software for a monthly fee is a normal practice now, selling books like this isn't. Amazon is still not doing it but its daughter company is - Audible. I'm a very big fan of this service (as you very well know) and I was surprised by their model - you can buy the books from them one at a time, but to encourage "audio" reading they prefer you went with a subscription from them so every month you'd get a "credit" that gives you one book guaranteed. I think this model is brilliant and I'm wondering why Amazon is not doing it yet. (they are sort-of with "prime" but that's not what I mean)

Selling a product "experience" instead of a product

If it wasn't enough, I was amazed to discover a new trend - in these trying times entrepreneurs are searching for ways to "monetize" their customers by giving them added "value" or "experience" and I think it's brilliant.

Upon my last weekend's visit to a local winery nearby I was prepared to have a regular guided tour and taste some good wine - the only surprise I was prepared for was a bad wine. The wine was great, but I was in for a different kind of treat.

When touring the winery we discovered the owner had built special, beautifully furnished and styled "wine rooms" in the basement for members of this winery's club. That's right. You could be a member of a club for a flat yearly fee, and have access to the special wine rooms where you'd have your own "box" of wines for the whole year and you'd come with your friends for a drink anytime you wanted.

This winery owner wasn't only selling his wines - he was selling a "wine experience". Did I say it was brilliant?

How can you subscribify your business?

Just think about it - if you own a restaurant, cafe, or sell to specialized niche market, your "traffic" is limited and your "capacity" is also quite limited. By inventing a way to sell your customers "an experience", special treatment, VIP access, whatever... you subscribify your offer and expand your capacities "in a virtual way" thus making more money and also giving your customers a different kind of value with additional benefits you'd never given them before.

It's about added value, more customer satisfaction and eventually... bigger revenues.

Subscribification is an opportunity for both the buyer and the seller to give more and receive more. To convert one-time customers to regulars. To achieve "high fidelity" of your customers, so to speak. You're bound by a subscription so you're both more loyal to one another. I know this. It works beautifully in my software business and I can see it work in other industries where it hasn't been done before. Especially now, when times are tough, customer fidelity is so important and competing with added value is the key (if you don't want to compete on price only).

I saw subscribification at work in an audiobook store and a winery, have you seen this at work somewhere else? How was it? What was the benefit? Was it a great value? Please let me know in the comments!

I'm Michael Sliwinski and I'm an entrepreneur who's also the...
.. Founder of Nozbe.com - a time and project management web application
.. Editor of Productive! Magazine - a global PDF publication on productivity
.. and a blogger as well as a producer of a weekly 2-minute Productive! show.

Posted on Monday, November 21, 2011 (business)