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Predictions estimate the subscription economy will grow to $1.5 trillion by 2025, double its current value. The problem is that step one to making subscriptions work is to understand how they apply to an existing business, and that is proving difficult.
A subscription business model creates forward-looking revenue through a voluntary contract in which regular payments are made to gain access to a product or service. The customer has designated ownership of the product or service during the length of the contract while the seller generates value from the subscription itself and a platform that scales to welcome additional customers.
This is often disruptive and requires the entire company to migrate to a new way of thinking but Capgemini has helped clients move successfully into subscription models that support the business and customers.
Crafting an appropriate subscription model can drive more predictable and linear revenue with a lower cost of sales and higher gross margins. It also opens up new avenues to customers and drives innovative ways to deliver more value.
Download Demystifying the subscription model to understand how the right strategy can drive retention and acquisition.