Subscription as a Service or SAAS economy is a global phenomenon that has been steadily growing over the last decade.
As more consumers turn away from ownership in favor of access, companies are finding new ways to attract customers. It has even been predicted that, by 2030, there will be no ownership at all!
In this article, we'll discuss how some of the major companies have switched to a subscription model with success and Uber's failure.
Finally, we will explore Taco Bell's foray into the world of subscriptions by looking at its new subscription plan, which is what prompted me to write about the subscription economy in the first place.
Companies with subscription model success
In 2012, Adobe switched from selling software licenses on a one-time basis to offering subscriptions as a service.
The original model was based on individual license purchases and set up software and services as a one-time purchase - much like purchasing a book at Barnes Noble. But, as more people began using the subscription service, Adobe changed its pricing structure to include both an enterprise and personal option with lower costs for those who subscribed.
Regarding Adobe's annual plan, there's a cancelation fee if you cancel it before the annual plan ends. This guide should help you if you're worried.
Internet Service Providers (ISPs)
ISPs are not the only ones looking to switch from a license-based model to a SAAS one, as many ISPs have already made the move.
I can't think of an ISP that does not work on a subscription model. Who would want to pay per bandwidth usage when you can get "unlimited" bandwidth with a monthly subscription!
Dollar Shave Club
Dollar Shave Club is a subscription service that offers razors for sale via the internet
Each month, Dollar Shave Club ships high-quality razors to customers at an affordable price which are then billed regularly.
There is a variety of plans to choose from, but they also offer personalized plans for more frequent shavers.
The shift towards subscriptions has been working out quite well for Netflix, which is now the largest paid video subscription service in the world. Netflix's numbers are expected to continue rising but with more competitors entering the market, they need to up their game in the collections' quality. A worthy competitor is HBO, which has just expanded its service into Europe.
By the way, Netflix offered to sell the company to BlockBuster when BlockBuster was still the market leader in the video rental business but was turned down, look how that turned out. If you don't know the full story, I highly recommend searching for it.
Another example of a company that made the switch to SAAS is Spotify, which now has over 100 million subscribers.
Amazon Web Services (AWS)
AWS is the largest provider of cloud infrastructure services and offers a robust suite of products for businesses to use - all of which are offered as subscription-based services.
Contrary to popular belief, AWS is much more profitable than Amazon's retail business.
As the second-largest cloud provider just behind AWS, Microsoft Azure is a fast-growing service that offers companies and individuals access to technology infrastructure through subscriptions
Azure provides software and services for building, deploying, and managing applications and services.
The subscription model seems to be a success.
Then there's Uber
Uber started a subscription model called the "Uber Pass", which offers discounts on all Uber-related services. But it has not been a huge success, with several factors included. One is that surge pricing is not included in the Pass, and this Pass only benefits customers who use Uber-related services often, considering that many competitors are offering similar services in the market. So the majority of customers who don't use Uber-related services very often find the Pass just not worth it.
We can see that not all businesses that made a transition to a subscription model were able to succeed.
And finally, the most recent company experimenting with a subscription model, Taco Bell
In this new year of 2022, Taco Bell has launched a subscription called "Taco's Lover Pass". This pass allows subscribers to redeem a taco every day for a whole month. The initial pricing for this subscription is $10, which is a good deal if you buy tacos from taco bell often since one individual taco would cost more than a dollar.
This pass is currently only offered in certain Taco Bell outlets in the US, so if you are a Taco Bell regular and are near one of those outlets, go sign up!
For now, we never know if this could be a success or not, but time will tell!
So what's next? Which major company will start to offer subscriptions next? And who will fail to follow this trend?
From 2022 onward, it is expected that there will be many more companies making the switch to subscriptions, as this method of business is extremely profitable for most of those who have made it so far. There are still some companies out there that have not yet shifted their operational models from traditional selling to subscription-based selling, even though they should. We will soon see more companies making moves in this direction.
For us at Media Studio Hong Kong, we also try to make some of our digital marketing services subscription-based wherever it made sense since digital marketing is an ongoing effort. Our most popular subscription plans are monthly video production, social media management, and SEO.
If you got any questions regarding this topic, feel free to contact us.