Why Almost Everything is a Subscription
In recent years, an explosion of monthly payment services has begun across the tech industry, and even simple apps and hardware features now require monthly payments. Most people don’t even know how many subscriptions they have!
The subscription market is huge, with Grand View Research saying that the subscription economy was worth $492 billion in 2024 and that it could hit $1.5 trillion by 2033. All of this shows that the model is not slowing down; it is actually accelerating across all industries. Just remember when BMW did their subscription model for heated seats!
Why do comnies like subscriptions? Because they equal predictable revenue, or MRR, and inventos reward commissions that have MRR. The predictable income means that the ocmnies income is more stable than one-time purchases. Why they avoid the one-time purchases a lot is because that means they only get paid once. If you use their thing for years, it caps how much profit they get, creates pressure to constantly find new customers instead of keeping old ones, and reacquiring revenue also boosts a company's valuation.
Subscription services also created something new: subscription fatigue. It’s when there are too many services, too many small bills, and too many renewals that can all add up to huge costs! Data says that 80% of customers underestimate how much they spend on monthly subscriptions. People will forget what they even pay for.
You might have also seen that annual subscription services are cheaper. Why, well, one great reason for conies to offer them is because they know you're less likely to cancel because you’ve already paid a big sum of money, you forgot the date and think you already paid for the year, might as well keep using it, and you also avoid thinking about canceling because the renewal feels far away.
There is also a connection problem with an easy-to-enter subscription, which is hard to leave. Systems that do this usually use hidden cancel buttons, forced phone calls, or confusing UI. Like have you very had to Google “how to cancel ___ subscription? That’s how hard it is sometimes to cancel things, and that’s why governments and other organizations are advocating for the ability to cancel subscriptions easily. But, of course, most companies want to make more money instead of helping consumers.
One business side of these systems is how communities have huge tech systems for billing, automated renewals, usage tracking, and more. Once a business builds this infrastructure, it pushes them to keep everything subscription-based. One-time subscriptions aren't enough to justify the price of these systems, but subscriptions do.
Comnies are trying to fight the subscription fatigue that people get with things like bundle accounts to make subscriptions feel cheaper. They also make things like pause options, flexible plans, and yearly discounts as strategies to keep customers. A survey found that 66% of people one a combined service instead of many single ones. I am one of those people, definitely, that sounds a lot better to me!
Now consumers are pushing back. More people are cancelling. Many apps will now get negative reviews for being subscription-only, so that’s why many companies make hybrid models: one-time purchases and optional subscription. But, like I have seen a calculator have a subscription, and I thought, Why is that a subscription? Does it really need to? What apps or products do you think should not have a subscription that do right now?
I think that in the future, they might be smarter bundles, regulations that will force easier conclusion, and better transparency about pricing. I really hope that comnies will return to one-time fees, maybe that will even make them stand out! What subscriptions would you say add value, and which should not be a subscription?
Should companies keep both one-time fees and subscription options? What future tech do you think will become subscription-only? How many subscriptions do you think you have right now? Let us know in the comments!
Sources: BusinessWire & Grand View Research Image: Unsplash/Marques Thomas