The membership vs subscription has long been a hot topic, and it’s time to put an end to it!
The e-commerce industry is booming, and with it, so are membership and subscription businesses. Membership-based services are currently generating over $15 billion in revenue and are expected to grow at a compound annual growth rate of 14%. Similarly, the subscription market value is forecasted to grow to US$2419.69 billion by 2028. The market is anticipated to grow at a CAGR of approx. 71% during the forecasted period of 2023-2028.
However, it is important for eCommerce brand owners-such as yourself- to understand the differences between the subscription and membership business models and choose wisely, because each model comes with a set of advantages and disadvantages that must be carefully considered.
To help lead you in the right direction, we’ve created a comprehensive membership vs subscription comparison. Sit tight and tune in!
Pros & Cons of Subscription vs Membership
Weight the pros and cons to different models, find difference between subscription and membership and make the wisest decision. When deciding which service option to choose, it’s important to weigh the pros and cons of both subscription vs membership. Here are 7 factors to keep in mind:
Pro 1: Price
Subscriptions are typically more affordable than memberships. Subscriptions offer a lower price point for customers and the ability to pay on a month-to-month basis. This makes them a great option for customers looking for a low-cost, short-term solution. Memberships, on the other hand, usually require an upfront payment and are more expensive in the long run.
Con 1: Commitment
Subscriptions tend to require less of a commitment than memberships do. Customers can cancel their subscriptions whenever they want, so there is no long-term commitment. However, in a membership vs subscription comparison, it is quite obvious that membership models often require a longer commitment and customers are typically charged a fee if they cancel before the end of their contract.
Pro 2: Variety
Subscriptions can offer a wide variety of services and products, from monthly boxes to streaming services. This makes them a great option for customers looking for something different every month. Memberships, however, often offer a more limited selection of services and products, making them less suitable for customers who are looking for variety.
Con 2: Accessibility
Subscriptions can be difficult to access for some customers. Many subscription services require customers to have a credit card or PayPal account in order to sign up, which can be a barrier to entry for some. Memberships, on the other hand, are usually more accessible, as they do not require a credit card or PayPal account to sign up.
Pro 3: Convenience
Subscriptions can be extremely convenient for customers. Customers can set up their subscriptions and forget about it, as the service will automatically renew each month. This means that customers don’t have to worry about having to remember to renew their subscription every month. As for convenience, the difference between membership vs subscription models is that memberships require more effort from customers, as they have to manually renew their membership each month.
Con 3: Flexibility
Subscriptions tend to be less flexible than memberships. Subscriptions are usually set up on a month-to-month basis, which means customers can’t customize their subscriptions to their needs. Memberships, however, can be customized to fit a customer’s needs, making them more flexible than subscriptions.
(Keep in mind, however, that with Subify, you and your customers will have the option to update, pause, or skip the orders if you want.)
Pro 4: Loyalty
Subscriptions are a great way to reward customer loyalty. Many subscription services offer discounts and other incentives to customers who sign up for a long-term subscription. Memberships, on the other hand, typically don’t offer these kinds of rewards.
Con 4: Lack of Engagement
Subscriptions can be a great way to keep customers engaged with a service or product, but they can also be a hindrance. If customers don’t use their subscription, they may end up paying for a service they don’t use. Memberships, however, often provide more of an incentive for customers to use the service, as they are typically required to renew their membership each month.
Pro 5: Additional Benefits
Subscriptions often come with additional benefits, such as access to exclusive content or discounts on products. This can be a great way to incentivize customers to sign up for a subscription. However, comparing the benefits between membership vs subscription models, turns out memberships typically don’t have these kinds of benefits.
Con 5: Limited Services
Subscriptions can be limited in terms of the services and products they offer. Most subscription boxes have predetermined products and services, and customers usually aren’t able to customize their subscription boxes.
Memberships, however, can be customized to fit a customer’s needs, making them more suitable for customers looking for diverse or changeable services and products.
Pro 6: Cancellation
If we want to have a complete guide for comparison between subscription vs membership, subscriptions are usually easy to cancel, as customers can usually do it online or over the phone. This makes them a great option for customers who don’t want to be tied down to a long-term commitment. Memberships, however, typically require customers to cancel in person or over the phone, making them less convenient for customers who want to cancel.
Con 6: Establishing a Value
With a membership model, customers are typically required to pay a one-time fee for access to goods or services. This means that the business must be able to establish the value of the goods or services they are providing in order for customers to be willing to pay for a membership. In the membership vs subscription comparison, this can be more challenging to membership models, as it requires the business to accurately assess the value of the goods or services they are providing in order to set a price that is attractive to customers.
Pro 7: Low Upfront Costs
Another pros of the subscription model is that it typically requires lower upfront costs for customers. This can make it easier for businesses to acquire new customers, as they don’t have to worry about customers shying away from large upfront fees.
Con 7: Difficulty in Upselling
With a membership model, customers are typically paying a one-time fee for access to goods or services. This means that the business will not be able to increase the amount of revenue they generate from that customer by selling additional products or services, as the customer has already paid a one-time fee for access.
Overall, it’s important to weigh the pros and cons of membership vs subscription models to decide which one is the best fit for your needs. Subscriptions can be a great option for customers looking for a low-cost, short-term solution, while memberships are more suitable for customers looking for a longer commitment and more control over the services and products they receive.
Subscription Boxes
Subscription boxes are a specific type of subscription program where customers receive a curated selection of products at regular intervals, usually once a month. This model has gained popularity in recent years, particularly in industries such as beauty, fashion, and food.
Advantages of Subscription Boxes
- Curated experience for customers
- Regular introduction of new products
- Increased customer engagement
- Opportunities for partnerships with suppliers
Examples of Subscription Boxes
- Grooming and beauty subscription box (Birchbox, Dollar Shave Club)
- Beverage and Food subscription box (Blue Apron, HelloFresh)
- Hobbies and interests (Book of the Month, Loot Crate)
Memberships
Membership business models are arrangements where customers pay a fee to access exclusive benefits, such as discounts, premium content, or members-only events. Unlike subscriptions, memberships may not involve recurring deliveries of products, but rather provide ongoing value through the benefits offered.
Advantages of Memberships
- Enhanced customer loyalty
- Opportunities to upsell premium services
- Increased customer lifetime value
- Creation of an engaged community
- Examples of Memberships
- Retail (Amazon Prime, Costco)
- Media (Patreon, MasterClass)
- Health and fitness (Peloton, ClassPass)
Loyalty Programs
Loyalty programs are designed to reward customers for their continued patronage. Typically, customers earn points or rewards for each purchase, which can be redeemed for discounts, free items, or other benefits. Loyalty programs aim to encourage repeat business and foster long-term customer relationships.
Advantages of Loyalty Programs
- Increased customer retention
- Encourages repeat purchases
- Enhanced customer satisfaction
- Valuable customer data for personalized marketing
Examples of Loyalty Programs
- Retail (Starbucks Rewards, Sephora Beauty Insider)
- Travel (Marriott Bonvoy, Delta SkyMiles)
- Financial services (American Express Membership Rewards, Chase Ultimate Rewards
Subscription Or Membership? Choose the best model!
1. What type of customers do I have?
Answering this question will help you determine whether the membership or subscription model or any other model is best suited for your business. If you have a customer base that is likely to be loyal and engaged with your company, then a membership model may be the best choice. It will allow you to reward customers for their loyalty and create a community of users that can interact and provide feedback. On the other hand, if you have a customer base that is more likely to be transient and not as engaged, then a subscription model may be the best option. With this model, customers pay a fee to access certain services or products and can unsubscribe at any time.
- Subscription boxes may be more appealing to younger demographics who enjoy discovering new products.
- Memberships may resonate with customers who value exclusivity and a sense of belonging.
- Loyalty programs can attract customers who appreciate being rewarded for their loyalty.
2. What type of products or services are being offered?
If you offer products or services that customers need to access on an ongoing basis, then a subscription model may be the best option. This will allow customers to pay a fee each month or year, and access the services or products without needing to make multiple purchases. On the other hand, if you have products or services that are more of a one-time purchase, then a membership model may be the better choice. With this model, customers pay a fee to join and receive access to exclusive deals and offers.
- Subscription programs and subscription boxes are ideal for consumable products or services with a high perceived value.
- Memberships work well for businesses offering exclusive content, experiences, or ongoing value-added benefits.
- Loyalty programs are suitable for businesses with a wide range of products and a broad customer base.
3. How often will customers need to access my products or services?
This is another important question to consider when deciding between a membership vs subscription model. If customers will need to access your products or services on a regular basis, then a subscription model may be the best choice. With this model, customers will pay a fee each month or year to access the products or services. On the other hand, if customers will need to access your products or services on an infrequent or one-time basis, then a membership model may be the better option. With this model, customers pay a fee to join and receive access to exclusive deals and offers.
4. How much time and money am I willing to invest in this business model?
Both the membership and subscription models require time and money to implement. With the subscription model, you will need to invest time and money into building a platform to manage subscriptions, as well as creating a customer rewards program. With the membership model, you will need to invest time and money into developing a community of users and creating exclusive discounts and offers. You should consider how much time and money you are willing to invest in either model before deciding which is the best option for your business.
5. What are my long-term goals?
It is important to consider your long-term goals when deciding between a membership vs subscription model. If you are looking to build a loyal customer base and create an engaged community of users, then a membership model may be the better choice. On the other hand, if you are looking to generate more revenue through recurring payments, then a subscription model may be the best option. Consider your long-term goals when deciding which model is best for your business.
- Subscription programs and subscription boxes can help generate predictable revenue and streamline inventory management.
- Memberships can build an engaged community and increase customer lifetime value.
- Loyalty programs can improve customer retention and encourage repeat purchases.
6. What are my resources and capabilities?
Consider the resources and capabilities required to implement and manage each program type. So answer this last question and choose the best model for your business between loyalty program vs subscription vs box and membership.
- Subscription programs and subscription boxes may require significant logistical support and inventory management.
- Memberships may necessitate the creation of premium content or experiences.
- Loyalty programs will need ongoing management and monitoring to ensure program success.
Subify Subscriptions App: Your All-in-One Solution
The Subify subscriptions app for Shopify simplifies the process of implementing subscription programs, subscription boxes, memberships, and loyalty programs for your eCommerce business. With easy integration, customizable features, and seamless customer experience, Subify helps you choose the best option for your business and manage it effectively.
Benefits of Using Subify
- Easy integration with Shopify
- Customizable subscription and membership options
- Streamlined customer experience
- World class support and success management
How Subify Supports Different Business Models
- Subscription Programs: Set up and manage recurring orders for your products or services.
- Subscription Boxes: Curate and deliver unique product selections to your customers.
- Memberships: Sell membership subscription online with Subify easy to use membership solutions.
- Loyalty Programs: Design and manage custom reward programs to incentivize repeat purchases through integrations with loyalty programs.
The subscription industry is expanding beyond physical products, with subscription services experiencing significant growth. Subscription trends and statistics show that the global market for digital content subscriptions alone is expected to reach $154.5 billion by the end of 2023. Service-based subscriptions, such as fitness classes, coaching, and software, are also gaining popularity.
Conclusion
The membership vs subscription models are two distinct approaches to e-commerce and each can offer unique value to customers as subscription models in ecommerce. Understanding the differences between the two models helps business owners make an informed decision on which model best suits their business needs and goals. It’s an important step in running a business because while the right decision can result in big sales, the wrong one can cause customer frustration and loss of profits. By understanding the differences between the two models and choosing the right one, business owners can ensure they are offering their customers the best experience possible and maximizing their profits.
We are only at the beginning of your journey; join Subify today and let us worry about the rest for you!
