Subscriptions within the past decade
Experts continue to debate whether subscriptions are a new evolution for the global economy or a passing fad.
Before exploring the answer to this question, it should be noted that subscriptions do provide more value than a typical lease set up. Even in the car industry, there is greater value. With Porsche’s Passport program, it’s possible for users to switch between different vehicles 18 times per year. Subscriptions can also be provided on a month to month basis compared with leases that are often built for the long term. As well as this, in the case of the car industry, subscriptions will include insurance as part of the package. This once again, ensures that customers are getting greater value and provides security for the brand.
The subscription economy is now benefiting both individual brands in different sectors such as Dollar Shave Club and Peloton as well as vendors. Vendors gain benefits from subscriptions with improved financial valuations. When this occurs, more companies are likely to adopt the model. By 2013, Adobe had stopped boxed packages completely and was committed to a SAAS business model.
Through this change, the businesses saw significant gains with shares increasing from $1.66 up to $5.2 from 2012 to 2018. Overall, the business witnessed a 700% increase in the price of its shares. In other cases, businesses have been introduced and then purchased for substantial profits. In 2016 Unilever purchased Dollar Shave Club for $1 billion. This occurred just five years after the initial launch of the business.