Subscription-based business models are unique for their recurring payment structure, rather than the normal one-time expense that a purchase incurs. This means that the “subscribers”, or customers, are expecting consistent access to the service they are paying for while they continue to pay the subscription fee. This model has become more popular than ever since the start of the COVID-19 pandemic. During the lockdowns that swept the United States, it was more convenient for people to pay for a subscription and have basic needs, such as groceries, entertainment, and medical care delivered right to their doorstep.
This subscription trend doesn’t appear to be slowing down anytime soon. There are 225 million different services currently being subscribed to by 61 million people in the United States, which translates to an average of 3.7 subscriptions per person. Subscription models are growing at a rate that is 3.7 times faster than that of companies in the S&P 500, indicating robust growth for these subscription based businesses. However, there are some types of services that are more popular than others. TV streaming services are dominant, with the most number of states (six) boasting it as their most popular subscription service. Security services follow closely in second place with five states.
There are three main types of subscription models, including replenishment, curated, and membership/access. The most common type of subscriptions are curated ones, accounting for 55% of the market. These provide a broad range of products, including media, boxes, and tangible items. 32% of the market is made up of replenishment services, which give customers predictability for access to items such as food, toiletries, and office supplies. 13% of the market is made up of membership/access subscriptions, which provide customers with special access and savings to services like Sam’s Club and Amazon Prime.