Subscription model: Tiered pricing and other options consumers demand

Published on:
April 24, 2024

The subscription economy has fundamentally transformed the way businesses operate and how consumers access goods and services. Despite concerns about subscription fatigue and market saturation, the subscription model is expected to continue its upward trajectory for several compelling reasons.

One of the key advantages of the subscription model is its ability to deliver personalized experiences tailored to individual preferences. By leveraging data analytics, companies can better understand their customers’ needs and preferences, offering tailored recommendations and curated content that enhance the overall user experience.

Subscription Model:

The concept of the Word Subscription model elicits both proponents and detractors. It elicits factors such as perceived value, convenience, the fear of missing out, and past experiences.

When discussing subscriptions, the meaning can vary depending on your perspective.

If you are a business, Subscription means: Predictable Recurring Revenue. For businesses, the subscription model provides a steady stream of recurring revenue, offering greater predictability and stability compared to traditional one-time purchases. This reliable cash flow allows companies to plan and invest for the future with confidence, fostering long-term growth and sustainability.

If you are a conscious consumer, Subscription means: Monthly Payments for a convenient way to always have access to a product/ service that adds value to your life. However, if you are not a conscious consumer, then you might be paying for a service you don’t need nor use.

In any business where billing occurs in recurring cycles (daily, monthly, bi-monthly, yearly, etc.), you have essentially adopted a subscription model, even if it's not explicitly labeled as such. Likewise, as a consumer, if you consistently pay for a product or service on a recurring basis, you are essentially "subscribed" to that company.

Some subscription businesses may not label themselves as such, yet they are among the most successful subscription models. This category includes schools, nurseries, after-school programs, periodic maintenance services, monthly gardening services, and more. When a product or service is seen as essential, it is often perceived as a necessity rather than a subscription.

Subscription exhaustion or subscription adoption?

It is a fact that subscription adoption is growing and is pivotal for companies to survive and thrive. Let’s explore two different perspectives.


Subscription exhaustion? There is no subscription exhaustion when it comes to B2B, it is quite the opposite. The business model is thriving and growing because of the convenience for businesses and how it has made products and services available to startups and small companies that before were available exclusively for large corporations.

To build lasting relationships and achieve sustainable growth, companies should deliver on their core value proposition, prioritize exceptional experiences, customer loyalty, and continuous improvement based on feedback.


As digital natives become the dominant consumer demographic, their preferences and behaviors are reshaping the marketplace. Millennials and Gen Z, in particular, are more inclined to prioritize experiences over ownership, making subscription-based services an attractive proposition. This generational shift in consumer behavior is a good sign for the continued growth of the subscription economy.

Consumers determine the type of relationship they desire with the products and services they purchase. They might opt for a subscription with a streaming service, pay-as-you-go with a fitness company, or make a one-time purchase with a meal kit service. If a customer no longer sees the value in their streaming subscription and there are no alternative options available that align with the perceived value offered (tiered pricing), the customer is likely to cancel their subscription. Consumers want choices to suit their preferences.

When it comes to B2C subscription model for products and services, we also have to mention some level of fatigue. Keeping track of subscriptions and not using the products/ services you are already being charged for could push consumers away from this model.

Subscription evolution:

The subscription fatigue is prompting companies to rethink their approach to pricing and customer engagement. By offering more choice and flexibility, businesses can better align with the evolving needs and preferences of today’s consumers.

When it comes to relating to a company, customers expect flexibility and convenience. Whether it’s a one-time purchase, a monthly subscription, or a pay-per-use model, add ons, businesses must offer a variety of pricing options to cater to diverse customer preferences. Let’s explore the different pricing methods available to customers:

1. One-Off Payments: One-off payments, also known as single payments or one-time purchases, involve paying for a product or service in full at the time of purchase. This method is straightforward and ideal for customers who prefer to make individual transactions without any ongoing commitment.

2. Monthly Subscriptions: Monthly subscriptions involve recurring payments made on a monthly basis in exchange for access to a product or service. This model is popular among businesses offering software-as-a-service (SaaS), streaming services, and subscription boxes. Customers appreciate the convenience of automatic billing and the ability to budget for recurring expenses.

3. Tiered Pricing: Tiered pricing involves offering multiple pricing tiers or plans with varying features and benefits. Customers can choose the tier that best aligns with their needs and budget. This model is prevalent in subscription-based businesses, allowing customers to upgrade or downgrade their plan as their requirements change.

4. Memberships: This model is prevalent in subscription-based businesses, allowing customers to upgrade their plan along with a better way to experience the products and services along with other perks offered by the company to improve the experience of loyal customers. This model is popular for lifestyle services like fitness clubs, lifestyle clubs, hotels.

3. Pay-Per-Use: Also known as Usage-Based Billing, allows customers to pay only for the specific resources or services they consume. This model is common in industries such as telecommunications, cloud computing, and utilities. Customers benefit from the flexibility of paying based on their actual usage, avoiding upfront costs for unused capacity.

4. Freemium Model: The freemium model offers a basic version of a product or service for free, with the option to upgrade to a premium version for additional features or functionality. Customers can initially experience the product at no cost and then decide whether to invest in the premium offering. This model is common in software, mobile apps, and online gaming.

5. Prepaid Accounts: Prepaid accounts allow customers to deposit funds into an account or wallet, which can then be used to make purchases or transactions over time. This method is convenient for customers who prefer to preload funds and manage their spending without the need for ongoing authorization for each transaction.

By offering a range of pricing options, companies can meet the varied needs and preferences of their customers, providing a frictionless payment experience that enhances customer satisfaction and loyalty. The key is to prioritize flexibility and convenience to meet the evolving expectations of today’s consumers.

The subscription economy shows no signs of slowing down. With its inherent benefits for both businesses and consumers, coupled with ongoing innovation and adaptation, the subscription model will continue its ascent in the years to come. As companies embrace its potential, the subscription economy will remain a driving force in shaping the future of commerce and consumption.