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The most important FAQs about the Subscription Economy

WHAT IS THE SUBCRIPTION ECONOMY?

The term subscription economy describes the business model on the basis of which products or services are sold in order to generate recurring revenues from subscriptions. Customer retention is central– subscription business-models place the focus on suitable ways to tie customers to the use of a purchased product or service, thus obtaining subscription sales.

HOW DOES SUBCSCRIPTION MANAGEMENT WORK?

Subscription management includes individual tasks that serve the management of subscriptions. These usually involve processes that can’t be planned – e.g. personalized subscription adjustment, promotional offers, or personalized pricing. Central subscription management simplifies the tracing of subscription activities in the course of a customer life cycle and strengthens customer retention.

WHAT DOES RECURRING BILLING MEAN?

Recurring billing describes a payment model in which companies create recurring bills according to a predetermined schedule and send them to their customers in a fully automated way. The automated billing and the subsequent dispatch can, for example, take place monthly, once per quarter, once a year, etc. Subscriptions are the most widespread form where this payment model comes into play.

WHAT IS A PAYMENT SERVICE PROVIDER?

Payment service providers provide the payment methods for the connection to online shops. The use of a PSP to pay for purchases on the internet usually takes place via so-called SaaS licencing (software as a service). This enables the selection of suitable payment methods with fewer clicks. The most well-known PSPs include PayPal or Giropay.