What is Subscription?
Definition
A recurring payment arrangement where a customer pays at regular intervals to access a product or service.
Understanding Subscription
Subscriptions have become the dominant business model in software, media, and services. Instead of a one-time purchase, you pay weekly, monthly, quarterly, or yearly for continued access. Common examples include streaming services like Netflix, software tools like Adobe Creative Cloud, and SaaS platforms.
Subscriptions provide predictable costs for consumers and predictable revenue for businesses. The average American household has 12+ active subscriptions totaling over $200/month.
Related Terms
Recurring Billing
An automatic payment system that charges a customer at predetermined intervals for ongoing access to a product or service.
SaaS
Software as a Service — a software distribution model where applications are hosted in the cloud and accessed via subscription rather than installed locally.
Billing Cycle
The recurring time period between billing dates for a subscription service, such as monthly, quarterly, or yearly.
Auto-Renewal
A feature that automatically renews a subscription at the end of each billing cycle without requiring manual action from the user.