Why Subscription Models Work

Subscriptions are usually explained in terms of revenue: predictable, compounding, valued at a multiple. That is the investor's reason. The customer's reason is that a subscription is a relationship with a renewal date, and both sides know it.

A product that is bought once has to be good once. A product that renews has to be good this month, and the company finds out fast when it is not. Churn is brutal, and brutal feedback is the most useful kind.

The models that fail are the ones that try to hide the renewal. The ones that work put the cancel button next to the upgrade button and earn the click every month.