A subscription business model can turn one-time buyers into repeat customers. By offering products on a recurring basis, small businesses can create more predictable revenue, build strong customer relationships, and increase customer lifetime value over time. Ecommerce store owners sell subscriptions for a range of products, including monthly meat deliveries and premium online content.
Analysts expect the growing subscription market to keep expanding. They estimate that global online subscriptions will grow from around $3.08 trillion in 2026 to over $9.05 trillion by 2034.
Learn the different types of subscription business models, the pros and cons of each, and the most popular subscription apps for Shopify stores.
What is a subscription business model?
A subscription business model is one in which customers pay a recurring fee to receive products or services over time. Unlike one-time purchase models, subscription models generate recurring revenue from existing customers.
Subscriptions have long been standard in print media, cable TV, software, landscaping, and grocery delivery—and subscription billing has become a mainstream ecommerce payment method. A 2025 Forrester report says that the average US adult has more than four monthly subscriptions.
Benefits of subscription business models
There are a few reasons why businesses offer subscriptions:
Predictable revenue
A subscriber base provides recurring revenue so you can better predict how much money your business will generate each period. “The more subscriptions we have, the better we can plan,” says Trey Lockerbie, cofounder of kombucha company Better Booch.
More cash on hand
Platforms like Shopify’s subscription billing support upfront payment for the full term of a subscription, providing you with cash at the point of sale rather than month-to-month.
This aids cash flow and gives startups a way to start a business with less upfront investment. In 2025, 79% of established store owners surveyed by Shopify said they use profits to self-fund growth,* and steady subscription revenue can provide an alternative foundation for reinvestment.
Efficient customer acquisition
Shopify’s 2025 Merchant Survey found that high-revenue store owners—who bring in $1 million or more—are six times more likely to track customer acquisition costs (CAC) than those with revenue of less than $100,000 (30% versus 5%),* suggesting that CAC is a critical success metric. Since acquiring a one-time customer can cost as much as acquiring a subscriber who generates revenue each time they renew, knowing your CAC can help you determine whether a subscription model is more efficient.
Customer loyalty
Subscriptions create a cycle of regular purchases, which can offer insights into customer behavior. Businesses can use this to create the personalized experiences that two-thirds of shoppers say are important.
Chargbee estimates the average churn rate for B2C subscriptions is between 20% and 30%. Based on these figures, if you have 1,000 subscribers joining this month, you’d keep, on average, 700 to 800 of them the following month.
Easier sales and cross-sells
Subscriptions often break higher annual costs into smaller monthly payments, giving customers a lower upfront commitment. Staying in touch with subscribers also gives you a channel to cross-sell them additional products or services.
Types of subscription business models
Here’s a closer look at popular subscription business models, with their pros and cons:
Curation
Companies like Birchbox, ButcherBox, and Stitch Fix offer subscription boxes, providing customers with a carefully selected range of products or experiences for an ongoing fee.
Companies can select products for customers based on a theme or on customer preferences, often gathered through quizzes or past purchases.
“We were very, very focused on quality and curation,” says Danny Taing, founder of snack company Bokksu, in a Shopify Masters episode. “We didn’t want to just put out our boxes for the sake of it. From the very beginning, it’s always been something I’ve been very focused on and careful about.”
Pros:
- Recurring revenue from a subscriber base
- Flexibility to change curated products to align with trends and customer demand
Cons:
- Maintaining subscriber interest requires ongoing product sourcing and curation
- Sourcing products from multiple suppliers and managing fulfillment adds operational complexity
Replenishment
Replenishment subscriptions let customers set an automatic schedule for ongoing purchases of essential items such as razors, diapers, vitamins, and pet food. This gives brands some predictability and better inventory forecasting, since they know how many subscribers are waiting for their next order.
The clean period-products company Riley is an example. “You can get so much on subscription, but a period is something that you get every month, and yet we always run out of these products,” says cofounder Fiona Parfrey in a Shopify Masters episode. “So having them delivered to your door conveniently, whereby you never need to worry about them, just made complete sense to us when we launched the business.”
A replenishment model can also work for wholesale sellers in a business-to-business (B2B) context. For example, you might promote subscription candles or bath products to hotels looking to stock local goods, or market your food subscription service to independent stores and cafés.
Pros
- On Shopify, recurring orders are processed automatically, so customers don’t need to reorder manually
- Because orders are tied to a set schedule, store owners can forecast demand and plan inventory around known order volumes
Cons
- Not all products need regular replenishing, restricting the types of products that will work for your subscription box
- Replenishment subscriptions are limited to products with predictable reorder cycles
Access
For a recurring fee, access subscriptions provide special member pricing, content libraries, or perks unavailable to non-subscribers. NatureBox, Amazon Prime, and Thrive Market are all examples of access subscription businesses, where the primary draw is a sense of value or exclusivity.
Pros
- Opportunities to strengthen customer relationships through personalized perks and offers
- You can upsell and cross-sell to subscribers who have indicated interest in premium services
- Opportunities to create member communities with forums or social media groups
Cons
- The access model requires ongoing investment in member benefits that differentiate the subscription from a standard purchase
- Operating costs scale with the scope of perks and content included in the subscription
Usage-based
With usage-based pricing, customers pay only for resources they use. This model is well-suited to services that must adapt to frequent shifts in customer needs, such as data storage or software-as-a-service (SaaS) products.
Shipping apps that charge based on the number of labels you generate, or fulfillment partners who bill per order processed, are examples of usage-based subscription models.
Pros
- Customers can start without a big commitment; as they use your services more, you earn more
- Usage-based plans offer customers flexibility
Cons
- Monthly revenue isn’t as consistent as other subscription business models
- Keeping up with usage—and billing for it—requires the right tools
Freemium
Freemium plans provide a basic version of a product or service for free. The idea is to get people to try it, and then encourage them to upgrade to a paid plan with better features.
Companies like Spotify (with a free version featuring ads) and Canva (offering limited access to graphics and tools) use the freemium approach to attract millions of users.
Pros
- Customers can try the product before committing to a paid plan
- Letting customers experience the product can build brand awareness and brand affinity
Cons:
- Free and paid tiers must be calibrated: too many features may reduce the incentive to upgrade, while too few might discourage adoption
- Free users generate data storage, customer support, and maintenance costs without necessarily generating revenue
Community and member clubs
Community and club members pay a monthly or annual fee to join a private group. This could be a physical place, like Soho House, or a digital community offering perks such as exclusive content, online events, and networking opportunities.
Pros
- Online community subscriptions don’t carry any inventory, shipping, or fulfillment costs
- It can be difficult for competitors to reproduce the value proposition offered by communities built around a specific group of members rather than a product or feature set
Cons
- Moderating and programming a community requires ongoing time and resources
- Community management costs and complexity increase as membership grows
Hybrid
A hybrid subscription model integrates subscription services into a business that already offers one-time purchase sales. It’s a flexible way to explore the subscription ecosystem without committing to a single revenue model.
Pros
- You can experiment with subscription services alongside a traditional business model
- This model generates data regarding the types of customers and products that will work for a subscription model
Cons
- Running subscription and one-time purchase models simultaneously adds complexity to inventory management, fulfillment, and customer support
- Subscription and one-time purchase pricing structures may conflict, requiring clear separation in how they are presented to customers
If you’re considering using a subscription model, you may choose to explore other ecommerce revenue models first to determine the best fit for your business.
Subscription business model examples
Here are three subscription businesses built by Shopify store owners:
Better Booch
Subscription type: Replenishment
Better Booch is a Los Angeles–based organic kombucha brand that sells weekly, biweekly, and monthly kombucha subscriptions through its Shopify store.
According to Cofounder Ashleigh Lockerbie, since the brand launched its subscription business on Shopify, “every metric has improved.” They estimate 32% of their Shopify revenue comes from subscriptions (up 6% year on year). Ashley also reports better retention: “Our lifetime value has gone way up. Our customer loyalty has gone way up.”
Odd Bunch
Subscription type: Curation
Odd Bunch is a produce-delivery business that ships boxes of imperfect fruits and vegetables directly from farms. “The idea was that you’d get a bunch of odd-looking fruits and vegetables in a box sent to you every week,” says Founder Divy Ojha in a Shopify Masters episode. “It was as simple as that for a price that you knew wouldn’t change. It’d come to your door every week like clockwork.”
After switching from a customer-selected model to a fixed mystery box format, Odd Bunch signed 200 subscribers within hours of relaunching. They now maintain 53% net customer retention at 12 months.
Indigenous Box
Subscription type: Curation
Indigenous Box is a quarterly subscription box service that curates products made by Indigenous entrepreneurs.
Cofounder Mallory Yawnghwe says the business idea came from a personal experience: “My mom sent a care package for me, with bear grease for my braids and a new ribbon skirt and medicine,” Mallory says in a Shopify Masters episode. “I just remember feeling how it was such good medicine for my heart and for my well-being. And I thought, ‘You know what, other people can benefit from this.’”
How to decide if a subscription model is the right fit
Use this framework to assess whether a subscription model makes sense for your product, customers, and operations:
1. Does your product fit?
Before launching a subscription business, ask yourself:
- Does it solve a recurring need?
- Will customers want it on a subscription basis?
- Can you deliver consistent value over time?
- Does it fit naturally into a routine (e.g., monthly use or replenishment)?
- Is there a clear reason to subscribe rather than buy once?
2. Is there market demand?
The more competitive your niche, the more you might consider competitive pricing strategies. A minimum viable product (MVP) or pilot can help you test interest without overinvesting.
Odd Bunch conducted its market research on Facebook. “It was a mom group, and it was a vegan group. There were two that did really well,” Divy explains in a Shopify Masters episode. “The majority of the first 87 people that signed up in that 10-day activation period, 80% ,came from those groups.”
3. Do you have a retention strategy?
As you scale, churn—the rate at which customers cancel—is a risk. A global study of 76 million subscribers found that 52% have canceled at least one subscription in the past year due to lack of use.
“Where I see a lot of people fail in subscription businesses is they spend a lot of time on how to drive down acquisition costs, but not a lot of time on how to increase lifetime value [CLV],” says Mike Salguero, founder of ButcherBox, in a Shopify Masters episode. “Increasing lifetime value is by far the easier one to do.”
Retention impacts profitability. If customer acquisition costs exceed CLV, you lose money on each customer. If the numbers are too close (e.g., 1:1 or 1.5:1), growth becomes difficult because there’s little margin for reinvestment. A higher ratio gives you more flexibility for marketing and product improvement.
- Make it easy to pause, skip, or adjust subscriptions
- Incentivize longer commitments (e.g., discounts on quarterly plans)
- Use email or SMS to stay engaged and remind customers of value
- Collect feedback and address common reasons for cancellation
- Deliver a consistently reliable product and experience
With 25% of new signups coming from former subscribers, consider win-back campaigns that encourage lapsed customers to rejoin.
4. Can you stay in touch?
Billing on a recurring schedule requires a communication infrastructure for order confirmations, renewal reminders, cancellation flows, and customer support.
Shopify Messaging lets you send automated post-purchase emails, renewal reminders, and win-back campaigns directly from the Shopify admin. You can manage customer support conversations across chat and messaging channels from the same admin, without needing a separate support platform.
How to start a subscription business
- Choose your subscription idea
- Select your subscription products
- Price your subscription options
- Start your online store
- Market your subscription business
- Track the right metrics
You can add a subscription business model to an existing business or use it as the basis for a new startup. Here’s how to launch one:
1. Choose your subscription idea
Decide on the subscription model and product categories you’ll offer.
The current situation often dictates these decisions. A successful clothing brand adopting a curation subscription model, for example, can increase the lifetime value of loyal customers by sharing new products they might like.
There may also be a great idea for a new subscription box business to start from scratch. Cratejoy, for example, anchors their boxes around a theme. Customers can find boxes with curated self-care products, adult crafting kits, and books.
2. Select your subscription products
Pick the types of products you want your subscription business to offer each month.
If you don’t already sell them, reach out to brands to ask whether they’ll offer wholesale pricing so you can include them in your monthly subscription. Shopify brands can also use Shopify Collective to sell products from other store owners.
Before a full rollout, build a prototype subscription to test your offering.
Odd Bunch learned during early testing that the operational side of curated boxes was difficult to maintain. “We got to 200, we got to 250, we got to 300 SKUs. And it was just madness,” Divy says in a Shopify Masters episode.
With four weeks of cash remaining, Divy pivoted the subscription business model to simplify customer choices to:
- Conventional or organic
- Fruit, veggie, or mixed
- Small, medium, or large sizes
“That was our happy middle between removing that customization piece where you couldn’t choose exactly what was in the box, but you knew exactly what was in the box,” Divy says.
Depending on the type of products you choose to sell, you may need to apply for a business license.
3. Price your subscription options
The average customer spends $90 per month on subscriptions, according to CNET.
Experiment with subscription pricing models to determine what your target customer is most likely to buy. A snack subscription box might offer a lower-cost “regular snacks” plan and a higher-priced “healthy snacks” option, for example.
Some subscription pricing strategies to consider:
- Value-based pricing. Price based on the perceived value to the customer, not just costs.
- Tiered pricing model. Multiple plans with different features, quantities, or levels of access.
- Freemium or entry-level plans. Let customers start small, then upgrade over time.
- Discounted commitments. Lower pricing for quarterly or annual subscriptions.
- Usage-based pricing model. Subscriptions based on how much the customer uses (common in apps and services).
Test your model with early customers and adjust your pricing based on their responses. If customers hesitate, churn quickly, or upgrade often, those are signals to revisit pricing.
4. Start your online store
An online store is a platform to sell your subscription boxes to customers around the world. Product photos, sign-up options, and pricing and feature information all belong here.
Choose an ecommerce platform with features designed for subscription-based selling. Shopify, for example, comes with these features out of the box:
- Unlimited products
- AI website builder
- Inventory management
- Native subscriptions app
- Payment processing
- Reporting and analytics
- Sales channel integrations
There are 13,000 apps in the Shopify App Store that offer additional features. Or build your own with Sidekick, the AI assistant baked into Shopify.
Add a subscription app to your online store
Shopify integrates with a range of subscription management software, including:
5. Market your subscription business
Early on, focus on channels that build awareness without high upfront costs. Word of mouth (53%) and building a social media presence (35%)* are the most common growth strategies for merchants in their first year, with many relying on organic traction before investing in paid ads.
Start with the fundamentals:
- Create and brand all of your social media platforms
- Take product photos so you have creative assets to promote
- Build an email list and send regular newsletters
Bokksu, for example, shares the contents of each subscription box on social media. “You get a little bit of a taste of it in advance with your eyes, so that when you subscribe, you can then try with your tongue later,” Danny says.
6. Track the right metrics
Track performance with these core subscription metrics:
- Monthly recurring revenue (MRR). Total revenue from subscriptions each month. Use it to track growth and forecast revenue.
- Average revenue per user (ARPU). Revenue per subscriber. This helps you understand which subscription plans drive the most revenue.
- Customer churn. The percentage of subscribers who cancel.
- Lifetime value (LTV). Total revenue you expect from a customer over time.
- Customer acquisition cost (CAC). The cost to acquire a customer.
As your business grows, tracking deeper metrics becomes a competitive advantage.
While 77% of store owners* track revenue, less than half track profit margin, traffic, AOV, or conversion rate, according to Shopify’s November 2025 Merchant Survey. High-revenue owners ($1 million or more) are far more likely to track these advanced metrics, underscoring the importance of digging beyond top-line numbers.
Look for trends and signals. If MRR is growing but churn is increasing, for example, growth may not be sustainable. If CAC rises faster than LTV, then acquisition is becoming less efficient.
Tools like Shopify Analytics can help you monitor these metrics in real time, so you can quickly spot issues and adjust your strategy.
Maintaining compliance for a subscription business
If you’re launching a subscription program in the US, your offer, checkout, and cancellation processes must follow the Federal Trade Commission (FTC)’s Restore Online Shoppers’ Confidence Act (ROSCA) regulations.
To stay compliant, your business must:
- Clearly disclose all material terms before collecting billing information
- Obtain the customer’s informed consent to the charge
- Provide a simple way to cancel recurring payments
The FTC enforces these rules, taking action against companies that contravene them.
Before expanding into new markets, review local regulations to make sure your subscription experience meets regional standards. Subscription laws vary by country, and requirements can differ across markets—especially around auto-renewals, cancellation rights, and refund policies.
Build customers and revenue with subscriptions
Set up recurring billing directly from the Shopify admin using the Shopify Subscriptions app. Shopify’s checkout supports subscription selling alongside one-time purchases, so customers move through the same flow regardless of order type.
As Mike of ButcherBox says: “For us, moving with a company like Shopify enables us to kind of offload the things that we’re not best-in-class at so we can focus on the things that we are best-in-class at.”
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Subscription business model FAQ
What are the key advantages of a subscription business model?
Subscription models generate recurring revenue from existing customers rather than relying on one-time purchases. Each billing cycle produces revenue without additional acquisition spend. 2026 data from Forrester found that half of US online adults have four or more monthly subscriptions, reflecting how embedded the model has become.
How does a subscription business model work?
In a subscription business model, customers pay a set price on a regular schedule, such as monthly, to use a product or receive a service. This creates a predictable recurring revenue stream for businesses rather than relying on one-time purchases.
Is a subscription business profitable?
A subscription business can be profitable. ButcherBox, for example, recorded $550 million in annual revenue from its meat delivery service without external investor funding. Success relies on multiple factors. Shopify data suggests that store owners who review their finances frequently and use formal financial management practices—such as regular profit and loss reviews and balance sheet monitoring—are more likely to hit revenue milestones and achieve profitability.*
How does a subscription business make money?
Subscription businesses make money by charging customers a recurring fee for access to their services or products. This fee can be charged monthly or annually.
* Based on a 2025 survey of 500 Shopify merchants conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established merchants with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all merchants.
