The eight subscription business models are Member Benefits, Consumables, Unlimited Content, Subscription Boxes, Bundled Services, Insurance (peace-of-mind plans), Software as a Service and Minimum Commitment. Each suits a different kind of product. Pick the one that matches what customers already buy repeatedly, and mix in elements of a second model where it adds value.
Key takeaways
- There are eight subscription models. Most strong businesses run one as the backbone and borrow elements from another.
- The best model is the one built on something customers already buy, use or worry about repeatedly.
- Unlimited works only where usage is naturally capped. Panera capped its 'unlimited' drinks at 30 a month in 2026.
- Insurance-style plans are safest when they cover costs you control. Babylon Health's collapse shows what happens when they don't.
- Minimum commitments are legitimate, but in 2026 the commitment and exit fee must be unmissable. Adobe paid $150 million over a hidden one.
"GoPro? Those are the guys who make the cameras, right? Surely that's exactly the kind of business you told us to avoid. They sell one-off products!"
You're right.
Kind of.
GoPro made its name with small, tough cameras that shoot great footage in ridiculous conditions. But a good chunk of its money doesn't come from cameras. It comes from a subscription.
In 2016 GoPro launched its first version: unlimited cloud storage for $4.99 a month. Not a bad deal when every clip you shoot eats storage. By the end of 2020 it had 750,000 subscribers, beating its own target of 600,000 to 700,000. When I wrote the book in 2022, it was at 1.74 million on a $49.99-a-year plan that bundled storage, editing tools, discounts and camera replacement.
Here's the part that has happened since, and it proves the point better than I could have in 2022.
GoPro's camera sales fell hard. Total revenue dropped from $1,005 million in 2023 to $652 million in 2025. The subscription barely moved: $106.3 million of revenue in 2025, against $107.0 million the year before, at roughly 30 cents of cost per dollar of revenue, compared with about 73 cents for hardware. The subscription kept the lights on.
Most people look at GoPro and see a hardware maker that couldn't possibly sell subscriptions. GoPro saw a customer need (storage, editing, peace of mind) and built a recurring service around it.
The message: any business can do subscriptions with a suitable model. Picking the model is the tricky part. That's what this page is for.
How does a subscription business model work?
A subscription business model charges customers a recurring fee, usually monthly or yearly, for ongoing access to a product, a service or a set of benefits. The customer gets convenience, predictability or savings. You get recurring revenue that compounds month after month. (If you want the full case for why that matters, read why recurring revenue is the ultimate business.)
But "subscription" isn't one thing. It's not as simple as knocking up some membership tiers, slapping prices on them and calling it a day. There are eight twists on the model, and each suits a different kind of business.
The 8 subscription business models at a glance
| # | Model | What the customer pays for | Classic examples | Best fit | Watch out for |
|---|---|---|---|---|---|
| 1 | Member Benefits | Access to perks non-members can't get | Amazon Prime, GoPro, Uber One, Kogan First | Retailers, brands, venues, clubs | Benefits that aren't worth the fee |
| 2 | Consumables | Automatic restocking of things they use up | Subscribe and Save, Dollar Shave Club, Who Gives A Crap | Products bought on a cycle | Easy to copy; thin margins |
| 3 | Unlimited Content | Unrestricted access to a library or service | Netflix, Spotify, Mister Car Wash | Content, low-marginal-cost services | Heavy users who cost more than they pay |
| 4 | Subscription Boxes | A curated surprise, delivered regularly | Book of the Month, BarkBox, Watch Gang | Collectors, niche hobbies | Needs volume to buy below retail |
| 5 | Bundled Services | Several services usually bought separately | Salon bundles, accounting fixed fees, maintenance plans | Local and professional services | Bundling things people don't want |
| 6 | Insurance | Peace of mind and priority care | Vet wellness plans, dental memberships, extended warranties | Health, trades, equipment | Underwriting costs you can't control |
| 7 | Software as a Service | Ongoing access to software, with updates | Salesforce, Xero, Canva | Software and digital tools | Seat-based pricing in the AI era |
| 8 | Minimum Commitment | A lower rate in exchange for committed volume or term | Stripe volume deals, energy contracts, enterprise AI plans | B2B, usage-heavy services | Hidden exit fees now attract regulators |
Let's go through them one at a time, with the book's stories and what has changed since.
Model #1 – The Member Benefits model
Members pay a fee, monthly or annually, to get things non-members can't. GoPro's plan is a member benefits model: storage, editing tools, discounts and support that a camera owner without the plan doesn't get.
Think of it as an umbrella model. The benefits can be anything, as long as your audience will pay a recurring fee for them.
The restaurant that sold speeches
There used to be an Italian restaurant in Toronto called Grano. For $1,200 a year, members got four private speeches from prominent people, held at the restaurant. Grano collected the membership fee, then made money on food and drink at every event, and met new customers along the way. Sadly, the owner suffered a stroke and Grano is no longer around. But the idea is one any venue could adapt.
What has changed since 2022
Paid membership has beaten free loyalty points. Uber ended its free Uber Rewards program on 1 November 2022 and bet on Uber One instead. By the first quarter of 2026 Uber said it had more than 50 million members. In Australia, Kogan's paid loyalty programs earned A$61.4 million in fiscal 2026, up 14.3 percent, mostly as high-margin fee income paid in advance.
There's a catch. In April 2025 the US FTC sued Uber, alleging it enrolled people without consent, overstated savings and made cancelling hard. "Easy to join, hard to leave" has become a legal liability.
Ask yourself: is the benefit big enough that people will pay for it on top of what they already buy from you? If not, one of the other models is probably a better choice. See the member benefits model for pricing and design.
Model #2 – The Consumables model
I have a favorite peppermint tea. Every four weeks a batch lands on my doorstep, 10 percent cheaper than a one-time buy.
That's the consumables model in a nutshell. Customers pay to be restocked with something they use up.
The book's example was Vitable, which recommends vitamins from a health and lifestyle assessment, then delivers packs from $1 a day. Its founders raised $5.5 million in 2021. Dollar Shave Club, Amazon's Subscribe and Save and razor-blade clubs all run the same play.
Three things make it work: convenience (no trip to the shop), automation of a boring task, and never running out.
What has changed since 2022
Two updates, pointing in opposite directions.
The warning: Dollar Shave Club, the poster child, was sold by Unilever to private-equity firm Nexus Capital in October 2023, with Unilever keeping 35 percent. A razor subscription is easy to copy, and by then DSC was also selling through Walmart and Target. Consumables need a second moat: your own formulations, personalization or a loyal community.
The success: Australia's Who Gives A Crap started in 2012 with a co-founder sitting on a toilet for 50 hours to crowdfund production. Its recurring boxes proved demand and built the brand, and it then moved into Waitrose, Whole Foods and, in July 2025, Tesco. The subscription became the loyal core while retail brought reach.
Read more about the consumables subscription model.
Model #3 – The Unlimited Content model
Netflix, Spotify, Disney+: pay a monthly fee, get unlimited access. Who can resist?
Here's the important bit. "Unlimited" doesn't have to mean millions of titles. It means unrestricted access to whatever you offer.
How New Masters Academy bootstrapped a library
New Masters Academy offers video art lessons from world-class artists. The founders had no budget to pay for content, so they asked prominent artists to record lessons for a share of the revenue instead of an upfront fee. The gamble worked. When I wrote the book it had a reference library of 35,000 images and 3D models, and two tiers: $49 a month for Premium and $39 for Standard.
A little ingenuity and an understanding of what a niche wants built an unlimited content subscription on a shoestring.
What has changed since 2022
The model has spread well beyond content, and 2026 taught a clear lesson about where "unlimited" breaks.
- Where it works: Mister Car Wash's Unlimited Wash Club made up 79 percent of its wash sales in 2025. Nobody washes their car 40 times a month, and the marginal cost of a wash is low.
- Where it breaks: Panera's Unlimited Sip Club dropped the word "unlimited" from 19 August 2026, capped members at 30 drinks a month and raised the monthly price to $14.99. Pret in the UK replaced five free drinks a day with half-price drinks for £10 a month. Heavy users are the first to join, and they cost the most.
- Where AI broke it: Cursor's "unlimited" AI coding plan ran into customers whose usage cost far more than $20 a month. In June 2025 it switched to an included allowance and apologized publicly for how it handled the change.
The rule: offer unlimited only where usage is naturally capped and each extra use costs you very little. Otherwise say "includes X, then $Y each." The unlimited content model page covers caps and fair-use terms.
Not sure which model fits?
Answer eight questions and the free Subscription Model Selector recommends a model for your business.
Model #4 – Subscription Boxes
Some products appeal to collectors. Others come in so many options that customers want help choosing. Subscription boxes solve both.
Loot Crate filled boxes with T-shirts, figurines and comics for the "geek" crowd. BarkBox does dog treats. Ipsy does beauty. Stitch Fix does fashion.
Then there's Watch Gang. Subscribers get a new watch every month, picked to their taste, and a random subscriber wins a Rolex every Friday. Watch Gang made $15 million in 2017. Some of its watches cost a fifth of retail because it buys in bulk.
Why subscribe? The surprise is powerful. It's like Christmas every month. And the savings are real, as long as the business has the volume to buy wholesale.
That's the catch. If you don't have a plan to reach volume, this model probably isn't for you.
What has changed since 2022
The oldest box of all, the Book of the Month Club, turned 100 in 2026 with more than 400,000 members (Fast Company, 2025), and it lets members choose their book rather than auto-shipping one.
Meanwhile regulators have turned their attention to the "first box" funnel. In December 2025 Australia's ACCC took HelloFresh and Youfoodz to court, alleging tens of thousands of customers were charged for a first order after cancelling before the stated cut-off. Let people browse before they enter card details, and make sure a cancellation actually stops the charge. See subscription boxes for the full playbook.
Model #5 – Bundled Services
Also known as the "rundle," this one is simple. Package together services people usually buy one at a time, and sell them as one monthly fee.
I see it working beautifully at the local level.
How a hairdresser turned four services into a subscription
Lavelle Hairdressers in Australia offers style cuts, blow-dries, shampooing and scalp massages, each bookable on its own. Lavelle packaged all four into a plan called Strength and Shine for $64 a month, saving members $108 a year on treatments they'd buy anyway. Members can add extra services on top.
There's the secret. Bundle what people already buy. If they don't like a service on its own, they won't fall in love with it in a bundle.
What has changed since 2022
Professional firms have become the bundled-services story of the decade. A 2025 benchmark of 219 US accounting firms found hourly billing for CFO and controller services fell from more than 20 percent of firms to 10 percent, with the most common bookkeeping package priced at $250 to $499 a month. Trades businesses run the same model as maintenance agreements. Australia's TechnologyOne bundles implementation into its "SaaS+" subscription, removing the biggest upfront barrier to buying.
The failure case is just as instructive. Car subscriptions bundled the car, insurance and servicing into one monthly fee. Volvo suspended Care by Volvo in the US in August 2024, and Jaguar, which the book quoted at about $1,000 a month, has paused most new car sales while it reinvents the brand. When the bundle contains a depreciating asset you don't control, the margin disappears. Read the bundled services model.
Model #6 – The Insurance model
You pay a monthly premium. In return, someone guarantees certain protections if something goes wrong. We pay for peace of mind.
Insurers are some of the world's biggest businesses because their recurring revenue is tied to something everyone needs. But smaller businesses can borrow the model too.
Remember GoPro? Its subscription includes camera replacement, which is effectively an extended warranty. Cancel the plan and you lose the peace of mind.
What happened to Babylon Health?
The book used Babylon Health as an example of a smaller twist on the insurance model: an app giving 24/7 access to a GP for £149 a year.
It became the book's clearest warning. Babylon went public through a SPAC at a $4.2 billion valuation in 2021, then expanded into managing care for US health plans, a far riskier business. Contracts worth nearly half its 2022 revenue weren't renewed. Its US entities filed for Chapter 7 liquidation in August 2023, and the UK business was sold for about £500,000.
The updated lesson: insurance-style plans are safest when they cover costs you control, your own time and services, with limits and fair-use terms.
Where it works in 2026
Vets and dentists are the model's quiet winners. Greencross Vets' Healthy Pets Plus costs A$660 a year (A$696 for seniors), payable fortnightly, monthly or annually, and covers routine care plus discounts. US dental practices are launching in-house membership plans for uninsured patients: cleanings and exams included, a discount on everything else. These cover predictable work the clinic delivers itself, which is the opposite of Babylon's mistake.
The insurance model page shows how to price and cap a peace-of-mind plan.
Model #7 – Software as a Service
Customers pay a regular fee for access to software, with updates included. Stop paying, and access stops.
Before Salesforce, companies bought CRM software from the likes of SAP and Oracle as standalone products, installed on site, with expensive upgrades. Salesforce put its flag in the ground early with cloud CRM for a monthly fee and became the blueprint for every SaaS company that followed.
One warning from the book still applies: you can't set up a SaaS product and forget it. Customers expect constant improvement.
What has changed since 2022
Two big shifts.
AI is being bundled into the seat. Salesforce reported that its Agentforce AI business passed $1.5 billion in annual recurring revenue by August 2026, and Salesforce needed three pricing meters to sell it: per conversation, per action (Flex Credits) and per user.
The seat itself is under threat. If AI lets your customers do the same work with half the staff, per-user pricing halves your revenue. WiseTech removed seat fees from CargoWise in December 2025 and now charges per transaction. Atlassian, meanwhile, set a 2029 end-of-life for its self-hosted products to move everyone onto cloud subscriptions.
If you're building software, read the SaaS business model alongside the newer usage-based and credit pricing models.
Model #8 – Minimum Commitment
Here the customer commits to buying a certain amount, or staying a certain time, in exchange for a better rate.
Energy retailers do it with wholesale contracts. Data companies sell minimum data volumes. IT service desks sign minimum-term contracts.
The book's example was Stripe. Once a business processes a reasonable volume, Stripe often offers a lower rate for a 12-month commitment. In other words: stick with us for a year and we'll take less of your money. The business keeps more of each sale, and Stripe locks in a year of volume. Businesses on Stripe processed about $1.9 trillion in 2025.
This model works best when your product becomes profitable at a known usage level. Rather than hoping customers reach it, have them commit to it.
What has changed since 2022
Minimum commitments have become the standard way to sell AI to business. Anthropic's Enterprise plan, for example, now publishes $20 per seat plus usage at API rates, with a 20-seat minimum. Infrastructure companies like turbopuffer set monthly minimums ($16, $256 and $4,096) so every account covers its cost.
But regulators now insist the commitment be visible. In March 2026 the US Department of Justice announced that Adobe had agreed to a $150 million settlement over allegations that it hid the early termination fee on its "annual, paid monthly" plans. If you sell a 12-month plan billed monthly, say so in the headline and show the exit cost before purchase. More in minimum commitment pricing.
Which subscription model works for you?
The answer comes down to what you sell and how often customers need it. Here's the decision framework I use.
| If your customers... | Start with | Borrow from |
|---|---|---|
| Use up a product on a predictable cycle | Consumables | Member Benefits (member pricing) |
| Visit you regularly for the same services | Bundled Services | Unlimited (with a cap) |
| Worry about something breaking or getting sick | Insurance | Bundled Services |
| Love your brand and buy across your range | Member Benefits | Consumables |
| Consume content, learning or a low-cost service | Unlimited Content | Member Benefits (community) |
| Want curation or discovery in a niche | Subscription Boxes | Member Benefits |
| Use your software every week | SaaS | Minimum Commitment, usage pricing |
| Buy large or variable volumes from you | Minimum Commitment | SaaS or usage pricing |
And if mixing makes sense, do it. GoPro mixes member benefits with an insurance-style replacement. Amazon Prime mixes member benefits, unlimited content and consumables. Read how GoPro's subscription held up as camera sales fell.
Steal this: the three-question model test
- What do my customers buy, use or worry about at least every quarter?
- Which one of those could I deliver for a fixed fee and still profit on my heaviest users?
- What would a customer lose if they cancelled? If the answer is "not much," add a benefit or pick a different model.
When a subscription is the wrong model
Be honest with yourself here.
- One-time needs. If customers solve the problem once and never return, a subscription will feel like a trap.
- No volume. Boxes and consumables need scale to buy below retail.
- Costs you can't cap. Unlimited plans and insurance plans fail when heavy users or outside costs can blow out.
- Nothing to lose on cancelling. If there's no switching cost, no community and no benefit, churn will eat you.
Our list of 101 subscription business ideas and the industry pages (linked below) show what tends to work in each sector.
The 16-model version
The chapter summaries that accompany the book extend these eight models to 16 by adding the five pricing models from Chapter 3 (fixed fee, advertising, e-commerce, transaction processing and data/APIs), plus freemium, free trials and usage-based pricing with a minimum commitment. Those are covered in the five subscription pricing models. Choose your subscription model first, then your pricing model.
2026 update: what's new in subscription models
The eight models still hold. What has changed is how they're priced, policed and combined.
Credits have become the AI version of the subscription. Most AI products now sell a monthly plan with an included allowance of credits, then charge for more. GitHub moved all Copilot plans to monthly AI credits from 1 June 2026, keeping the same headline prices. It's the Minimum Commitment and SaaS models fused together.
Hybrids are the norm. ICONIQ's 2026 survey of AI builders, summarized by SaaStr, found companies blend an average of 1.7 pricing models. A base subscription plus usage is now the most common shape for software.
Loyalty is moving from free points to paid membership. Uber One, Kogan First and Amazon Prime show that a paid membership with one headline benefit beats free points, because members spend more and stay longer.
Easy cancellation is becoming law. Australia's new subscription rules start on 1 July 2027 (disclosure at sign-up, notices during the subscription that are expected to include reminders before trials end and renewals, with timing left to regulations not yet made, and an easy way to cancel). The UK's apply from January 2027. As at October 2026, this is general information only, so get advice on your own terms.
Big players stopped counting subscribers. Netflix stopped reporting subscriber numbers in 2025 and Disney followed. They now point to revenue and engagement. Whatever model you choose, track revenue per member and churn, not just member count.
What to do next
You need to know which subscription model you'll use before you set a price. Here's how to get there this week.
- Shortlist two models from the decision table above.
- Run the three-question test on each.
- Get a recommendation from the free model selector (it's the tool the book's Chapter 2 points to).
- Sketch a three-tier offer and check the numbers with the subscription price calculator so you profit after costs, GST and fees.
- Move on to pricing. Once you know your model, it's time to pick your pricing model.
If you'd like the full chapter, with every exercise, the book is free for registered Australian business owners and as an ebook worldwide.
Read the whole book free
The Subscription Playbook as a free ebook and audiobook. Australian business owners can claim a free hardcover, shipped free.
Claim the free hardcover Get the ebookMore in this section
Model #5
How to bundle services customers already buy into one monthly fee: salon, accounting and vet examples, a pricing method, and the cost traps to avoid.
Model #2
How consumables subscriptions work, from Amazon Subscribe and Save to Who Gives A Crap: pricing, delivery math, a sample offer, and the risks to plan for.
Model #6
How small businesses sell peace of mind with care plans, wellness plans and maintenance agreements, how to price the risk, and the AU rules to know.
Membership Business Model
The member benefits model explained: how GoPro, Amazon Prime and Kogan First make memberships pay, how to price one, and when it's the wrong choice.
Membership vs Subscription
Membership vs subscription: what each one sells, how pricing and churn differ, when to use which, and why Amazon and Uber smartly combine both.
Model #8
Minimum commitment pricing explained: how Stripe, Zendesk and Snowflake trade a lower rate for committed spend, how to set the floor, and the Adobe lesson.
Productized Services
What a productized service is, examples from design to accounting, how to package one in seven steps, and how to price it so scope creep can't win.
Recurring Revenue
What a recurring revenue model is, why buyers pay more for it, and how to add it to any business. Chapter 1 of The Subscription Playbook, updated for 2026.
Retainer Pricing
How retainer pricing works for agencies, consultants and professional firms, when a subscription beats a retainer, what to charge, and the traps.
Model #7
The SaaS business model in 2026: how software subscriptions make money, why seats are giving way to usage and credits, AI margins, and a sample tier table.
Model #4
How the subscription box business really works in 2026: Watch Gang, Loot Crate and BarkBox lessons, a box cost breakdown, and the churn trap to avoid.
101 Subscription Business Ideas,…
101 subscription business ideas grouped by industry, each matched to one of the 8 subscription models, plus a five-test filter for picking one that lasts.
Model #3
The unlimited content model explained: Netflix, Spotify and a bootstrapped art school, when 'unlimited' works, when it breaks, and how to price it in 2026.
Why Subscription? The Advantages, the…
The real advantages of a subscription business model, from cash flow to valuation, the eight risks most guides skip, and a checklist to decide.
Frequently asked questions
What is the most profitable subscription business model?
It depends on your costs, not the model's name. Software as a Service has the highest gross margins because each extra customer costs little to serve. Member benefits and bundled services can be very profitable for local businesses when the included work is predictable. Subscription boxes and unlimited plans are the easiest to get wrong, because heavy users and product costs eat the margin.
Can a small local business use a subscription model?
Yes, and many of the best examples are local: a hair salon bundling cuts and treatments, a vet's wellness plan, a car wash club, a plumber's maintenance agreement or a cafe's coffee plan. Start with the service your regulars already buy every month and turn it into one fixed monthly fee with clear inclusions.
How many subscription models should one business run?
Start with one, clearly. Once it works, borrow elements from a second model to deepen it. GoPro mixes member benefits with an insurance-style camera replacement. Most businesses that run three or four separate subscription offers at once confuse customers and their own team.
What is the difference between a subscription and a membership?
A subscription is a billing arrangement: the customer pays on a schedule for ongoing access. A membership is a sense of belonging and status, often with exclusive benefits. Many offers are both. The Member Benefits model deliberately combines them, which is why memberships tend to have lower churn than plain subscriptions.
Are subscription boxes still a good business in 2026?
They can be, but only with a plan to reach volume, because the model depends on buying stock in bulk below retail. Curation that saves customers time, member choice instead of auto-shipping, and easy skipping or cancelling are now essential. In Australia, subscription notices become legal duties from 1 July 2027, expected to include trial-end and renewal reminders once regulations set the timing.
Do I need special software to run a subscription?
Not at first. Most payment platforms and accounting systems can bill recurring card or direct debit payments. As you grow, dedicated subscription or membership software helps with failed payments, upgrades, pauses and reminders. Choose a system that can send renewal and trial-end reminders automatically, since those are becoming legal requirements in several countries.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- GoPro: Fourth quarter and full-year 2025 results (5 Mar 2026)
- Restaurant Dive: Panera adds limits to Sip Club beverage subscription (14 Jul 2026)
- US Department of Justice: Adobe agrees to $150 million settlement (13 Mar 2026)
- Salesforce: Q2 fiscal 2027 results (26 Aug 2026)
- FTC: Action against Uber over billing and cancellation practices (21 Apr 2025)
- Healthcare Dive: Babylon files for Chapter 7 (Aug 2023)
- Greencross Vets: Healthy Pets Plus (accessed Oct 2026)
- Stripe: 2025 annual letter (24 Feb 2026)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.