Membership Vs Subscriptions—Choose the Business Model for SaaS

These days, the trend of using a single business model has changed rather different business models are tried and tested to find the best fit. When there are so many models and tactics are there, it sometimes becomes difficult to differentiate between two different business models.

That’s the very reason for the debate behind the membership vs subscriptions business model. If you are also confused about these two models, then this article is for you. By the end, you will have a clear understanding of these two and which one to choose.

Also Read: Build, Manage, And Grow Your Member Community With Membership Management Software Like SubscritptionFlow

But They Say, “Memberships and Subscriptions Are Same?”

When a SaaS business opts for a subscription business model, it offers access to a certain level (depending on the subscription plan) to the users or the customers. The customer is entitled to use and enjoy the features of the SaaS product as per his subscription plans.

However, in the case of membership, people are convinced to get on board to get certain services. Subscriptions can be offered for a certain product or service, but in the case of membership, usually, customers are onboarded and managed for certain specific services. Companies opting for the membership model are mostly focused on community building.

Here are some of the points of the difference between these two business models:

1. Community Building

As it has been mentioned that the businesses that aim to build a community, opt for the membership business model. They facilitate the customers as a member of a certain community. And the purpose of creating a community is to monetize customers and the community as a whole. For instance, gyms and fitness center’s create a community of fitness freaks. They charge gym members for the services. Then community events are arranged, and members who want to leverage such community activities pay for them. So, membership-based businesses diversify their activities to diversify their revenue.

On the other hand, consider the example of subscriptions to a magazine. Here, the customer gets just weekly, monthly, or yearly subscriptions to the magazine. And the magazine publishers can either monetize magazines based on per edition or the per article. The pricing for the magazine can be improvised, but there is no such option to conduct community events and monetize them.

2.  Customer Access Management

As the community is the surface of a membership business model, customer access is usually associated with the subscription business model. The customers of a SaaS platform pay a specific subscription fee, and in return, they get access to the platform depending on the subscription plan. Sometimes, subscribers upgrade their subscription plan. As a result, they get more access to the SaaS platform to which they have subscribed.

In the case of membership, every member brings a different value to the community. So, you cannot opt for giving equal benefits to the members rather what they get from the community also depends on their engagement with the community.

Also Read: Track The Data Trail Of Your Customers And Grow Subscription Business With SubscriptionFlow

Which Business Model Suits Your SaaS Business the Best

Now that subscription vs membership has been discussed in detail, you need to decide which one of these business models is for your SaaS business. If you want to opt for the subscription business model, then you just need to identify the recurring need of the customers.

However, the membership business model is for some specific businesses. For instance, gyms, sports clubs, dance clubs, and other businesses like these can easily go for a membership model. In the case of membership, you do not identify and target a customer base but rather a specific community.

The difference between these business models is clear. Now, you also need to see what’s so similar between membership and subscriptions that people get confused.

The fact of the time is,

We are entering an era of the end of ownership.

And businesses need to shift focus from sales and shipping to customer relations. Whether you opt for subscriptions or membership, customer relations are the point of similarity as well as a cornerstone for both. If you opt for a membership or subscription billing model, the customer will have to come to you recurrently. To maintain goodwill relations, you will need to offer the best treatment to your customers. Customer retention is possible only if your customer care and customer services are flawless.

Also Read: Subscription Management Software: A One-Stop Solution for Managing Memberships Across Businesses

Conclusion

Companies opting for a subscription billing model offer standard, basic, and premium subscription plans. And those that adopt the membership billing model offer standard gold memberships. So, there are similarities between these two models, yet they differ. The billing model for your business will depend on your business niche.

No matter whether you choose a membership or subscription business model for your business, SubscriptionFlow offers you its subscription management platform. From billing to revenue, here, you can manage everything.