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Dec 02, 2016Recurring+ Evolution in 2017: Subscription Plus Usage
There is no question that subscription services are here to stay. In fact, some would say that we have crossed the chasm as a growing multitude U.S. businesses are adopting recurring revenue models. Wall street is rewarding it; private equity, venture capitalists and investors are giving valuation multiples for it; and buyers, both business and consumers, are demanding it across nearly every industry, every sector.
As identified by Forrester, four key drivers are fueling the shift to recurring revenue:
- a desire for “stickier” customer relationships
- a thirst for customer insights
- an eagerness to capitalize on the cloud
- an inclination to experiment with connected products
While the subscription box boom may be turning into a bubble, B2B will continue to transition to recurring revenue. The quest for predictable, long-term revenue overrides the short-term challenges such as initial cannibalization and revenue dips in traditional product lines. Many companies start with a simple subscription recurring revenue model—a set price charged at a set frequency. These are easily handled within ERPs and basic subscription management platforms.
Moving into 2017, however, industry-leading enterprise organizations are looking beyond the simple subscription model to usage-based or consumption-based services surrounding the subscription offer, creating the “recurring+” model.
Recurring+ = Subscription plus Usage Model
The Internet of Things (IoT) and Over-the-Top (OTT) platforms are two technological trends leading the movement to recurring+. Other companies focused on software, data centers, messaging, energy management and digital advertising have been quietly experimenting with recurring and usage models and preparing to launch at scale in the coming year.
What these organizations have found is that traditional ERP and basic subscription platforms cannot support the sophistication and limitless bundling scenarios necessary for usage-based billing without manual efforts and spreadsheets. Nor can these platforms meter usage and apply charges (rating). These smart businesses are future-proofing their business models by adopting dynamic, intelligent billing platforms to satisfy both the simple subscription scenarios as well as sophisticated usage-based packaging models.
Join the Recurring+ Evolution
Smart businesses that join the recurring+ evolution today will be best positioned to take advantage of the opportunities offered by the digital economy tomorrow. Our intelligent billing platform TRACT® can handle an any combination of one-time, recurring and usage-based offerings you can dream of. Contact our team of monetization experts to begin your evolution today.