What is the Difference Between Subscriptions vs Memberships?
November 23, 2021 10 min read
You have a clear idea for launching your membership website. However, now you got confused between Subscriptions and Memberships. Further, you are not sure in which category, membership or subscription, your offering would fall and how to market your product or service.
The words memberships and subscriptions are being used interchangeably but they are not synonymous to each other. It is crucial to differentiate them in order to position your product strongly in the market. We are going to bifurcate them with examples for you to get a better idea and choose the best.
The Key Difference: Subscriptions VS Memberships
To define both the terms in a very simple language,
A Membership is an exclusive benefits community wherein you are bound to interact with other members, build a sense of community, and get certain benefits. It mostly has one-time joining fees, or annual fees to be a member. Look at how the World Federation for Mental Health bifurcates its membership models in varied categories.
On the other hand, a subscription service is more of a transactional nature. It is a give and take wherein you pay specific subscription fees and receive your product/content at regular intervals or up to the time you are subscribed with the platform. It can be a monthly subscription, or even weekly, quarterly, yearly after which it can be renewed.
Think of being a student at your school and then being an Alumni. As a student, you are a subscriber of the services wherein you pay recurring fees for your education. After graduating, you can become an Alumni MEMBER wherein you are required to pay yearly fees or a lifetime token amount to be a member. You get access to all the information regarding events, happenings, access to visit on special occasions, and maybe even a discount if your child studies at the same place.
I hope this real life example helped you distinguish between memberships vs subscriptions in your mind. Now, let us look at some features of the membership and subscription model with their examples.
Understanding the Features of Membership Model with Examples
1) Driven by a Community for s Sense of Belonging
Being a member creates a community. A membership business model fosters discussions, engagement, sharing. It gives a sense of belonging and gives importance to relationships over transactions. By launching a membership program, you must be ready to create a community and have plans to engage them in fruitful discussions. You must also be ready to provide exclusive bonus content to your members by option for membership model for your business.
The membership community of Soulcial Suite is a great example of a community driven Website. It is a type of business providing a private creator community wherein you connect with other creators and entrepreneurs to understand more about the industry, hone your skills, and sharpen business goals.
2) A Right Business Model to Offer Discounts and Special Promotions
This model allows offering discounts, coupon codes, special offers, and exclusive content to feel worthy in the community and get benefits of membership.
For instance, the Starbucks Rewards Card or Sephora Beauty Insider Program.
Starbucks is a successful membership model providing specific member-only perks like free drinks, food, birthday offers, and so on. There are three levels of membership viz. Welcome, Green, and Gold. Based on your in store expenses, you receive stars and further, receive offers based on the level and stars. It’s a perfect example of how you can engage your audience virtually to increase the physical walk-ins and give them benefits of belonging.
This kind of model may be more appropriate and successful if you have a physical location and want to increase its traffic.
3) An Exclusive Feeling by creating a membership
When you are an Amazon Prime Member, you pay a membership fee and get access to Free Delivery or Discounted Delivery Benefits, One Day Delivery Option, Access to Prime Video, Prime Readings, Amazon Music, and various other benefits. Now, all these are not available to regular Amazon users.
Thus, the Prime Members have an exclusive feeling because of the benefits they receive. Similarly, you can limit the entry of your membership Website to specific professionals only and screen everyone before giving them an entry. This will make your membership website exclusive to the people who are a part of the community and would appreciate the quality of the members and value they receive.
Understanding the Features of Subscription Business Model with Examples
1) A Billing Model for Subscription Management
A subscription-based business works on revenue model and billing period. Once they subscribe to your Website, they get access to content for the specific period. On expiration of that period, they need to renew their plan by making a payment to continue having the access to content.
The Bloom Method is a membership site for Women to help them with their bodies during pregnancy, postpartum phase. It has various subscription options that Women can choose from based on their journey.
2) Regular Content Drops for Subscribers
Imagine if Disney+ or Netflix stops launching new content on regular intervals! The subscribers to these platforms will shift to other streaming services with regular new releases. Similarly, if the model you choose is a subscription one, make sure you are dropping content at regular intervals to keep your subscribers renewing their memberships. A Subscription without regular content will not be a successful subscription.
For instance, on a Website dedicated to tutoring for clearing Medical School, you will have to define various levels. After that, you need to keep releasing content on different topics. If the students find it valuable and easy to understand, they will keep paying a subscription fee to keep receiving updates.
To restrict content based on their subscription plan, you can use the features of Content Access Rules and Drip Content that can help you personalise the user experience.
3) Predictable Revenue in the Recurring Subscription Model
When you know your member base is loyal and your content is good enough, you are sure about a specific set of members that would retain. Thus, you have a revenue surety coming out of recurring subscription fees. This gives a peace of mind regarding your income. Based on that you can plan your further investments and costs to incur to keep your membership site updated and relevant.
Subscription is a financial model and thus, looking at finances is as important as managing memberships.
Key Differences Between Memberships and Subscriptions
To provide a better perspective, let us compare the two business models side by side. There are pros and cons to each model that you need to assess while exploring the difference between memberships and subscriptions:
| Memberships | Subscriptions |
|---|---|
| It usually works on one time cost or offers a lifetime membership plan | It is a simple subscription of recurring payment which can be monthly, quarterly, yearly, etc. |
| Main focus on fostering a community value with interactions, benefits, offers and members engaged with each other | Subscription Businesses often focus on providing content at regular intervals as this business model is where customers pay recurrently |
| There is usually no trial period before becoming a member | There is a possibility of free-trial or minimally paid trial before subscribing to full services |
| There can be no prediction of revenue generation | This model provides an idea of revenue based on which further planning can be done |
| User Generated Content is promoted in memberships | Here, user-centric content needs to be delivered |
| This module requires moderation to keep the community engaged and free of nuisance | Subscription Model may give entry to everyone as they use the content/product on their own and interact directly with the provider and not peers |
Which Model is Right for Your Online Business?
To choose between a membership or subscription model, you must be well aware of the following pointers and what’s the difference between the two.Choose the Right Long Term Goals
You must jot down what you wish to offer in the long term. Do you wish to foster a community of like-minded people and provide an interactive platform? Or do you wish to provide regular courses, videos, podcasts, blogs to your members? The answer depends on what’s your expertise in and what you can sustain for longer duration.
Available Resources and Clear Budgeting
If you are into this for the long term, you must decide how many resources are you willing to invest into initially and after what point you would start investing more. Know how much would it cost to set up a membership website, get its add-ons and features to enhance its functionality, and what will be the future costs. Memberships and subscriptions are two ways to choose for your business.
Market Demand and Trends of Membership Business
Based on your niche, you must chalk out what are the current trends and what are your business needs. You must study the market for understanding how often does the trends change, what does the audience need, what are the spending habits of the target group. All these will take you closer in the direction of a model to choose.
There are some membership modules that also provide a chance to subscribe. For instance, when you become an Amazon Prime Member, you get access to various prime benefits. In Prime Video, you get options to subscribe to Discovery+, Lionsgate Play, Eros Now, DocuBay, HoiChoi, MUBI, etc.
Reiterating the Major Difference between subscription and membership
To sum it up, if your goal is community building, opt for creating a membership site and if your goal is to provide regular content, offer subscriptions. Both have its own place in the website building and both can be profitable if used well. You must be well aware of your expertise and skills to understand what will be the best for you.
Study various Websites and their offerings to understand the membership and subscription landscape. It will help you pre plan your content and show you a pathway towards the amount of planning required.
FAQs
1) Can I change my model from membership to subscription?
You can offer two different things on your Website. Make a separate group for members who can access premium content and community building tools. Have a separate plan for those users who do not want member benefits and just the content you launch.
2) What is the best model for providing online courses?
To provide online courses and attract students, opt in for a subscription model. You can divide the subscription plans in different levels to give different courses to members and charge a monthly fee.
3) How can Fitness Services be Subscription based and not Membership?
When you provide different plans and diet charts just like online courses, it will be a subscription. People will access the workout based on their plan and workout on their own. For a physical gym, a membership plan helps to join members online as well as offline.
Related resources:
Brian Denim
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