How to use subscriptions to generate recurring revenue for your online store

Recurring revenue. Monthly revenue. Passive income. Continuity. Subscriptions. Each of these labels has the same goal: to build a solid foundation for business income every month.

It doesn’t matter what you call this, it feels great getting paid every month without the need to make another sale.

Industries have been inspired by the benefits of recurring income to their businesses.

Here are some of the benefits.

  • This is the income base that you receive before you have a new customer.
  • Subscribers who are loyal to a subscription model last longer.
  • Higher lifetime values for customers who recur regularly
  • Referring to customers who are returning customers is more likely.
  • Subscribers are more efficient because they save customers time and reduce the amount of effort required to purchase.

It is not difficult to create a range of products or services that are available on a subscription basis. You can sell anything from software to smoothies to coffee, clothes to healthcare services, and even car care with monthly payment models.

Two main challenges are required to be successful with a subscription service, product or business:

  1. Your customers will be more likely to subscribe if they are convinced that it is better than a one-off purchase.
  2. Create a system for selling and processing subscriptions.

WooCommerce is able to solve the second problem by offering customizable solutions that seamlessly integrate with your online shop.

WooCommerce Subscriptions Extension

You can build a business model that generates recurring revenue with WooCommerce Subscribes. This revenue stream can be charged at any frequency that works for you and your customers. Fees can be charged weekly, monthly, annually or at any other time that suits your business model.

A weekly model is best for a food-based online shop that sells yogurt, coffee, and prepared meals. Monthly or even annual subscriptions might be more appropriate for other businesses. No matter whether the product is digital or physical, WooCommerce subscriptions can support your recurring revenue plan.

It can be set up to allow for more specific situations such as allowing only one customer to make recurring purchases or charging shipping only on the first order. The extension also includes email renewal notifications so that you and your customers are always aware of when payments have been processed, and when new orders are due to be charged.

Learn more:

A Example of WooCommerce Subscriptions

NobleTree Coffee offers a subscription model that allows customers to enjoy their coffee while not having to remember to replenish it.

Here is a product page from NobleTree’s website. You can see how this extension works by selecting an option from each dropdown menu. NobleTree offers four options for customers to purchase their coffee beans: weekly, every two or monthly, or one-time.

They also offer 20% off for all subscribers who select one of their three subscription options. Why would they offer a discount? NobleTree knows the advantages of a subscription model. This includes the ones mentioned at the beginning of this article. They are trying to convince their customers to opt for a subscription rather than a single purchase.

Subscribers will save money on every order but will spend more over the course of their lives than a single buyer.

How to Market to Customers Your Subscription Business

Another challenge in launching a subscription part of your business is how to implement it on your website. This is handled by the WooCommerce Subscriptions extension. How can you market your subscription product to customers?

These are some ways to get your customers to opt for a recurring payment instead of a one-time transaction.

  • Like Nobletree, offer a discount when you sign up.
  • You can get a trial for free and then renew your subscription to the paid version.
  • You can create exclusivity by allowing only a limited number of subscribers to join your service at a time.
  • Limit the time that people can join to create a sense of urgency.
  • Give a gift of appreciation to each new member.
  • A product of the Month club is created where only members have access to exclusive items.
  • Special coupons for your monthly subscribers only
  • You can create VIP events such as celebrity appearances and parties that are exclusive to subscribers.
  • Offer additional customer service options.
  • Subscribe to receive additional benefits that aren’t available with one-time purchase.

You have many options to get customers to sign up to your subscription. You can create recurring revenue for your online shop by combining these strategies with the WooCommerce Extension technology.

Want to run a more flexible subscription business?

There are some limitations to the subscription, which you can read more about in Subscriptions Use Case.

This applies to subscription boxes that include multiple products. This can cause inventory problems and backend support issues.

You can also get two extensions if you require more flexibility with your subscriptions.

  1. Customers have the option to purchase a product once or on a monthly basis with the All Products extension. This is the same as NobleTree’s earlier example.
  2. The Product Bundles extension lets you and your customers group products together and get discounts.

WooCommerce offers you flexibility to tailor your subscription business model with its many extensions.

How can a service-based business use a subscription model?

A subscription model can be used if your business provides a service rather than a product. It’s actually easier than a product-based company in many ways.

You can now offer a monthly, bimonthly, or an annual subscription with the WooCommerce Extension. This will provide a steady stream of revenue even during your busy season.

As an example, let’s say a pest control company charges $200 per customer. Customers typically request service three times per year. This is $600 per customer.

You have to pray that they stay with you. You never know when they will call you again. You might not get a call from them the third time.

You can make more long-term if you sign them up for a subscription which costs less than the usual one-time fee. You might also offer a monthly option for $45, which is $600 per annum. This gives you $540 per annum of guaranteed income. You can also offer upgrades and upsells to your customers every time you service their house.

Subscriptions make it easier to build long-lasting relationships with more customers.

How to Set up WooCommerce Subscriptions

  1. Purchase and install WooCommerce Subscriptions.
  2. Navigate to WooCommerce Products – Add Product in your WordPress Dashboard.
  3. You can choose from a Simple Subscription, or a Varable SubscriptionFor more information about variable products.
  4. You can set the terms of your subscription such as price, billing interval, period, length, sign up fee and trial period. You could, for example, charge $9.99 per month to your customer and give them a 14-day free trial.
  5. Additional product information such as inventory and shipping details.
  6. At the top right click and publish

Variable Subscriptions let you offer your customers a variety of options. You might offer large and medium bags if you are selling a subscription to coffee beans. If you sell subscription boxes of toys, customers can choose from different age groups.

You can create unique sign-up fees for each variation. You can create unique offers regardless of the products or services that you sell.

Learn more about subscription products and settings in our Subscriptions Manager Guide.

Start Your Subscription Business as Soon As Possible

You lose potential revenue every single day you don’t offer recurring revenue to your online shop because of the added value it brings. Get started today!

It is your primary responsibility to determine which products or services are most successful. You should brainstorm a variety of ideas, and not immediately dismiss any that come to your mind. It might surprise you to see some of the subscription-based businesses that have been successful.