Subscription portfolios more and more attractive

According to Jakub Sitarz, president of the vc fund – Venture INC, we are in the midst of a global economic change, in which both companies and consumers prefer access to services over a product to own, hence the consistent increase in interest in subscription businesses. As a result, companies around the world are changing their business models and implementing a SaaS solution to meet new customer requirements and effectively scale their business in an increasingly competitive market.

The benefits of subscription business models are second to none. Research has shown that companies operating in this model achieve 5 times faster revenue growth than the S&P 500 (18.2 percent compared to 3.6 percent), ITportal.com reports.

Jakub Sitarz adds that the shift towards subscription services helps companies to develop in the long run, although this change is not without short-term slowdowns. As the company begins to transform the revenue structure from the traditional (on-premise) model to subscriptions, sales revenue temporarily drops. This is because revenues from relatively large, up-front, one-off transactions are being replaced by subscriptions – recurring, lower-value payments. When investing in new technologies and business development as an integral part of the change, costs often outweigh revenues. This has happened to many major brands such as Adobe, Nutanix, and Microsoft, and is the reality of any company transforming into a service provider.

The method of providing services has also changed – consumers are looking for immediate access to the product, immediately after the purchase. The high level of customer service, the possibility of personalization, and self-service are possible thanks to technologies. Services such as Spotify or Netflix, thanks to this business model, have added a new dimension to ordinary services. Although in Poland this model is just starting to gain momentum, according to Paweł Działak, CEO of the Tpay payment operator, it is a matter of time when it will come to us for good.

(WBJ)