How Small Businesses Can Build Value for Customers Using Subscriptions

In 2025, it can seem like there’s a subscription for everything. Whether it’s your monthly Netflix access or toilet roll being delivered to your door, paying for convenience has become routine.

For customers, subscriptions provide a convenient way to get the products and services they regularly need. For businesses, subscription models can bring higher lifetime sales, greater retention value and improved financial predictability compared to relying on one-time purchases.

In this article, we’ll explore how small businesses in the UK can use the subscription model to build value for their customers and ensure sustainable profits and growth in 2025.

 

The Value Proposition of Subscriptions

Subscriptions can be a valuable model for both customers and businesses. Not only does it mean convenience and accessibility for customers, it also creates a sense of community – something that more customers will be seeking out in 2025. 71% of customers want more personalised interactions with businesses, and offering an exclusive subscription could be a perfect way to meet this need.

If your customers see subscriptions as valuable, you can enjoy higher retention rates and increased customer lifetime value (CLV). The more value you can give your customers, the lower your churn rate will be (the number of customers who cancel their subscriptions).

In fact, a recent survey found that 59% of consumers are more loyal to businesses they subscribe to, and 45% are likely to spend more money through their subscriptions, which clearly demonstrates the value of the subscription model.

Offering your products and services via a subscription also gives businesses the chance to collect a wealth of information about your customer’s wants, buying habits and behaviours. You can then use this information to curate the customer experience further, build brand loyalty and improve your product/service. This is extremely important, as studies have suggested that businesses who use data-driven insights to make decisions can outperform competitors by up to 85%.

Subscription models can be applied to most businesses, whether it’s a local pub offering a curated brewery box to customers every month, car garages providing a monthly membership for maintenance, or a restaurant offering an exclusive supper club membership to their most loyal diners. Whatever business you run, you can turn it into a subscription.

 

Types of Subscription Model for Small Businesses

There isn’t a one-size-fits-all approach to subscription models, there are a few different types to choose from, depending on your business and the product/service you provide. Here are just a few examples:

Flat-rate

This is where you have a single price for all features that applies to all customers each billing cycle. This works best for businesses with limited features and a single buyer persona.

This model is simple to understand and sell, but will help create a more predictable billing process.

Tiered Memberships

For this model, there are different packages that each come with various features; the more a customer pays, the more features they will have access to.

A model like this works best if you have different segments of customers with different needs. For example, Netflix offers a tiered membership depending on the number of screens you need.

This model is flexible and scalable as customers can upgrade/downgrade as their needs change, which maximises their lifetime value.

Curated Product Boxes

If you run a product-based businesses, sending customers a regularly scheduled box of items is the obvious choice for a subscription model.

Customers sign up for a monthly subscription of your products, whether that’s tampons or fruit and veg, and can then enjoy the convenience of getting it delivered to their house as frequently as they need it.

Freemium Models

Finally, you have the Freemium model, which is most commonly used by SaaS businesses. With this model, you offer a basic service to your customers at no cost so you can introduce them to your product and collect their details.

If the customer wants access to any advanced features, membership fees will be introduced, which could be tiered, or a flat-rate.

 

How to Build a Successful Subscription Model

Subscriptions are not a quick and easy way to bring additional revenue into your small business, it needs to be pre-planned and executed correctly.

Most importantly, you need to make sure your customers are actually interested in this new service – otherwise, you could be wasting a lot of time, money and resources.

To ensure your new subscription model is implemented correctly, follow these key considerations:

1.     Define Your Target Audience And Their Needs

You should already have a good idea of who your customer is, why they are interested in your business and what their needs are.

Defining this customer will come down to three things:

• Demographics: Their age, location, income, occupation etc.
• Psychographics: Their interests, lifestyle, pain points, motivation
• Behaviours: Their purchasing patterns, brand preferences, habits

If you don’t have a clear idea of the above yet, you can collect this information through surveys, day-to-day customer interactions, or even looking at what your competitors are doing.

If you decide that your customer would benefit from a subscription model and has the appetite to subscribe to one, you can go ahead with the rest of the process. If not, you may want to look into alternative revenue streams that more closely align with your business.

2.     What’s Your Value Proposition?

You may think your new subscription is a great idea, but now you have to communicate this to your customers. You need to demonstrate how this subscription solves their problems, improves their lives, or saves them time and money.

It’s possible that you’ll have different value propositions for different customers. Some customers may be more interested in convenience whereas others may be seeking personalised products and personalised content. Whatever the pain point is, lead with it throughout your communication of the service.

3.     Create a Pricing Strategy

Setting a price for your subscription can be tricky, but it should be one of the first things you think about – if you find you need to adjust it later on, you risk losing some of your most loyal customers.

Your pricing should be based on the value it brings to your customer. Here are some of the costs you need to be aware of to set your pricing:

• Customer Acquisition Cost (CAC): The cost of acquiring a new subscriber.
• Customer Lifetime Value (CLTV): The value of a customer, in revenue, over their subscription period.
• Variable costs: The cost of running a subscription that vary over time.
• Fixed costs: The cost of running a subscription that remain constant.
• Competitor pricing: If your competitors offer a similar subscription, how much are they charging?

4.     Be Able to Respond to Customer Needs and Trends

As a small business, you have the opportunity to do something that most larger businesses can only dream of – be nimble.

If something isn’t working, you can quickly regroup and change course, a skill you may need to lean on in the early days of your subscription.

As you start welcoming your first subscribers, you may start to pick up on certain needs that aren’t being met. Maybe the tiered model is confusing, customers aren’t happy with the regularity of deliveries, or maybe there are new consumer trends you haven’t considered.

Don’t be stubborn about your offering and be willing to respond to a changing environment, if needed. Constant iteration will improve your subscription model and help you meet the needs of even more customers.

 

Financing Your Subscription Model

If you think a subscription-based model could be the right next step for your small business, you may need some money to help your start-up and scale.

Testing out any new service can be a big risk for a small business, which is why revenue-based finance can often be a good idea. Unlike traditional loans, you only need to pay it back as your customers pay you.

With the funds you receive, you can fund the initial cost of starting your subscription model, invest in a paid marketing campaign, or just purchase the stock you need to fulfil your first few orders.

 

Conclusion

The subscription model is becoming a hugely popular way to generate revenue for small businesses across various industries. It can help build stronger customer relationships, drive recurring revenue and help you achieve sustainable growth alongside your ‘business as usual’.

By following our tips and choosing the right finance option to help you scale up, you should be able to get your subscription model off the ground in no time.

At 365 finance, we can offer revenue-based funding of £10,000 to £500,000 in capital, so your business can thrive all year round. Apply for funding today without affecting your credit score. Or speak to our team to find out how we can help your business. To find out more, head to our website.