How subscription models help prepare DTC brands for a recession + more

By  Recuro
Apr 12th 2023
Read time: 
5 minutes
Table of contents
Weekly News Roundup
1. Estrid sets sight on Europe – Dagens industri

Estrid, a Swedish company selling colorful razors on a subscription basis, 
is now set to take on Gillette on the European market, signing a number of partnerships with European pharmacies and groceries.

“The turnover landed at SEK 430 million, to be compared with just under SEK 226 million in 2021. The operating loss grew at the same time to SEK 185 million from SEK 75.9 million. “Here you have to remember that the foundation of the business idea is a subscription model. We have customer revenue that grows exponentially over time, so the more customers we bring on board, the bigger the loss.””

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2. Fresh funding for Swedish company handling B2B subscriptions – Breakit

The Swedish SaaS company Younium, which offers a service for managing B2B subscriptions, has received a total of SEK 21 million in new funding from existing and new owners. The company was valued at approximately SEK 235 million in the recent transaction (pre-money).

““Continued growth in selected markets. We have a very strong focus on SaaS/software companies within B2B. We have therefore chosen to grow geographically at a rapid pace with e.g. customers in the USA, Canada, Germany, France and the UK in 2022”, the company’s CEO Niclas Lilja answers when asked how the new capital will be used.”

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3. Study: Millions of UK motorists could be ready to switch to car subscriptions – AM Online 

Nine million UK motorists might be ready to make the switch from car ownership to subscription and half a million Brits consider it as their first choice, according to the results of a study, asking 2,000 Brits their preferences.

“[The study conducted by the car subscription company Wagonex] determined that up to 9.2 million would consider the mobility solution due to its flexibility, deposit-free format and not having to worry about servicing or maintenance.”

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4. Orb, which helps B2B SaaS companies price their products, raises $19M – Techcrunch

Orb, a US-based pricing platform that helps companies automate a range of different billing types – usage-based, subscriptions or a mix of both – has announced that it has raised $19.1 million across in a Series A funding round.

“The trend towards usage-based pricing has accelerated in recent years, and so has the hype around it. [But] there’s no one-size-fits all approach to pricing. We like to think of Orb as marrying an analytics product and a billing product to create a new approach that provides flexibility and enables experimentation. Orb gives companies a single source of truth that can connect every unit of product usage to revenue.”

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5. Music producers revolted against an app’s subscription scheme – The Verge

The software company Waves has reversed a plan to exclusively sell its audio plug-in library via a subscription, instead of through perpetual licenses. The initial move upset many music producers and audio engineers who are already paying subscriptions for a variety of creative software, writes The Verge.

“Now, Waves notes on its website that users “who already own perpetual licenses will once again be able to update your plugins and receive a second license via the Waves Update Plan—again, just as before. This option, too, will be available alongside and independently of the subscription program.””

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6. Tinder is developing an exclusive $500-per-month subscription for big-spending singles – Fast Company

Tinder is pushing forward with its $500-per-month subscription offering, tentatively called “Tinder Vault.”, with no word on when it would officially launch. The company has not commented on exactly what features Vault will have compared to its other, less expensive premium offerings.

”“We’re still in this learning mode. Part of that is figuring out how something that could cost someone $6,000 per year adds value to the overall Tinder ecosystem. It can’t break the experience for Tinder’s free members, which make up the vast majority of overall users.”

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Weekly Analysis Roundup

1. “Subscription acquisition rates are still rising”: Key findings from Zuora’s new report – What’s New in Publishing

The latest Subscription Economy Index report from Zuora shows that while subscription acquisition rates are still rising and churn stays flat, publishers need to place greater emphasis on offering subscription flexibility, including subscription pauses.

“Subscription businesses in [Zuora’s Subscription Economy Index] continue to grow: In 2022, the SEI experienced 12% revenue growth. Media and publishing witnessed modest subscription growth last year, reflective of a highly competitive sector, with 4.6% revenue growth.”

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2. In-car subscription services: The business model innovation no one is asking for? – LinkedIn

Many automotive companies have ventured into subscription-based services for built-in vehicle features, sparking mixed reactions from consumers and experts, writes Recuro’s Jonas Åström, while listing the pros and cons with the approach.

“[…] automotive subscriptions can be effective if the entire vehicle or service is designed with a subscription-based model from the outset. The issue arises when business models (transactional vs subscription-based) are mixed, leading to “business model dissonance” and increasing the risk of dissatisfied customers and negative publicity.”

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3. “How much money do we think Substack lost last year?” – The Verge

“Substack is desperate, huh?”, asks The Verge’s Elizabeth Lopatto, in a comment on how the newsletter subscription platform is allowing for retail investors to become shareholders. She notes, among other things, that Substack’s valuation has fallen since 2021 and that last year the company failed to secure an investment round of 75-100 million dollars through conventional methods.

“It’s hard for me to read this as anything other than a cynical ploy to rope people into identifying as helping writers in the absence of real financial information. It’s a way to make money, I suppose. But it doesn’t strike me as a good omen for Substack’s longevity.”

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4. How subscription models help prepare DTC brands for a recession – Total Retail

In uncertain times, an effective subscription model enables businesses to invest in their most powerful players: loyal customers, who are on average many times more valuable than other customers, writes Total Retail. 

“Effectively leveraged subscriptions can provide your customers with flexibility and savings, boost loyalty, increase CLTV, and give your business a steady stream of recurring revenue during hard times […]”

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5. Wired: Even used cars may soon come with subscription fees – Wired

BMW and other automatoive companies have been criticized for charging monthly fees for features in new cars like heated seats. Now the tactic is coming to used cars, writes Wired.

“The average lifespan of passenger vehicles has steadily ticked up in recent years and now sits at around 12 years in the US, with cars cycling through two or three or four owners before they hit the scrap heap. Carmakers are working on making those owners into subscribers too.”

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