Why Is the Subscription Model Gaining Popularity in India?

Why Is The Subscription Model Gaining Popularity In India

The landscape of consumer behavior in India has evolved significantly, shifting from traditional subscriptions with newspaper vendors and milkmen to a strong inclination for monthly supplies of shaving essentials, dietary supplements, and a myriad of over-the-top (OTT) platforms. These platforms, such as Netflix, Amazon Prime, Sony LIV, Disney Hotstar, and others, have redefined how Indian consumers engage with content and services. Increasingly, Indians are embracing the concept of owning less and subscribing more. But what has fueled this transformation? Why have subscriptions become a prevailing choice among Indian consumers? Join us to uncover the reasons behind this growing trend.

This article delves into the factors that have propelled the success of the subscription model in India. We’ll explore why businesses are inclined to adopt subscription models, why Indian consumers are gravitating towards this approach, and the various types of subscription models that are shaping the market.

How Did the Subscription Model Establish a Foothold in India’s Diverse Landscape?

Customer Centricity

The subscription model’s popularity in the Indian market is, in large part, attributed to its customer-centric approach. Consider OTT platforms as an example. They offer an array of subscription plans with varying features and prices, granting customers the freedom to choose the option that best suits their preferences. This personalized approach places customers at the core of the experience. It’s no surprise that Statista predicts the number of OTT users in India to reach a remarkable 528.9 million by 2027.

Growth of eCommerce

The rapid expansion of the eCommerce sector in India, especially during the pandemic, has been nothing short of meteoric. In just one year, the market size of the eCommerce industry surged from 30 billion in 2020 to an impressive 84 billion in 2021. Projections indicate that this trajectory is set to continue, with expectations of reaching 200 billion by 2027. The proliferation of products and services, diverse payment options, and a seamless shopping experience have been key drivers behind this growth, motivating Indian consumers to embrace subscription services.

Transition to Digital Payments (UPI)

The availability of digital payment options, including Google Pay, BHIM UPI, and Paytm, has simplified online purchases for Indian consumers. As internet penetration continues to expand in India, consumer preferences are evolving. This transformation enables them to swiftly access and pay for the services they require, often within a matter of seconds.

Increased Spending Power

The rising income levels and urbanization in India have significantly bolstered the spending power of both urban and rural-urban consumers. These economic factors have been instrumental in driving the surge in subscription adoption. Moreover, the growing spending capacity is poised to have a positive impact on the Indian economy, with predictions of it reaching the $5 trillion mark by 2026-2027.

Why Entrepreneurs and Startup Companies Are Embracing the Subscription Model

Aspiring businesses are increasingly drawn to the subscription model for several compelling reasons:

Positive Impact on Cashflow Management

Unpredictable revenue streams can wreak havoc on cash flow management, as it becomes challenging to forecast the inflow of funds in the coming months. This uncertainty can hinder effective cash flow management. Subscription business models offer the advantage of predictable monthly revenues, providing businesses with clarity on the flow of funds in the immediate and near future. This predictability equips them to manage cash flow efficiently and handle any financial repercussions that may arise.

Enhanced Customer Loyalty

Customers often seek convenience and a seamless experience. The subscription model offers precisely that. Customers can easily subscribe to services by making small monthly payments, saving them time and effort. Furthermore, they have the flexibility to upgrade or downgrade their subscriptions with just a few clicks. This streamlined customer experience fosters loyalty, a valuable asset for any business.

Customized Personalization

Unlike traditional models, subscription models offer extensive opportunities for personalization. Customers are presented with multiple subscription options, enabling them to choose the plan that aligns with their needs and preferences. This level of personalization empowers customers and encourages long-term commitment to the business.

Effective Demand Forecasting

For businesses selling physical products, such as shaving items or baked goods, predicting future demand is crucial for meeting customer needs. Subscription models facilitate this by leveraging customer data to understand purchasing patterns. This data-driven insight allows businesses to forecast demand accurately and adjust their production levels accordingly.

Why Indian Customers Are Embracing the Subscription Business Model

Indian consumers are flocking to subscription-based businesses for various reasons:

Simplified Purchasing Process

The ease of the buying process is a major draw for Indian consumers in subscription models. The ability to make small, affordable payments is far more accessible than paying the full amount upfront.

Bundled Product and Service Features

Subscription models often bundle multiple features into a single offering, which presents a more compelling value proposition than purchasing individual products or services. This bundling approach resonates with Indian customers, motivating them to embrace subscription-based businesses.

Tailored Personalized Experiences

Customer preferences vary widely. Some customers desire additional features and are willing to pay extra, while others seek basic features at a lower cost. Subscription businesses cater to this diversity by offering a range of plans with distinct pricing and features. This level of flexibility and personalization ensures that customers receive a tailored experience.

Trial Opportunities

Indian consumers prefer trying out products or services before committing to a purchase. Subscription models facilitate this process. Customers can sample services or products by making a minimal upfront payment. If they find value in the offering, they can continue with their subscription. Conversely, they have the freedom to cancel their membership if it doesn’t meet their expectations.

Reward Programs

Subscription businesses often cultivate stronger customer loyalty compared to other models. Many of these businesses reward long-term customers with incentives, providing an added incentive for customers to remain engaged.

Types of Subscription Pricing Models

Flat Rate

In the flat-rate subscription model, customers gain access to a product or service at a fixed price with predefined features. Payment terms may vary based on the duration of the subscription. Prime examples include Amazon Prime and Hotstar.

Pay-as-You-Go Model

As the name suggests, the pay-as-you-go model allows customers to pay only for the resources or services they utilize. This approach is commonly seen in broadband services, where customers are billed based on their data consumption.

Stair-Step Based

The stair-step pricing model involves charging customers a predetermined fee until they surpass or fall below a specific usage threshold. For instance, a company offering resume parsing services might charge a fixed rate for parsing up to 1,000 resumes, with a higher rate for exceeding this limit.


Tiered pricing models are often employed by software products. They consist of 2-5 pricing tiers, each offering a unique set of features at varying price points. Well-known examples include GoDaddy and Microsoft Visual Studio.

Per-Feature Pricing

In the per-feature pricing model, the cost of the product or service is determined by the number of features or functionalities included. Products like Nibble Box and QuickBooks use this approach.

Key Takeaway

The subscription business model is on a steadfast rise in India, with consumers embracing it enthusiastically. This trend is anticipated to continue its growth trajectory, offering online entrepreneurs the opportunity to stay ahead of the competition and capture an ever-expanding market. Embracing the subscription model is a strategic move that aligns businesses with the evolving preferences and behaviors of Indian consumers.

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