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Ecommerce glossary > Recurring subscription products

Recurring subscription products

What is a recurring subscription product?

A recurring subscription product is any product that is purchased on a set cadence via recurring payments. Subscription businesses’ products can be either physical, as in a curated box of tangible items, or digital, as in offerings from software as a service (SaaS) providers. To enter into a subscription agreement with customers, subscription services must first obtain consent to charge customers on a recurring basis in exchange for their purchase. Then, they must obtain each customer’s payment information, including payment details like their preferred payment method (for example, whether they prefer to make bank account or credit card payments) and billing address. If the business offers multiple cadences for their recurring products (e.g. options for weekly, monthly, or bi-monthly shipments), the customer must also select their preferred payment cycle.

What are the benefits of the recurring billing model for businesses? 

Recently, the subscription economy has been experiencing monumental growth, with more and more merchants flocking to the subscription model and an increasing number of consumers entering into subscription billing agreements. For a subscription business, a major benefit of recurring billing includes stable and continuous revenue, making processes like forecasting and inventory management easier and more accurate. The recurring nature of this business model is also conducive to customer retention and loyalty, as it allows businesses to get to know their customers over a longer period of time and apply their learnings to continually hone the customer experience.