A drop in revenue and rise in expenses might be worth it when transitioning to a subscription model because it can lead to a more sustainable and predictable revenue stream in the long run. The initial drop in revenue and rise in expenses is often due to the costs associated with restructuring the business model and investing in new systems and processes. However, once the transition is complete, the subscription model can provide ongoing value to customers, leading to increased customer loyalty and recurring revenue.

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Subscribed

Subscription services have grown revenues 8X faster than the S&P500 and 5X faster than US retail sales. This new business model is why Adobe, Netflix,...

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With consumers increasingly focused on access over ownership, the key is to start with the wants and needs of your particular customer base, then create a service that delivers ongoing value. This will require a new organizational structure; a shift in the focus of the sales, marketing, and finance teams; and, a new approach from IT. But, the initial drop in revenue and rise in expenses will be more than worth it.

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Some strategies for managing the transition to a subscription model include understanding the wants and needs of your customer base and creating a service that delivers ongoing value. This may require a new organizational structure, a shift in the focus of the sales, marketing, and finance teams, and a new approach from IT. It's important to be prepared for an initial drop in revenue and rise in expenses, but the long-term benefits can be worth it.

A company can balance customer needs with financial sustainability in a subscription model by focusing on delivering ongoing value to its customers. This may require a new organizational structure, a shift in the focus of the sales, marketing, and finance teams, and a new approach from IT. Despite the initial drop in revenue and rise in expenses, this approach will be more than worth it in the long run as it will lead to customer satisfaction and loyalty, which are key to financial sustainability.

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