Accounting terms

Dictionary of all accounting terms

What is a Subscription?

A subscription is a signed agreement between a supplier and customer that the customer will receive  and provide payment for regular products or services, usually for a one-year period.

A subscription is a relatively new business model by which a customer agrees to pay the company for products or services throughout a specified time-period. For example, the customer may agree to purchase a one-year subscription to a magazine which he receives on a regular basis (monthly, weekly, etc.). The customer may pay the entire sum upfront, or he will pay on a monthly basis. The payment is usually applied automatically, and therefore the customer will need a credit or debit card and agree to be charged.

The subscription model can be applied for various businesses, including:

  • magazines and newspapers
  • Software as a Service (SaaS) businesses
  • gift packages
  • membership (club, gym, etc.)
  • and any business that provides recurring products or services

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